In a bid to make the capital markets more trustworthy and investor-friendly, market regulator the Securities and Exchange Board of India (Sebi) is working on ways to dilute the know your customer (KYC) norm and simplify the voluminous initial public offer (IPO) document. It also plans to enhance the surveillance mechanism to catch irregularities, said Sebi chairman UK Sinha at the SKOCH Summit in Mumbai.
“I find today that disclosures of primary issues are too voluminous and too unstructured,” said Sinha. “If you want to participate in an IPO, you do not get meaningful information unless you go through 200 pages of documentation in fine print. Sebi is working towards that and very soon we are going to simplify it.”
Regarding KYC that many in industry feel creates bottlenecks, Sinha said that it is important but it has entered into a situation where different sets of KYC required for different activities. “Obviously, Sebi has to remove that and we are working towards it,” said Sinha.
Sinha also highlighted the need to deepen the capital markets. He said only 50% of India’s savings go to financial assets, while only 2.6% of it goes into capital markets. About 55% goes to banks, 20% to insurance and 9.5% to pension, he said.Sinha said that pension and provident fund money should be allowed to enter capital markets and law and regulation should not prevent it from coming to the market. "If it is comes to the market it will create a counter balance to the foreign institutional investor’s money that are driving the market today," said Sinha.
Sinha also emphasised the need to make the investors and general public feel comfortable with investing into the market. He touched upon the need to building trust and thus Sebi is working to enhance its surveillance system to catch any irregularity in the market.
“We believe that people in the country should feel that their investments in the market is safe. We are going to make our surveillance mechanism more and more technically savvy and will be watching all irregularities carefully,” said Sinha.