Further to the wide-ranging reforms unveiled on Thursday by the Securities and Exchange Board of India (SEBI) to prop up mutual funds and other market segments, Finance Minister P. Chidambaram, on Friday, indicated that the market regulator is expected to announce a fresh set of reform measures next month in keeping with the government’s bid to encourage investment in financial instruments instead of in gold.
In a statement, while lauding the reforms announced by the market regulator, which have been welcomed by all stakeholders, Mr. Chidambaram noted that he had requested SEBI Chairman U. K. Sinha to look into a number of other suggestions for the benefit of investors. The measures already announced, he said, “will stimulate financial savings among households as well as give a fillip to the mutual fund industry. More and more households should be encouraged to save in financial instruments rather than in gold.”
Referring to his discussions with Mr. Sinha on August 14, Mr. Chidambaram said: “There are a number of other suggestions which are under consideration by the government…I had requested him to examine those suggestions independently and advise me. The examination by the government and SEBI is likely to be completed in the next two weeks. I have requested the SEBI Chairman to schedule another meeting of the board in early September when some more decisions can be taken on the suggestions that are under examination.”
The Finance Minister also noted that he expected the government to take a decision soon on SEBI’s recommendation to provide tax benefits to equity mutual fund investors under the proposed Rajiv Gandhi Equity Savings Scheme (RGESS) that was announced in the budget for this fiscal. “I expect that it would be possible to take a decision shortly,” he said while pointing out that the government has taken note of the recommendation on the RGESS and he has asked the capital markets division in the Department of Economic Affairs (DEA) to examine it.
With SEBI gearing up to reform mode and announcing a slew of decisions after a single board meeting on August 16, Mr. Chidambaram also sought to recall his statement on August 6. “In the next few weeks, we will announce a number of decisions to attract more people to invest in mutual funds, insurance policies and other well-designed instruments…In the context of that statement (of August 6), the government welcomes the decisions taken by SEBI,” he said, marking a fulfilment of his commitment in this regard.