In a meeting with Sebi next month, they would push for increased awareness about markets in rural areas
Dismal reach
2.54 crore-- demat accounts with depositories
1.46 crore – accounts managed by NSDL
1.08 crore – accounts under CDSL belt
The Securities and Exchange Board of India (Sebi) is planning to go big on increasing retail participation in capital and commodity markets and bringing in changes in the Rajiv Gandhi Equity Saving Scheme.
After an initial meeting with stock brokers, the regulator has called all registered investor associations, 19 of them, on May 17.
In last few years, it is the first time that Sebi has given a chance to investor associations to set the agenda for the meeting. It has mentioned in letter that focus would be on increasing retail participation in equity and commodity markets.
An association member told dna, "We will discuss new products for retail investors which will increase their participation, which is currently very low".
Investor associations said they would discuss measures for increasing penetration for retail investors. They will give suggestion on increasing awareness about equity and commodity segments to retail investors in rural areas. They are planning to highlight some innovative products that attract small investment in the capital market.
That the participation by retail investors is low in the country is a cause of concern for the regulator. Data with the depositories shows that the total number of demat accounts was pegged at 2.54 crore as on March 31. While NSDL manages 1.46 crore demat accounts, CDSL has 1.08 crore accounts under its belt.
Despite repeated efforts, Sebi did not respond to dna's queries.
Investors associations said they would like to advice Sebi for taking support of local bodies to crack down chit fund scams in rural areas. The associations feel that the chit fund scam is hurting sentiment of retail investors and it is deep-rooted in rural areas. Retail investors have been easily targeted by chit funds for higher returns. Sebi had banned many chit fund companies but they are still operating under new titles.
An association member, who is primary market member, told dna, "Sebi has to stop chit funds in rural India and it is not possible without local support".
Suspension of trading of companies on exchange without adequate and detailed notice causes apprehension in the mind of investor. A Mumbai-based association member said, "We will ask regulator to make proper guidelines for suspending scrips and give proper chance to retail investor for exiting."
Investor associations said they would also raise the issue of brokers' default in recent past. More than five brokers have been defaulted in last two years. However, investors are facing difficulty in getting money back from investor protection fund of exchanges.
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