G-Secs Should Be Issued In Demat Form For New Retail Investors: SEBI Chairman

SEBI Chairman, Mr Ajay Tyagi emphasized on the need to increase the participation of new retail investors in the capital market. We have seen a huge surge in participation of retail investors in the equity market in the last few months. The fact that there is also a surge in opening up of demat accounts suggests that many of these retail investors are perhaps first-time investors in the stock market, he added. With a view to facilitating a smooth and welcome entry of these newcomers to the capital markets, it would be ideal that they begin their journey by first investing in risk free G-Secs. The issuance of G-Secs in demat form, apart from easing the process of making investments by non-institutional participants in these securities, may also facilitate easier raising of the borrowings.

In order to further improve the corporate bond and G-Secs market, Mr Tyagi said that there is an inter-linkage between the corporate bond market and G-Sec market. The required reforms in the corporate bond market should be brought in without any further loss of time. Mr Tyagi also said that the market infrastructure for corporate bond and G-Sec markets should be integrated. Having two separate ecosystems results in artificial segmentation of investors and divergent governance and regulatory norms for institutions in the two markets performing similar functions, he said. Highlighting the potential of Indian financial market, Mr Tyagi said that we are passing through difficult, stressful and uncertain times. However, the challenges also bring along with them several opportunities.

In a bid to provide relief to companies affected by COVID-19, Mr Tyagi said that SEBI has issued a number of relaxations to facilitate fundraising by the corporates. SEBI has come out with relaxed norms for preferential issue pricing and exemption from open offer for eligible stressed companies. These relaxed norms, finalized after wide public consultation, can be used for restructuring of stressed companies without going through the IBC process. Of course, the guidelines have due safeguards built-in to prevent misuse, he added.

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