Highlighting the long term growth prospects of the Indian stock market, Securities and Exchange Board of India (SEBI) Chairman U K Sinha urged small investors to invest in the same through mutual funds and pension schemes.
"Wage earners who can invest their small savings need not be cut off from the stock market but should look to invest small part of their savings. However, do not believe in hearsay and be aware of ponzi schemes. Do not invest directly in the stock market. Rather, invest through mutual funds and pension schemes that are registered with SEBI. For an emerging nation like us, where economy is growing at about 7.5%, it is quite obvious for industry and commerce to grow. As a result, people will also benefit from the share market in the long term," Sinha said in his keynote address during a financial literacy awareness programme in Ahmedabad on Thursday.
The awareness program was jointly organised by Indian School of Microfinance for Women (ISMW) along with Bombay Stock Exchange (BSE). Advising investors not to trust ponzi schemes and those who offer instant high returns, Sinha called for focus towards pension schemes and mutual funds. Citing the example of EPFO, Sinha said that participation of pension funds in India's capital markets is set to boost confidence towards share market.
"India's largest pension fund, Employees' Provident Fund Organisation (EPFO) has now agreed to invest 5% of its funds in the India capital markets. It is good to know that EPFO has expressed confidence in the regulations of SEBI," Sinha said, while adding that foreign pension funds too were reaping benefits of the Indian stock market.
In last six months alone, SEBI has received 150,000 calls on its toll-free number set up for handling such complaints.
Sinha said that in last three years, the regulatory body could not only bring down time taken to resolve a complaint from 155 days to 38 days but also witness reduction in number of complaints from 25000 to mere 5600 in three years.
Talking about action against fraudulent schemes, Sinha said the regulatory body has taken strict action against 200 companies which are not doing well or hurts investors' interests. "We have seized these companies' properties and now trying to give money back to investors by selling properties of these companies," he said.
Speaking on behalf of BSE, managing director Ashishkumar Chauhan too cautioned women investors from ponzi schemes.
Meanwhile, talking about the SME platform on the sidelines of the event, Chauhan said that depending on how economic activity picks up, more and more SMEs are likely to come to the platform to raise funds from BSE.
"Already 30 companies are in pipeline, of which 20 are from Gujarat. Some of the major sectors to be looked forward to are automobiles and technology sector, with companies like Foxconn coming in, along with heavy industries in the next 2-3 years. For the first time, in 2016 China will have less number of people coming into job market than in 2015. That is putting lot of pressure on their wages, making China very uncompetitive. Somehow that investment will start moving in to India. Many companies worldwide are looking seriously at India for setting up their plants, not only for India but also for exports," Chauhan said.
Talking about BSE's intention of setting up base at the Gujarat International Finance Tec-City (GIFT City), Chauhan said that while regulators like SEBI, IRDA, RBI have already issued their guidelines, tax related guidelines from the Ministry of Corporate Affairs were awaited. "As soon as they come, we will have to take views on what to do next," Chauhan added.