T N Manoharan Task Force on Secondary Market in Corporate LoansDate: 31 May 2019 Tags: Banking Committees
The Reserve Bank of India (RBI) constituted six-member Task Force on the Development of Secondary Market for Corporate Loans. It is mandated to suggest policy and regulatory interventions required for development of secondary market in corporate loans. It will be headed by Canara Bank chairman T. N. Manoharan. The task force will submit its report by the end of August 2019.
Terms of Reference of Task Force
- It has been set up to review existing state of the market for loan sale and transfer in India as well as the international experience in loan trading.
- It is will recommend required policy and regulatory interventions for facilitating development of secondary market in corporate loans, including loan transaction platform for stressed assets.
- It will also suggest creation of loan contract registry to remove information asymmetries between buyers and sellers and related protocols such as standardisation of loan information, independent validation and data access.
The secondary loan market in India is largely restricted to asset reconstruction companies (ARCs) and ad hoc sale to other lenders, including banks. But there is no formalised mechanism so far developed to deepen this secondary loan market. There is urgent need to develop well-developed secondary market for debt that will aid in transparent price discovery of inherent riskiness of the debt being traded.