Indian stock exchanges need to further reconcile their regulatory functions with market interests in order to protect and promote the interest of retail depositors, Niti Aayog Vice Chairman Rajiv Kumar said on Wednesday.
Addressing National Stock Exchange of India’s (NSE) silver jubilee celebrations here, Kumar also urged domestic capital markets to bring about better reconciliation between the Indian spot and derivative markets so as to win the confidence of small investors.
“Our exchanges perform regulatory functions and here they need to consider if there is a trade-off between that and profit maximisation,” he said.
“This is required to protect the interest of the retail depositors so that the markets can go ahead with the work of inorganic growth.”
The Niti Aayog Vice Chairman said that a reflection of the situation is seen in the fact that despite the best efforts of the NSE, only two per cent of Indian households have come into the capital market.
“In the common Indian mind, the stock market is still a Satta (gambling) bazaar over which they have no control… a place controlled only by the big players,” Kumar said.
“The NSE should aim like it is in the US, for instance, where 40 per cent of the households are involved in the capital market.”
Kumar noted in this regard that the size of derivatives trading in India is more than 40 times the “underlying equity trading” and called for better reconciliation between the two to boost retail investors’ confidence in the stock markets.
“While the stock exchanges have done a great deal to bring the SME segment of the economy into the capital markets, the bourses need to do more to integrate more small and medium enterprises with the capital market,” Kumar said.
Former Prime Minister Manmohan Singh, who was the Finance Minister when the NSE was established in 1994, was also present on the occasion, along with Transport Minister Nitin Gadkari and Delhi Lieutenant Governor Anil Baijal.
President Ram Nath Kovind, who was unable to attend the event owing to other engagements, sent his address which was read out at the event.
The NSE also unveiled its new logo on the occasion.