The edit “Wasted efforts” (September 12) aptly points out how the Securities and Exchange Board of India (Sebi) has failed to fix capital markets. It is a pity to note that only five per cent of household savings are in shares and debentures. The reasons for poor savings in capital markets are: financial illiteracy among people, the reluctance on the part of corporations to attract and retain retail investors despite Sebi’s instructions to have a minimum 25 per cent shareholding by retailers, lack of corporate governance to compensate shareholders adequately with good dividend and bonus shares, and persistently high inflation that makes it difficult to save in shares since the rate of return and capital appreciation are not attractive enough. Sebi and banks should make joint efforts to educate households and attract them to markets by facilitating the opening of bank and demat accounts. Corporations also have to do their bit to attract retail investors as a matter of policy.
T V Gopalakrishnan Mumbai
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