Financial awareness, and not tax incentives, is required to bring in more investors into the capital markets, SEBI Chairman Ajay Tyagi today said.
"People should be (financially) aware. To take everyone along and to help them understand the potential of the market is a big task," he said.
Tyagi was speaking at a function organised at the National Institute of Securities Markets (NISM) campus at Patalganga near Navi Mumbai.
"Some people say to get people invest into capital markets, there should be some support in terms of tax. I don't support this," he added.
Noting that it is crucial to spread financial literacy across the country, the senior IAS officer said, "India is a huge country and if there is participation only from some areas then something is not correct."
He said people across the country should invest in the capital markets, and not just those from Mumbai and Ahmedabad.
Pointing to a SEBI survey where investors thought derivatives are a safer instrument than bonds, the SEBI chief said the finding was disturbing.
"The capital market are booming but if only some people participate in them, then it is unfair and wrong," said Tyagi, who took over as the SEBI chairman last month.
The function was organised to felicitate the winners of National Financial Literacy Assessment Tests (NFLAT).
NFLAT is conducted across the country for school students. So far, nearly five lakh students have taken the NFLAT since its inception and close to 4,000 schools have participated in the tests.
The Sebi chief today announced that NFLAT, held under the aegis of National Centre for Financial Education (NCFE), would be available through out the year.
He said financial literacy has become important in the present-day context with many products available for investors and some of them becoming increasingly complex.
"Financial education and awareness help individuals do planning to achieve their financial goals, understand the risks involved in various financial products, ultimately contributing to their financial well-being," Tyagi said.
Financial awareness also helps investors keep away from ponzi schemes (which promise very high return on investment), he said.
Besides, financial education has become even more important due to increase in digital transactions post- demonetisation, the SEBI chief said.
Numerous apps and alternative instruments for investors have come up. It is extremely important to keep pace with these developments in order to reap the benefits of technology, Tyagi said.
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