{"id":124437,"date":"2026-09-14T15:43:20","date_gmt":"2026-09-14T10:13:20","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=124437"},"modified":"2026-09-14T15:43:20","modified_gmt":"2026-09-14T10:13:20","slug":"hr-khan-committee","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/hr-khan-committee\/","title":{"rendered":"HR Khan Committee, Objectives, Recommendations, Importance"},"content":{"rendered":"<p><b>HR Khan Committee<\/b><span style=\"font-weight: 400;\"> was constituted by the <\/span><b>Reserve Bank of India (RBI)<\/b><span style=\"font-weight: 400;\"> to examine issues related to the development of the <\/span><b>corporate bond market in India<\/b><span style=\"font-weight: 400;\">. The committee focused on improving the functioning of the bond market, increasing investor participation, and making it easier for companies to raise long-term funds.<\/span><\/p>\n<h2><b>Why was the HR Khan Committee Formed?<\/b><\/h2>\n<p><b>HR Khan Committee<\/b><span style=\"font-weight: 400;\"> was formed to identify the key problems in India\u2019s <\/span><b>corporate bond market<\/b><span style=\"font-weight: 400;\"> and suggest measures to make it deeper, more liquid, transparent and accessible.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Low market liquidity:<\/b><span style=\"font-weight: 400;\"> Many corporate bonds were not actively traded in the secondary market, making it difficult for investors to buy or sell them easily.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Limited investor participation:<\/b><span style=\"font-weight: 400;\"> The corporate bond market had a relatively narrow investor base, with greater participation needed from institutional as well as retail investors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>High dependence on banks:<\/b><span style=\"font-weight: 400;\"> Companies relied heavily on bank loans for raising funds. A stronger bond market could provide an alternative source of finance.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Need for long-term finance:<\/b><span style=\"font-weight: 400;\"> Infrastructure and other large projects require long-term funds, which can be raised more effectively through a well-developed corporate bond market.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Weak secondary market:<\/b><span style=\"font-weight: 400;\"> Limited trading and price discovery reduced the attractiveness of corporate bonds as an investment option.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Need for better market infrastructure:<\/b><span style=\"font-weight: 400;\"> The committee examined ways to improve trading, clearing, settlement and information systems related to corporate bonds.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Regulatory challenges:<\/b><span style=\"font-weight: 400;\"> Differences and complexities in regulations could discourage participation. The committee therefore looked at ways to create a more supportive regulatory framework.<\/span><\/li>\n<\/ul>\n<h2><b>Major Recommendations of the HR Khan Committee<\/b><\/h2>\n<p><b>HR Khan Committee<\/b><span style=\"font-weight: 400;\"> suggested several measures to strengthen India\u2019s corporate bond market, improve liquidity, increase investor participation and make the market more efficient.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Improve Secondary Market Liquidity:<\/b><span style=\"font-weight: 400;\"> The committee recommended measures to increase trading in corporate bonds and make it easier for investors to buy and sell them.<\/span><\/li>\n<li><b>Develop the Corporate Bond Repo Market:<\/b><span style=\"font-weight: 400;\"> It suggested developing the <\/span><b>repo market for corporate bonds<\/b><span style=\"font-weight: 400;\"> to improve short-term liquidity and provide financial institutions with better funding options.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Strengthen Market-Making:<\/b><span style=\"font-weight: 400;\"> The committee recommended encouraging <\/span><b>market makers<\/b><span style=\"font-weight: 400;\"> to provide regular buy and sell quotes, helping improve liquidity and price discovery.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Widen the Investor Base:<\/b><span style=\"font-weight: 400;\"> It proposed increasing participation from <\/span><b>banks, insurance companies, mutual funds, pension funds, foreign investors and retail investors<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Improve Market Infrastructure:<\/b><span style=\"font-weight: 400;\"> The committee recommended strengthening systems for <\/span><b>trading, clearing, settlement and reporting<\/b><span style=\"font-weight: 400;\"> of corporate bonds.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Improve Transparency:<\/b><span style=\"font-weight: 400;\"> Better availability of information on bond prices, trades, issuers and outstanding securities was recommended to help investors make informed decisions.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Promote Credit Enhancement:<\/b><span style=\"font-weight: 400;\"> The committee supported mechanisms that could improve the credit quality of bonds and make them more attractive to a wider range of investors.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Simplify Regulatory Framework:<\/b><span style=\"font-weight: 400;\"> It recommended reducing regulatory difficulties and creating a more coordinated framework for the development of the corporate bond market.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Encourage Electronic Trading:<\/b><span style=\"font-weight: 400;\"> Greater use of electronic platforms was suggested to improve transparency, efficiency and price discovery in corporate bond transactions.<\/span><\/li>\n<\/ul>\n<h2><b>Corporate Bond Market in India<\/b><\/h2>\n<p><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/corporate-bond-market-in-india\/\" target=\"_blank\"><b>Corporate Bond Market in India<\/b><\/a><span style=\"font-weight: 400;\"> is a market where companies raise money by issuing debt securities to investors. It provides an alternative to bank loans and is an important source of <\/span><b>long-term finance<\/b><span style=\"font-weight: 400;\"> for businesses and infrastructure projects.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Meaning:<\/b><span style=\"font-weight: 400;\"> A corporate bond is a debt instrument through which a company borrows money from investors and promises to repay the principal, generally with interest.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Primary Market:<\/b><span style=\"font-weight: 400;\"> Companies issue new bonds to raise funds for purposes such as business expansion, infrastructure development and refinancing existing debt.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Secondary Market:<\/b><span style=\"font-weight: 400;\"> Investors can buy and sell already-issued corporate bonds. An active secondary market improves <\/span><b>liquidity and price discovery<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Major Participants:<\/b><span style=\"font-weight: 400;\"> Banks, mutual funds, insurance companies, pension funds, financial institutions, foreign investors and other eligible investors participate in the market.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Regulatory Framework:<\/b><span style=\"font-weight: 400;\"> The <\/span><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/securities-and-exchange-board-of-india-sebi\/\" target=\"_blank\"><b>Securities and Exchange Board of India (SEBI)<\/b><\/a><span style=\"font-weight: 400;\"> regulates the listed corporate bond market, while the <\/span><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/reserve-bank-of-india\/\" target=\"_blank\"><b>RBI<\/b><\/a><span style=\"font-weight: 400;\"> plays an important role in areas related to banks, financial institutions and the broader debt market.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Importance:<\/b><span style=\"font-weight: 400;\"> A strong corporate bond market helps companies access long-term funds, reduces dependence on bank credit and provides investors with additional investment opportunities.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Key Challenge:<\/b><span style=\"font-weight: 400;\"> Despite reforms, the market continues to face issues such as <\/span><b>limited liquidity, concentrated investor participation, credit risk and relatively low retail participation<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>HR Khan Committee examined India\u2019s corporate bond market and recommended measures to improve liquidity, investor participation, market infrastructure and long-term financing.<\/p>\n","protected":false},"author":27,"featured_media":124481,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[786],"tags":[10252,10253],"class_list":["post-124437","post","type-post","status-publish","format-standard","has-post-thumbnail","category-general-studies","tag-hr-khan-committee","tag-khan-committee","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/124437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=124437"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/124437\/revisions"}],"predecessor-version":[{"id":124507,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/124437\/revisions\/124507"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/124481"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=124437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=124437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=124437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}