The importance of developing domestic bond markets is to diversify risks in the financial system. The basic philosophy of developing a diversified financial system with banks and non-banks operating in equity markets and debt markets is that it enhances risk pooling and risk-sharing opportunities for investors and borrowers. In the absence of a debt market, the banking system would be larger than it otherwise should be. Prevalence of a vibrant domestic debt market can move a crisis outside the banking system, making it easier for the government to manage.