The Rising Bharat Summit 2024 commenced with fervour in New Delhi on March 19th, heralding two days of dynamic discourse and visionary insights into Bharat’s burgeoning influence on the global stage. Spearheaded by prominent voices such as SEBI Chairperson Madhabi Puri Buch, the summit embarked on a journey to explore the democratisation of capital markets, a pivotal aspect of Bharat’s ascent as a global powerhouse.
In her illuminating address, Madhabi Puri Buch underscored the significance of democratising access to capital markets, emphasising how online share trading empowers all traders with equal rights to participate in buying and selling shares. She shared anecdotes revealing the profound impact of inclusive market practices, exemplified by her conversations with small traders, which highlighted the importance of access to selling shares.
MF Central
Buch shared that Zerodha co-founder Nikhil Kamath has household help and he wanted them to participate in the growth of the country, and market and create wealth for families. He said I will invest on their behalf but when I am not there and they need to exit, who will be there to serve them? They will be lost in this world, said Madhabi Puri Buch.
“One day, Sebi showed him a demo of MF Central… the global forum IOSCO cannot believe that an entire industry has come together to say that investors will be served from a single window. MF Central is a single window to be served for your entire cycle of holding that. It is not just that technology enables it, it is about that the entire industry came together to collaborate. That is what creates the democratisation,” she added.
She also said that Sebi is looking to do sachetisation of financial products. The entire industry is coming forward to support this.
Rs 250 SIP
“We are working with the MF industry to identify the costs involved that makes Rs 250 SIP unviable. Hopefully, we will soon have MF sachets with Rs 250 top ups,” she added.
“We are going to launch SCORES 2.0 in early April, in which the way to handle investor complaints is completely automated,” said Sebi chief.
“We have to make it easy for an investor (a smaller investor). Now if he just puts in his PAN number, our system speaks to the KRA and pulls out his details. Simplifying the registration of a complaint and linking it to taking it to an online dispute resolution mechanism is something that has been digitised. The objective is to democratise dispute resolution for investors, without this it is just lip service,” said Buch.
REIT
Buch also said that REITs, InvITs and Municipal Bond market will be as big as India’s equity market. 1x of the country’s GDP. One of my favourite products for the future – REITs, said Buch. Mutual funds are our favourite product for financial inclusion, she added.
“One of the things that worried people about the bond market concerned liquidity drying up. Something absolutely sparkling that this government has done and has gone unnoticed is that it has put in place a backstop facility (Rs 30,000 crore) when there is stress in the market and the mutual funds get stuck. This is a very important step the government took,” said Buch.
“We have a vibrant bond market. The secondary market in the bond market is not very vibrant and we are working on it. If we look at the primary market… for every Rs 100 that the banking system gives to corporate India, the bond market gives Rs 60. We are expecting the bond market to grow much more,” said Buch.
“This is important because the product was always there in the market but it was not getting used. The exchanges were focused on equity and did not have the management bandwidth to eat, dream, drink, and breathe the bond market. So, we created a whole new institution (Corporate bond repo clearing corporation). We were told it would be very difficult and it was done with the collaboration of the industry.”
“In order to democratise REITs, we need higher levels of disclosure and compliance. Again, the cooperation we got from the industry (was unbelievable), they all agreed to (higher disclosure norms) …. as a result, we could launch small and medium REITs.”
Buch said, “With democratisation (of various segments) we can say that this market is contributing to capital formation for the real economy, that’s where the driver of growth is going to come from and at the same time it is creating wealth for investors. That is all thanks to the democratisation of the capital markets.”
Seamless Change
Buch said, “If a person got the news of a dear one passing away, there is grief. At a time like that, for us to give the investor the runaround and not give him access to assets of his parents, it is the most appalling thing possible.”
“Full credit to the entire market ecosystem (for finding a solution). Around 50-odd legal heads arrived at a common set of documents they will all accept. Now, if a person goes online and submits one set of transmission documents, across the entire market system (all MFs, all depositories, etc.) nobody will ask you for another document.”
“If the regulator cannot empathise with loss, we need to have our heads examined,” she added.