A well endowed domestic pension fund in India will be the panacea for a robust and sustainable capital market”. Speaking at the 6th Capital Markets Summit of Confederation of Indian Industry at Mumbai on 30 March, 2015, Chairman of Securities and Exchange Board of India (SEBI) mentioned that India does not have too many large domestic institutional investors who could invest in Indian capital markets. The Indian Capital Markets have a large corpus of Foreign Institutional Investment and there is a huge window for long term equity investment in the markets for domestic pension funds which will reduce the vulnerability of the Capital markets. Further the Chairman, SEBI urged the industry to look at National Pension System of Pension Fund Regulatory and Development Authority (PFRDA) as a social security option for their employees to ensure that large corpus of long term funds are made available for investment in Capital Markets. The budget announced last month has made investment in NPS even more attractive.
“In spite of the new government’s pro-development agenda, the enhanced investor confidence and a great budget, the primary markets in India have somehow not picked up till now”, iterated Mr U K Sinha. He categorically invited the Indian Industry to use the primary market route to generate capital especially as the world over, everyone is projecting the Indian Economy to grow at rates as high as 7% in the coming years.
Speaking about Alternate Investment Fund options available in India, Chairman, SEBI, said that the regulations related to Real Estate Investment Trusts (ReITs) in India are in line with some of the best in the world and as in countries like Singapore and the US, ReITS has the potential to take up a substantial chunk of the Indian Capital Markets as well. “SEBI is coming out with regulations on Municipal Bonds very shortly and these Bonds will play a very important role in the aspirational ‘100 Smart Cities’ mission of the Government”, said the Chairman, SEBI.
Mr Sinha also informed the gathering that SEBI is soon coming out with a discussion paper on “How to facilitate listing of start ups”, so that more and more new age technology companies look at Indian listing.
Speaking about the new regulations of the Companies Act 2013 dealing with Women Directors, SEBI Chairman, urged the Industry to ensure that there is complete compliance on this regulation as it reflects on the Corporate Governance aspect of the companies and non-compliance will surely send the wrong messages to the world.
Speaking at the same Summit, Mr Manoj Joshi, Joint Secretary, Financial Markets, Ministry of Finance said that the Budget of 2015-16 clearly states the objective of the government - investment required especially in infrastructure and to increase employment. “The government will increase investment in Infrastructure and through the budget has enabled private operators to increase infrastructure investment”, iterated Mr Joshi.
Development of Bond Markets in India is the foremost priority of the government but India does not have enough domestic pools of funds which invest in the Bond Market. There seemed to be a definite syncing of priorities of the Regulator and the Government as Mr Joshi said “Globally pension funds invest in capital markets and it is very important to develop pension funds in India”. As per the Joint Secretary, there is need to look at development of Long Term hedging market in India through Alternative Investment Funds. Mr Joshi also spoke about the importance of the Bankruptcy system which was announced during the budget. Speaking about the 1st International Finance Centre in India, Gujarat International Finance Tec-City (GIFT), Mr Joshi said that “IFCs across the world have evolved in different ways depending on the competence of the domestic system, needs of the economy and tax arbitrage. The Government is looking forward to work very closely with the Industry, on how to evolve GIFT to the best standards across the globe.
Addressing the CII 6th Capital Markets Summit at Mumbai, Mr Ashish Kumar Chauhan, Managing Director and CEO, Bombay Stock Exchange said that the Indian Financial Infrastructure is going to change dramatically over the next 2-3 years with the advent of moving the independent financial sector regulators under common regulations through Financial Sector Legislative Reforms Commission (FSLRC) recommendations and the setting up of IFC at Gujarat.
Mr Nimesh Kampani, Chairman, CII National Committee on Capital Markets and Chairman, JM Financial Group, said that, “With the Government focusing on encouraging ‘Make In India’ and pushing for faster infrastructure development, the focus now needs to be on reviving investments in order to achieve the desired goal”.
During the Summit Mr U K Sinha released CII report on “Globalization and Development of Indian Capital Markets”. The report gives a clear emphasis on the need to evolve investment and finance structures, merging capital markets and other markets to have uniformity in the Indian Financial Markets and evolving India as an offshore International Financial Centre to take the Indian markets to the next level.
Mr Chandrajit Banerjee, Director General of CII, in his introductory remarks said that “Industry and financial sector, including both domestic and foreign investors are quite upbeat about ‘The India Growth Story’ and analysing India’s current position, there is a greater need for capital to foster economic growth”. CII believes that deeper and mature capital markets stimulate economic growth by facilitating capital formation through efficient mobilization of savings and making those available for productive investments and developmental purposes.
“India is on the cusp of becoming an engine for global economic growth. We need to have the right structures for raising funds from onshore and offshore investors to finance the capital needs and ultimately position India as a natural choice as an International Finance Centre” said Mr Atul Joshi, MD and CEO, India Ratings and Research.
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