“Challenging to achieve Government’s target of investment in Infrastructure unless bond market is adequately developed”, SEBI Chairman, Ajay Tyagi

The Securities and Exchange Board of India, Chairman believes that development of bond markets is necessary to help the Government to achieve its target of investment in Infrastructure.

“It would be a challenging task to achieve the Government’s target of achieving Rs 100 lakh crore investment in Infrastructure by 2024-25 unless the bond market is adequately developed,” said the SEBI Chairman, Shri Ajay Tyagi while addressing the Inaugural session at the 11th edition of the CII Financial Markets Summit which is being organized on 21-22 October.

While elaborating on the theme of one of CII’s flagship events this year, the Chairman said that it is a misconception to think that reforms could take place only when there was a problem with the existing system or that reform only means radical changes by Government or the Regulators. Reforms, he added, was not just limited to fixing a broken structure but also includes incremental changes. He further iterated that SEBI’s approach towards reforms has been progressive, open-minded and forward looking.

The SEBI Chief further mentioned that the recovery in capital markets after the initial hit by the pandemic has been broad-based.

“We have observed that recovery has been broad-based. It is not only the large cap, but the mid and small cap shares have also recovered since the low hit in March 2020,” Shri Ajay Tyagi said.

The corporate bond market needs to become more robust because there is an urgent need to diversify funding requirements from the banking sector, the Chairman said.

The Chairman also addressed the increase in independent directors’ resignations in the last two years and urged them to come forward and flag concerns if related to corporate governance.

Speaking about the role of other stakeholders in reforms, the capital markets regulator said that all stakeholders need to play equally important role towards the reformation of the financial markets.

“While I talked about the reforms brought in by SEBI, it backs the question as to why the term ‘reform’ is almost always been associated with the Government or the regulators. We believe that other stakeholders need to play equally important role in reforming the financial markets,” the SEBI Chairman said. The SEBI Chair also acknowledged that illiquidity in the bond markets was an issue and that it needed long-term solutions.

Addressing the Inaugural session at the CII Financial Markets Summit was also Mr Uday Kotak, President, CII who began by complimenting SEBI on taking “unprecedented decisions in record time to ease the pain of COVID and giving much needed regulatory relief to all segments of the capital market.”

Mr Kotak further added “reforms in the securities market need to focus on fundamentally encouraging delivery-based customers, who buy on cash basis.”

“SEBI has taken many steps to support the broking industry and improve the quality of the broking industry. Simplification of account opening through e-KYC is a true game-changer for broking, depository participants and mutual funds businesses,” the CII President added.

On the LODR guidelines for listed companies, Mr Kotak asked SEBI to look at how it can ease areas for promoters’ reclassification. He also suggested SEBI to review Open Interest limits, particularly for large institutional investors, which were put in place in March.

Earlier in the Summit, Mr Chandrajit Banerjee, Director General, CII delivered the welcome address and thanked SEBI and the industry for their continued support towards CII. He added that it was necessary to get the country back on its growth trajectory and to re-shape businesses through adequate financing options.

Delivering the theme address at the Summit, Mr Nilesh Shah, Chairman of the CII National Committee on Financial Markets said India could convert the crisis induced by the COVID-19 pandemic into an opportunity by becoming Atmanirbhar, becoming the manufacturer to the world or we could become an Agricultural powerhouse. However, he added, that any reform now would require investments and without investments it would not be possible to turn around growth. “Indian savings and offshore savings need to channelizedd for productive investments which can create our dream of India,” Mr Shah said.

Later, Mr Vishal Kampani, Co-Chairman of the CII Financial Markets Committee delivered the vote of thanks.