Democratising equity market is all about digitisation, says Sebi chief Buch

Over the next 10 to 15 years, the REIT, INVIT and muni bond market will be as large as our equity markets, says Buch

Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch on Wednesday said that democratising the equity market is all about digitisation and enabling easy entry and exit for small investors.

Delivering her address at The Rising Bharat Summit 2024, Buch said that in a large part of any industry, product or service, there are many people who encourage someone to enter. However, the question one needs to ask is whether they have equal access and as much service when they wish to exit.

“To me, democracy needs to encompass not just the ease to come in but the ease of being served right through the life cycle of being an investor. And indeed, the ease of going out,” said Buch.

 

The Sebi chief said real estate investment trusts (REITs) are the products of the future and to democratise them, we need higher levels of disclosure and compliance.

Buch said Sebi enabled small and medium REITs so that a larger section of the population could benefit from demand in the real estate sector.

“Our back-of-the-envelope calculation tells us that over the next 10-15 years, REITs, INVITs and muni (municipal) bonds will be as large as our equity market today,” said Buch.

Speaking about how MF Central, a unified platform for all mutual fund-related needs, has made mutual fund investing hassle-free, Buch said, “It's not just about buying through a single window that everybody does because of their own commercial interest. It's about the fact that there is a single window to be served during your entire life cycle of holding mutual funds, which is truly phenomenal. It's about the fact that the entire industry came together and offered this and said this is not a space where we need to compete. This is a space where we need to collaborate. And that's what creates democratisation.”

She said Sebi is working to make financial products accessible to everyone by making Rs 100 systematic investment plans (SIP) profitable for the mutual fund players.

“We as regulators know that unless it is viable, it will not be pushed. So, we are working very closely with the industry to identify all the costs, including some of the regulation-driven costs, that are making this unviable,” said Buch.

Stressing the need to ease grievance redressal, Buch said Sebi will launch a new version of Scores 2.0, a grievance redressal system that was rolled out in June 2011 to help investors lodge complaints online with Sebi.

Terming mutual funds as Sebi's favourite tool for financial inclusion, Buch said the number of unique mutual fund investors has multiplied from 10 million to 44 million in the last 10 years.

Buch said India's bond markets are equally vibrant as its equity markets.

“If you compare the total bonds outstanding today to the total banking loans to the corporate sector, it amounts to 60 per cent. This means for every Rs 100 that the banking system gives corporate India, the bond market gives Rs 60,” Buch said.

Buch added that there will be more interest in bonds in the coming indices as Indian government bonds have been added to global indices.