India Needs Deeper Financial Markets To Achieve Viksit Bharat: RBI Deputy Governor

Mumbai, Jul 28 (KNN) India must develop deep, broad and resilient financial markets before achieving developed economy status, as the country's future financing needs cannot be met through the traditional bank-led model alone, Reserve Bank of India (RBI) Deputy Governor Rohit Jain has said.

RBI Calls for Stronger Market-Based Financing

Addressing the Financial Institutions Leadership Conference organised by Standard Chartered Bank in Mumbai, Jain said India would require stronger market-based financing to support the long-term capital needs of infrastructure, manufacturing, urban development, technology and business expansion.

He noted that while the bank-led financing model has served the economy well, the scale, tenor and diversity of funding required for the Viksit Bharat vision demand deeper government and corporate bond markets, along with stronger foreign exchange and derivatives markets.

Deeper Financial Markets Key to Viksit Bharat

Jain said the focus should be on building larger, deeper and more resilient financial markets, with regulatory frameworks evolving in step with market development, reported Businessline.

He highlighted that household savings are increasingly being channelled through insurance, pension funds, mutual funds and other market-linked instruments alongside traditional bank deposits.

According to him, well-functioning financial markets can effectively connect these long-term savings with long-term investment requirements across the economy.

Robust Markets Support Investment and Risk Management

The Deputy Governor said government securities markets finance public investment and provide pricing benchmarks, while corporate bond markets facilitate private investment. 

Money markets improve monetary policy transmission and liquidity management, and foreign exchange and derivatives markets help businesses and investors manage financial risks.

Broader Access to Finance Requires Stronger Market Infrastructure

He added that broader access to market-based finance for enterprises would require stronger credit risk assessment, reliable recovery mechanisms and efficient markets for risk distribution.

Deeper financial markets would also enable financing risks to be shared among a wider pool of participants instead of remaining concentrated with a limited number of financial intermediaries, he said.

(KNN Bureau)