January - March 2015

Protecting Small Investors’ Interests For 140 Years

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BSE has been at the forefront of fund raising activities for the industry and protecting small minority investors for almost 140 years, Ashish Kumar Chauhan, MD & CEO, Bombay Stock Exchange (BSE), tells Kartik Sharma of Elets News Network (ENN)

Ashish Kumar Chauhan

Ashish Kumar Chauhan
MD & CEO, Bombay Stock Exchange (BSE)

BSE assumes a critical role in view of the Government of India’s stress on programmes like ‘Make in India’. How do you see the role of BSE in making India investor-friendly?

There are various aspects which need to be taken care of if we wish to make India investor-friendly and raise its ranking from 142nd to 5th or so as an investor-friendly state. It requires a robust framework for providing transparency to the investors and a mechanism for the entrepreneurs to raise funds.

India needs to create around 1.5 crore jobs annually for the coming 20 years, taking the number of new jobs to 30 crore. This can happen only if more and more new entrepreneurs come forward. Therefore, it is vital that funds are arranged for them through angel funding, venture capitalists, incubation and the main board. Therefore, we are working in all these areas. We are trying our best to ensure that no good project remains neglected. We have to create an ecosystem where these projects can flourish. BSE has been at the forefront as far as fund raising activities for the industry and protecting small minority investors are concerned for almost 140 years. So, this is the perfect time for BSE to find out what can it do for the country to nurture entrepreneurs. These entrepreneurs will create jobs in every walk of life.

Out of $600 billion dollars of the country’s savings, almost 30 percent is saved. Out of this, hardly 10 percent is given to financial instruments like banks, mutual fund companies, micro finance etc. We need to educate people so that they go for formal finance and get better returns for themselves.

We need to generate confidence among foreign investors to come and invest in India and protect minority investments. These measures are of utmost importance to the Government of India and the regulatory bodies. We need to instill confidence in them, so that they can park their money here. In the last 20 years, India has received only $225 billion investment and bought gold worth $200 billion in the last four years. We are expanding our gold holdings which are serving no purpose at all. The foreign investors have made small investments in India. Therefore, BSE assumes a primary role in raising those funds for the private sector and for the public sector, as also for the government.

According to many experts, lots of base activities are yet to be completed. So, when do you see the real action taking place?

In recent past, the government has taken various measures, which include the PM’s Jan-Dhan Yojna, Ordinance in Land Reforms, Ordinance in Labour Laws, Clean Ganga Project, Swachh Bharat Abhiyan, Beti Bachao etc. Our society has some critical issues which need to be solved. Unless this happens, the commercial policies will not be fully effective.

There were some loopholes in the system in the past. There were many policies which got the government nod, but no action followed. With the new government coming to power, a holistic approach for reforms has been adopted. There is a proper business framework in place now and the government has announced ordinances on the subjects of Insurance, Land Reforms etc. The challenges of the Indian society, such as contradictory archaic laws, red-tapism, etc., pose hindrances. The responsibility of reforms also lies with individuals or corporations, along with the government.

The concept of savings in India is at times restricted to household savings, or investments in gold, etc. How important is it to bring them in the banking fold?

Including unbanked under the purview of bank has many advantages in modern-day economies. The western economies did it early enough. Technology must be adopted in the way money is handled, transactions, etc., are made. The Jan-Dhan Yojna will allow subsidies to be transferred directly into the bank accounts of beneficiaries. It will help in smooth movement of people across the country and nullify the role of intermediaries. It is a phenomenal concept. In my opinion, if we are able to bring 11.5 crore households in the banking mainstream, that itself will increase the GDP of India by one or two percent points within five years. This will happen as a result of bringing the hidden wealth into the mainstream and channelising the subsidies into a framework which is more targeted. This will create a huge demand at the bottom of the pyramid which will create growth in consumer goods, need for infrastructure, housing etc. It can be a way to empower people.

India needs to create around 1.5 crore jobs annually for the coming 20 years… This can happen only if more and more new entrepreneurs come forward

What are the latest initiatives of BSE in terms of creating jobs, capital formation in India or creating formal finance?

every year across the country and reaches out to 3.5 lakh people directly. We use the print medium to expand our reach of people, educating them about Dos and Don’ts of investments. BSE also has a training institute through which it awards certificates. We have also set up an SME segment, in which we have 83 companies listed. This is our effort to bring small and medium entrepreneurs to the mainstream. We are also expanding our range of work from just stock exchange to derivatives, equity derivatives and currency derivatives. According to us, the SME market creates the highest number of jobs for every crore rupees invested.

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