Viral V Acharya: Development of viable capital markets - the Indian experience

Remarks by Dr Viral V Acharya, Deputy Governor of the Reserve Bank of India, at the Indian School of Business, Hyderabad, 29 June 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

1. Introduction

1.1 Capital markets play a crucial role in the economic development of a country. They provide financial resources required for the long-term sustainable development of the economy. Development of viable capital markets is therefore considered an important element in the macro-financial policy toolkit, including for objectives such as financial stability and the transmission of monetary policy.

1.2 The Committee on Global Financial System (CGFS), which meets at the Bank for International Settlements (BIS), constituted a Working Group in 2018-19 to examine global trends in capital market development, identify various factors (legal, institutional, structural and conjunctural) that foster the development of robust capital markets, and consider the role of policy including prudential measures. The Working Group, co-chaired by the People's Bank of China (PBOC, Dr. Li Bo) and the Reserve Bank of India (RBI, Dr. Viral V. Acharya), focussed on issues primarily related to the development of markets in bond and equity securities². While these issues are arguably of greater relevance to emerging market economies, they were found to be of significant interest even for advanced economies.