SEBI sets up Panel to look into working of Corporate governance: Tyagi
Published: Sep 07, 2017
The Chairman, Securities and Exchange Board of India (SEBI), Mr. Ajay Tyagi, yesterday expressed great hope and optimism for Indian capital markets. Speaking at the inaugural session of 14th CAPAM, the Annual Capital Market Conference organised here on September 6, 2017, by Federation of Indian Chambers of Commerce and Industry (FICCI), he informed that in 2016-2017, the public offer equity was Rs. 32,520 crore, posting a growth of 70% over that of 2013-14 and the current year promises even more action. This success could be attributed to stable macro-economic fundamentals, political stability and the structural reforms that the present government has been endeavouring towards over the last 3 years.
Mr. Tyagi also cited other upward trends that were corporate bonds and mutual fund investments, which he described as the 'backbone of the investment mechanism in capital markets'. There is an upward trend in equity oriented mutual funds, which is very encouraging. If public markets have to sustain, they must satisfy some broad conditions. Corporate governance is extremely important, and much needs to be done on this front. A committee has been set up to look into this, and its report is expected shortly.
The SEBI's mandate on disclosure of voting policy by institutional investors has yielded desired results. Another important issue is the stewardship code. With the institutionalising of markets, institutional investors need to play a role in the governance of their investing companies. SEBI would like uniform norms for all institutional investors, said Mr. Tyagi.
The market integrity is also very important, it is necessary to prevent fraudulent and unfair trade. Other issues that the Chairman flagged up were 'ease of doing business' and 'materiality of disclosure, and sanctity of financial statements'. Fintech is changing the way financial markets function, and the regulator is faced with new challenges. A committee is advising SEBI on an ongoing basis in this regards.
The Senior Vice President, FICCI and Chairman & CEO, Edelweiss Group, Mr. Rashesh Shah, said that the last few years have seen very important trends such as financialisation of savings, where mutual funds have played a big role. This is very important for capital markets. Capital markets are now complementing the banking system. With the expansion of asset class bond markets, currency futures, and the commodities market, they are poised to become multi-asset class. Even real estate will become part of capital markets.
Mr. Rashesh informed that fall in interest rates is also important in driving financialisation. Another important trend that he highlighted is democratisation of credit, observing that the bond market is growing at more than 30% per year. He called upon capital markets to make use of this trend and ensure that credit also gets democratised. With the growth of retail, Domestic Institutional Investors (DIIs) have become more important than FIIs.
The Chairman, FICCI Capital Markets Committee, Mr. Sunil Sanghai, observed that barely last October, the 13th CAPAM conference talked about achieving a market capital of 1.5 trillion dollars. Less than a year, later, that figure has crossed 2 trillion dollars. A combination of a stable macro-economy and political situation could facilitate low interest rates, low inflation, and a stable currency. Liquidity from domestic investors brought stability to the markets. In such a situation, 'a vigilant and proactive regulator is important', he pointed out, observing that the new SEBI leadership touched on very important issues in a span of 6 months.
