The Reserve Bank of India(RBI) has set up a task force to submit a report on the development of a secondary market for corporate loans.It was headed by T.N. Manoharan.
The task force has recommended setting up of a self-regulatory body of participants who would work on creating a platform for secondary sale of corporate loans.
The task force has also called for amending regulations of SEBI, IRDA and PFRDA to enable participation of non-banking entities such as mutual funds, insurance companies and pension funds.
Currently,banks and NBFCs are the only participants in the primary and secondary loan markets.
The task force has suggested for setting up an online loan sales platform to conduct auctions/sale process of the secondary market loans.
Further,it has also recommended to create a Loan Contract Registry to remove information asymmetries between buyers and sellers.
The secondary market is the market where investors buy and sell securities they already own.It is also referred to as the stock market.
Secondary loan market in India is largely restricted to asset reconstruction companies and ad hoc sale to other lenders including banks and no formalised mechanism has been developed to deepen the market.