Create financial awareness, make stock market accessible to everyone: Tyagi

Says Regulators and the govt will have to constantly engage with stakeholders to achieve it

The Securities and Exchange Board of India (Sebi) wants the stock market to become accessible to everyone by creating financial awareness, not through tax incentives. 

“Some say to get people into capital markets, there should be some support in terms of tax. I am not in favour of any tax concessions. People should come into the market through awareness,” said Ajay Tyagi, chairman of Sebi, at a felicitation ceremony of the National Financial Literacy Assessment Test (NFLAT) at the National Institute of Securities Markets.

Only two per cent of the population invest directly in  stock markets.

“India is a huge country and if there is participation from only some areas, something is not correct,” Tyagi said, adding the regulator was planning more investor awareness programmes. It is also in discussion with the government to make financial education a part of schools’ curriculum.

“People across the country should invest in equity market, and not just those from Mumbai and Ahmedabad. Every segment should have an opportunity to participate in the financial sector,” the Sebi chief said.

An investor survey by Sebi-Nielsen showed 90 per cent of  households prefer bank deposits, while less than 10 per cent prefer stocks and mutual funds. In rural areas, less than two per cent prefer stock market-related investments. 

The survey revealed many people think trading in derivatives was safer than bond market investments, indicating a lack of financial awareness. 

Tyagi said the use of technology in the financial sector was emerging as an important area. 

Demonetisation has led to increased use of digital transactions and people have to understand the new financial instruments available and how these are getting integrated with the financial world.

Regulators and the government will have to constantly engage with stakeholders to increase financial literacy, he said. Tyagi also announced that NFLAT would be available through the year.