Liquidity stress has abated, says SEBI chief

The liquidity stress affecting non-banking finance companies and housing finance companies since September 2018 has abated significantly, and the Indian markets have performed better than several developed markets despite high global volatility this year, the chief of India’s stock market regulator Ajay Tyagi said on Friday.
The Securities Exchange Board of India (SEBI) Chairman said that the role of capital markets in facilitating fund raising to sustain the country’s economic growth momentum ‘becomes even more important given the stress in the banking sector.’ The volatility in global markets, caused by factors such as uncertainty in oil prices, change in monetary policy stance of central banks like the U.S. Federal Reserves and U.S.-China trade tensions, is likely to persist, Mr. Tyagi said at a financial markets summit.
Domestic issues
“These factors have also affected Indian markets, as well as domestic issues such as NBFCs and housing finance companies facing tight liquidity since September 2018, although it has improved much on account of steps taken by the RBI in providing systemic liquidity,” the SEBI chief said. Despite the high volatility in the Indian markets compared with ‘previous years when markets were just rising and people almost thought they provide assured returns, the performance of Indian capital markets has been comparable, not much worse than the comparable jurisdictions,’ Mr. Tyagi said. The SEBI chief said that the regulator has moved ‘in a timely manner’ ‘by government standards’ on implementing reforms in the corporate governance framework proposed by a committee headed by Uday Kotak. Steps are afoot to enhance the focus on independent directors, prescribe the separation of CEO, MD and chairperson roles, enhance the role of audit, nomination and remuneration and risk management committees as well as strengthening disclosures of related-party transactions, he said.
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