The Securities and Exchange Board of India (Sebi) wants to increase retail participation in the capital market and enhance the penetration level of the equity market across the country. In this endeavour, the capital market watchdog has called for a meeting with top office-bearers of broker associations to deliberate on ways to achieve it.
According to persons familiar with the development, the meeting will be attended by representatives of BSE Brokers’ Forum and the Association of National Exchanges Members — the two leading bodies representing the top brokerages of the country. Sebi chairman UK Sinha will also be present at the meeting.
“The meeting has been fixed for April 21 and the agenda includes discussing ways to increase retail participation and spreading the equity investment culture across the country,” said a top official of one of the broker bodies. He declined to be identified as discussions are yet to take place.
“Sebi has made it clear that only broad proposals for achieving the aim would be discussed and operational issues will be taken up separately later. The number of demat accounts has increased at a very slow pace over the years and that is a matter for concern for the regulator as well,” he added.
All individuals need a demat account to trade in the capital market. Brokerages help investors open such accounts with depositories like the National Securities Depository Ltd or the Central Depository Services (India) Ltd.
Data with the depositories show that the total number of demat accounts was pegged at 2.54 crore as on March 31. While NSDL manages 1.46 crore demat accounts, CDSL has 1.08 crore accounts under its belt.
Incidentally, the capital market regulator has expressed its concerns on numerous occasions that the number of demat accounts in India is a paltry two per cent of the total population and has not grown at a healthy pace over the years.
According to monthly statements from NSDL and CDSL, the number of demat accounts increase by only a few thousands every year. For instance, NSDL had 1.35 crore demat accounts in December 2014, which grew to 1.38 crore in March 2015 and is currently pegged at 1.46 crore.
The concerns also stem from the fact that there has been no significant growth in the number of demat accounts even as the government has increased the penetration of bank accounts through Pradhan Mantri Jan Dhan Yojna. It has been reported that the scheme has been able to cover nearly 99 per cent of all households in India.
The issue of enhancing the penetration level of the securities market also featured in the recently-concluded annual brainstorming session of Sebi held from April 6-8 at Lonavala, near Mumbai.
Concern over the number of demat accounts in India being a paltry 2% of the population
