Analysis of Debt Portfolio in Indian Corporate Sector Dr. Venugopalan T. Assistant Professor, Department of Commerce, SGTB Khalsa College, University of Delhi, Delhi, India Online published on 13 March, 2014. Abstract This paper attempts to investigate comprehensively the corporate debt portfolio from the perspective of corporate capital structure and critically examines the composition of debt in the capital structure of the Indian companies. This study also evaluates the performance of corporate bond market and examines how effective were the financial sector reforms in transforming corporate bond market to into a liquid and vibrant well-developed corporate bond market. The corporate debt portfolio analysis endows new insights on the pattern of debt financing in Indian industries. The research findings disclose that the most common forms of corporate debt finance are the bonds and debentures, borrowings from bank and financial institutions, loans from central and state governments, commercial papers, inter-corporate loans, external commercial borrowings, and deferred credit from suppliers. The high levels of long-term debt, dominance of bank credit, absence of adequate short-term debt instruments, and low levels of debentures utilization are diagnosed as some of the persistent problems of corporate debt market. These problems have not only constrained the financing activities of corporate sector but also hampered the growth and development of business and industry. The unsatisfactory performance of the corporate bond market reminds the unenthusiastic response and the futility of the massive first generation economic reforms that have been introduced over two decades to strengthen the corporate debt market. The corporate debt portfolio analysis discloses how the imperfections prevails in the corporate debt market have distorted the financing patterns of corporate sector in India. Based on these results, we can assert that the corporate debt market could neither be a viable source of long-term debt finance to the corporate sector nor be a close substitute to the banks and DFIs. Thus, these findings are pointer towards the necessity of the introduction of massive and vigorous next generation reforms in proper direction to strengthen corporate debt market. Top Keywords Debt portfolio analysis, capital structure, first generation economic reforms, developmental financial institutions. Top |