In order to align NSS rates with marketbased yields on instruments of similar tenors, the yields on NSS instruments were first reduced, and then pegged to the yields on the government’s market-based long term bonds. From March 2000, institutional investors were barred from incremental investment in NSS. These measures helped in developing bond market to some extent as the number of issuance increased subsequently.
The corporate sector issued 69 TFCs worth Rs 45.7 billion during FY01 to FY07. Market activity slowed down in the following years due to both overall slowdown in economic activities and the policy-reversal by the government to re-allow institutional investment in NSS. The corporate sector issued only two bonds worth Rs 6.1 billion during FY09.