Sebi proposes overhaul of household savings calculation in securities mkt

In FY23, share of such assets came to Rs 84 trn, which was in sharp contrast to RBI's computation of Rs 23.6 trn

The Securities and Exchange Board of India (Sebi) has proposed changes to the methodology for computing household investments in the securities market, aiming to capture the true extent of such savings.

The regulator on Wednesday released a working paper, which stated that household savings going into the securities market aren’t fully captured under the current methodology of the Reserve Bank of India (RBI).

The paper states that under the new methodology, household investments in equities will come to Rs 127.8 trillion for the financial year 2023-24 (FY24). In FY23, it came to Rs 84 trillion against the RBI's computation of Rs 23.6 trillion, a stark difference of Rs 60.15 trillion.

 

Sebi has proposed three changes in the computation methodology — expanding the investor categories, inclusion of new asset classes and some components absent in the existing methodology.

In the category of investors, Sebi has proposed the inclusion of all individuals, Hindu undivided families (HUFs) and non-profit institutions serving households. These include trusts and non-government organisations (NGOs), irrespective of the extent of income or investments.

In investment instruments, it has proposed the computation by including actual amounts instead of assuming a percentage of the total investments.

For example, for household investments through primary issuances, the RBI only computes 35 per cent of those issues in the equity segment and 40 per cent in the debt segment as being mobilised from individuals and HUFs.

When calculating household investments in mutual funds, net flows into MFs and exchange-traded fund (ETF) transactions in the secondary market will also be considered and not just net flows into MFs.

The assets under management (AUM) have to be taken as at the end of the financial year.

Furthermore, investments into new asset classes, such as infrastructure investment trusts (InvIT), real estate investment trusts (REITs), alternative investment funds (AIF), preferential issuances in the primary market, and offers for sale (OFS) executed through stock exchanges are to be included from here on.

Data about resource mobilisation in primary markets will be sourced directly from the Association of Mutual Funds in India (Amfi).

For rest of the segments, issue and allotment details will be collected from the stock exchanges. This will then be shared with the depositories for data extraction.

Secondary market transaction data will be collected on a net basis from the three stock exchanges — National Stock Exchange (NSE), BSE and Metropolitan Stock Exchange of India (MSEI).

The holding value of stocks will be sourced from Amfi, depository firms National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), the paper states.

The regulator said it could provide granular data for computation to the RBI, which can give it to the Ministry of Statistics and Programme Implementation (MoSPI). MoSPI is the designated body for publishing data on household savings through its National Accounts Statistics.