Mumbai– To develop secondary market for corporate loans, the Reserve Bank of India will facilitate the setting up of a self-regulatory body (SRB) for such transactions.

“As recommended by the Task Force, the Reserve Bank will facilitate the setting up of a self-regulatory body as a first step towards the development of the secondary market for corporate loans,” the apex bank said in a statement on developmental and regulatory policies.

According to the statement, the SRB will be responsible for “standardising documents, covenants and practices related to secondary market transactions in corporate loans”.

In India’s context, corporate loans both standard and Non-Performing Assets (NPAs) have been transferred from banks to other lenders and Asset Reconstruction Companies (ARCs).

However, this inter-bank bilateral transactions of loan accounts have been relatively infrequent.

As regards the securitisation market, it has mostly evolved in the retail segment and there has been no major breakthrough in the corporate portfolio.

To overcome these hurdles, the RBI constituted a task force to examine the development of secondary market for corporate loans and make recommendations to facilitate rapid development of this market. (IANS)