India needs to strengthen its corporate bond market: IMF official

India needs to strengthen its corporate bond market in order to meet the funding requirements of various infrastructure projects, a senior International Monetary Fund (IMF) official said.

"Although India has a vibrant equity market, there is an absence of bond market which is required for funding of long-term infrastructure projects. The presence of a bond market is necessary for India's success," IMF first deputy managing director, John Lipsky, told reporters here today.

He said that due to the limited size of India's debt capital markets, banks are the main source for funds for both firms and households.

"India has enormous infrastructure needs, but infrastructure financing remains largely dependent on banks, with all its attendant inadequacies and risks," he said.

"It (development of bond market) is a challenge but many things can be done for faster development of this market in India," he said, adding that soon some important progress would be seen in this area.

He said that further progress in the development of an active securitisation market for consumer and small business loans would facilitate greater access to credit, by enabling risks to be shared by banks and other investors.