Recommendations on Indian Capital Market Reforms
Recommendations on Capital Markets Governance & Investor Protection
1
Recommendations
1. CAPITAL
MARKETS
–
CHALLENGES,
OPPORTUNITIES
FOR
INNOVATION During the discussion on Capital Markets – Challenges, Opportunities for Innovation, the experts suggested as under: Expand the retail investor base - For a developed Capital market, there is need to expand the participation of retail investor and also enhance the investor morale and domestic allocation. Following are the suggested areas to be focused to
increase the participation of retail investors : • Reduction in the complexity and cost of opening dematerialised accounts to encourage people beyond the top-10 centres i.e Metros and ‘A’ Grade Cities to invest directly in equities. • Increased investor education and awareness in semi-urban centres to cover each and every corner of the country. It is necessary to increase the awareness among general public in rural area as they are less aware. Investor Camps / Investor Awareness Programmes should be organized on continuous basis.
2
• Appropriate measures should be initiated to make financial services companies to focus on ethical selling practices and enhanced disclosures. • Indirect Investor participation should be enhanced through mutual funds and long-term retirement products. • High net-worth Non-resident Indians (NRIs) should be targeted by facilitating account opening and introducing reforms to simplify profit repatriation. • Class Action Suits should be introduced against erring corporates. Special courts should be assigned to deal with these matters. • Market Making should be made compulsory in all illiquid stocks on the same lines as it is applicable to SME Platform of Stock Exchanges at present. • Stringent Rules/ Regulations be introduced for better monitoring of companies post IPO/FPO for use of funds. There should be provision for refund in case the discrepancies are noted. Target Tier II and Tier III cities - The share
1
Recommendations
1. CAPITAL
MARKETS
–
CHALLENGES,
OPPORTUNITIES
FOR
INNOVATION During the discussion on Capital Markets – Challenges, Opportunities for Innovation, the experts suggested as under: Expand the retail investor base - For a developed Capital market, there is need to expand the participation of retail investor and also enhance the investor morale and domestic allocation. Following are the suggested areas to be focused to
increase the participation of retail investors : • Reduction in the complexity and cost of opening dematerialised accounts to encourage people beyond the top-10 centres i.e Metros and ‘A’ Grade Cities to invest directly in equities. • Increased investor education and awareness in semi-urban centres to cover each and every corner of the country. It is necessary to increase the awareness among general public in rural area as they are less aware. Investor Camps / Investor Awareness Programmes should be organized on continuous basis.
2
• Appropriate measures should be initiated to make financial services companies to focus on ethical selling practices and enhanced disclosures. • Indirect Investor participation should be enhanced through mutual funds and long-term retirement products. • High net-worth Non-resident Indians (NRIs) should be targeted by facilitating account opening and introducing reforms to simplify profit repatriation. • Class Action Suits should be introduced against erring corporates. Special courts should be assigned to deal with these matters. • Market Making should be made compulsory in all illiquid stocks on the same lines as it is applicable to SME Platform of Stock Exchanges at present. • Stringent Rules/ Regulations be introduced for better monitoring of companies post IPO/FPO for use of funds. There should be provision for refund in case the discrepancies are noted. Target Tier II and Tier III cities - The share