India's investor base could double in 3-5 years, says Sebi chairman

Sebi chief says India could see its investor base double in three to five years, backed by strong economic fundamentals, rising household participation and a regulatory push for safer market access

India’s unique investor base could double over the next three to five years as equity participation remains significantly underpenetrated, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey said on Monday.  Pandey emphasised that sustained economic expansion will be critical for channelling a larger share of domestic savings into capital markets. “Going forward, this growth is the main reason how we would be able to deploy our internal savings into our capital market,” he said at the CII National Financing Summit.  He noted that Indian households and domestic institutions together now hold a larger share of listed equities than foreign portfolio investors (FPIs), with the country home to about 135 million unique market participants.  Why is rising household awareness vital for market growth?  A recent nationwide Sebi survey showed that 63 per cent of respondents are aware of the securities market, but only 9.5 per cent of households currently invest. Another 22 per cent are considering entering the markets within the next 12 months — a trend Pandey said places a “very big responsibility” on regulators, issuers and intermediaries to ensure safety and quality of offerings.  How resilient are India’s markets amid global uncertainty?  Pandey said India’s capital markets remain supported by strong domestic fundamentals and rising household participation, even as global uncertainties — including concerns around potential corrections in the US market — pose risks.  “There will always be external risks, whether trade-related or from global financial markets. But India’s growth story is supported by solid fundamentals, demographics, a deep talent pool, and sustained public and private investment. These factors, combined with investor trust, act as a shield against shocks,” he said.  What systemic risks are regulators tracking?  He added that Sebi continues to work closely with the Reserve Bank of India on models that track interconnected risks, including liquidity stress and redemption pressures in mutual funds.  How is Sebi approaching AI, algorithms and tokenisation?  On the rapid adoption of AI, algorithmic systems and tokenisation, Pandey said Sebi’s regulatory stance is anchored in “innovation with responsibility and accountability.” Innovation, he said, is “unstoppable,” and regulation must evolve dynamically to de-risk emerging technologies without stifling progress.  What risks accompany the surge in digital market participation?  He also cautioned that as digital participation rises, so does exposure to cyber fraud. Ensuring that new investors enter the market safely and responsibly, he said, will be key to lifting India’s capital markets to “a different level” over the next five years.