Retail investors and capital market

Attract retail investors to Capital Market

The editorial is well written pointing out how and where SEBI has failed to fix capital market. It is a pity to note that only 5 percent of household savings are in shares and debentures ( Business Standard dated 12/09/12). The efforts from SEBI if any to increase the percentage of household savings in shares and debentures have not borne fruit only reflects the lack of seriousness, initiative and involvement  on the part of SEBI in this direction. The reasons for poor savings in capital market are basically financial illiteracy among the people, failure of banks to bring well to do people under banking fold, the reluctance on the part of corporates to attract and retain retail investors despite SEBI’s instructions to have minimum of 25 % of share holding by retailers, lack of corporate governance to compensate the retail shareholders adequately with good dividend and bonus shares and persistent inflation at very high levels making it difficult to save in shares where the rate of return and capital appreciation are not attractive enough. The SEBI and the Banks should put some joint efforts to educate the households and attract them to market by facilitating opening of bank and demat accounts without any hassles. The Corporates also have to do their bit to attract retail investors as a matter of policy.

(This comment was in response to the Editorial).