The investors in the whole sale debt market are usually institutional investors. Let take a look at the investors in this market:

Banks: All banks put together are the largest investors in the wholesale debt market. A bank has to invest at least 25% of its deposits in approved securities and unencumbered Government securities as part of the Statutory Liquidity Reserve requirements. That makes banks the largest investors in the G - secs market. In reality, most banks have much higher exposure to the Government securities mainly because they are highly liquid and carry negligible risk. Similarly investing in CDs, CPs and Corporate bonds provide excellent yields to the banks. Banks also play in this market to manage their liquidity as part of their treasury operations. Whenever banks have excess funds, they either go to the call money market or to the G - secs market due to their high liquidity and relatively less risk.

Insurance companies: LIC and GIC are the second largest investors in the wholesale debt market. LIC has to allocate 60% of its annual incremental investments in the GoI dated securities, while GIC and its four subsidiaries have to allocate 40% of their annual incremental investments in these securities. Also LIC is allowed to invest a maximum of 15% of their annual incremental investments in the debentures and shares of the private sector, while for GIC and its 4 subsidiaries, this percentage is 25%. So the two insurance companies have not much of a options and they have to invest in the GoI dated securites. This makes them the second largest investor in this market.

Provident Funds: Provident funds are the third largest investors in this market. They have to invest 25% of their incremental deposits in GoI dated securities, 15% in State Govt. securities, 40% in PSU bonds and they can invest a maximum of 10% of their incremental deposits in rated private sector debt instruments. Apart from these statutory instruments, these instruments provide these institutions with fairly good assured returns coupled with negligible risk.

Mutual Funds: Mutual Funds are the fourth largest investors in this market. There are specialized funds now a day, which invest in this market. There are money market mutual funds, which invest in money market only and there are income funds, which invest in PSU bonds and private sector bonds. These MFs also invest in GoI dated securities due to their high liquidity and less risk.

Corporate treasuries: Private and public sector corporate treasuries have started playing in this market in the recent past. The respective administrative ministries heavily regulate the PSU treasuries in the sense that they can invest in few selected securities. They can invest in debt instruments issued by banks, DFIs and GoI dated securities. There are no such restrictions for private sector treasuries. They are willing to take higher risk for higher returns. So they invest in CPs of other companies, their debenture issues and G - secs. One common favourite for these treasuries is inter - corporate deposits. These deposits are in the nature of usual bank deposits, the only difference being that they are issued by corporates.

Foreign Institutional Investors: Certain SEBI approved FIIs are allowed to play in the Indian wholesale debt market. Each FII has a limit up to which it can invest in these securities. The total aggregate limit on investments made by FIIs in this market has been kept at $1.5 bln.