Complications of Debt Market

We always try to know about debt markets. What is it? In general, equities market is known for everyone. But, debt market always creates confusion among people. Actually, the capital market comprises two markets, one is equities market and the second one is debt market.

Equity market is the market in which shares are issued and traded, either through exchanges or over the counter markets. It is also called stock market. It is one of the most vital areas of an economy. Because it gives opportunity to companies to raise capital and at the same time investors get a slice of ownership in a company with the potential to realize gains based on its future performance.

Whereas, debt market is a market for the issuance, trading and settlement in fixed income securities of various types. Fixed income securities can be issued by a wide range of organizations including the Central and State Governments, public bodies, statutory corporations, banks and institutions and corporate bodies

In debt market fixed income securities of various types and features are issued and traded. Debt Markets are therefore, markets for fixed income securities issued by Central and State Governments, Municipal Corporations, Govt. bodies and commercial entities like Financial Institutions, Banks, Public Sector Units, Public Ltd. Companies to raise money.

Debt market is the pillar of any economy.  And it plays a vital role for growing country. If, any country need a huge amount of capital for industrial and financial growth then fixed income securities can play a critical role.  

Fixed Income securities are one of the most innovative and dynamic instruments evolved in the financial system. It offers one of the most attractive investment opportunities with regard to safety of investments, adequate liquidity and flexibility in structuring a portfolio. At the same time it is easy to monitor and gives long term reliability and decent returns.

The Fixed Income Securities Market, also known as the debt market or the bond market, is easily the largest of all the financial markets in the world today. The Debt Market has, as such, a very prominent role to play in the efficient functioning of the world financial system and in catalyzing the economic growth of nations across the globe.

The Indian debt market is today one of the largest in Asia and includes securities issued by the Government, public sector undertakings, other government bodies, financial institutions, banks and corporate.

The issue and trading of fixed income securities are regulated by different bodies in India. Government securities and issues by banks, Institutions are regulated by the RBI. The issue of non-government securities comprising basically issues of ‘Corporate Debt’ is regulated by SEBI.