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Financial literacy programme to empower small investors

business Updated: May 20, 2010 20:39 IST
Mahua Venkatesh
Mahua Venkatesh
Hindustan Times
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What is a share? What are the rights of minority shareholders? What is the risk in buying equities?

If you wanted to know the answers to these questions, help is on its way. With a view to increasing retail participation in the stock market, the government along with Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) has decided to embark upon a massive campaign to increase awareness among retail investors.

As many as 3,000 programmes will be held this year to boost the level of awareness and confidence among investors.

"We want every investor to be well informed about the risks and advantages of investing in the stock market and in order to do so we have decided to hold an intense awareness programme," R Bandyopadhyay, secretary, corporate affairs told Hindustan Times.

At present, only 1.6 per cent of total household savings is directed towards the market.

These programmes would be held in all major and mini metros, Bandyopadhyay said. Indian Institutes of Management would also be involved in the initiative.

The government is also readying a stringent set of rules and norms that would arm small investors to fight for their rights collectively through "class action suits".

Under current norms, a person who holds shares worth Rs 1 lakh or less in a company is categorised as a small investor.

However, while large investors can question corporate strategies through voting rights, small investors do not have any specific instrument to hold promoters of companies accountable under existing laws.

The new Companies Bill, which was introduced in Parliament last year, contains specific clauses allowing "articulation of shareholders democracy with protection of the rights of minority stakeholders and responsible self-regulation with disclosures and accountability".

In 2009-10 only 300 such programmes were held. Industry bodies like the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci) would also be roped in for the awareness programme.