3.2 Capital market specific drivers Let me now turn to some of the other important drivers of market development in India and also highlight some critical areas for improvement. 3.2.1 Disclosure regime As per the cross-country survey findings of the CGFS Report, proper and timely disclosure by the issuers in corporate bond market is a prerequisite for gaining investors’ confidence in this market.
Conversely, lack of adequate disclosures raises the financing costs of corporates, especially sub-investment grade ones, and keeps the capital markets small. Recognising this, regulators in India have emphasised and mandated high quality and timely disclosures by issuers. However, a few instances of recent defaults in commercial paper and corporate bond markets have raised concerns about the quality of disclosures, even for investment-grade firms.