Awarness - The First Step

For a population of more than one and a half billion the size of those who are actively investing, particularly in the equity markets, has always been a point of concern. From policy makers to regulators and various intermediaries who form a part of this very vibrant ecosystem, the lack of participation of the masses has always been a subject of debate. Despite the best efforts it has not reached a meaningful level and hence has not been instrumental in creating inclusive growth. India is among the fastest growing economies - probably only next to China - and in order to broad-base the benefits of this growth among the masses what is really required is to channelise the vast savings potential of the population into proper avenues which could fetch them good returns over a period of time.

This is however no mean task. The higher savings rate of the Indian population itself speaks about how funds are not being deployed into wealth creating avenues in a meaningful manner. Indians at best are happy to plough back their savings into safer havens like bank fixed deposits or the old and familiar post office schemes which they feel are far more secure. This naturally leaves a major part of the population outside of the scope of capitalistic growth that is being offered by many other avenues, particularly the equity markets.

This is exactly where creating awareness among investors becomes very important. But is investor awareness only about trying to tell investors of the do’s and don’ts while putting their money in the market? Our experience tells us otherwise. From the various programmes that we at DSIJ have conducted very recently through-out a large part of northern India, there seems to be something more that investors are looking out for than what is being offered to them in the name of creating awareness. From first-time investors to those who have burnt their fingers in the market and from the risk-averse to those who have managed to make money by taking risks, what is needed is far more than what is being done. We are not at all suggesting that everything can be done at one go. But there are a lot of initiatives that are presently stepping up their efforts in this direction.

We at DSIJ have gained a whole lot of experience in the wake of con-ducting the first leg of our Investor Awareness Programme (IAP) through-out the northern part of India. We have realised that there is a much larger need for more such programmes only from the experience that we have gained thus far. Reaching out to investors across various classes and across the length and breadth of the country is far more important than just trying to focus on metros, Tier I or Tier II cities. This is amply reflected in the response that our programmes have generated in smaller towns like a Varanasi in Uttar Pradesh or a Ludhiana in Punjab.

While education about the how’s and where’s of investing for those who are new to the market is a very critical element which needs to be handled, it is also important to create a solid plat-form for handling investor grievances. Look at what one of the participants at our programmes had written to us. “If a promoter is not corresponding with the exchanges it is his fault, why penalise investors for this? Why are investors being punished by suspending the company? There are around 1,600 companies which have been suspended by the BSE. Something needs to be done in the interest of investors who have invested their money in such companies and do not have an exit option,” said Nikhil Gupta from Kanpur. 

So are we doing enough in that direction of developing a healthy capital market? “There can never be enough for creating investor awareness as there is no end to it. There is no way to measure whether you have done enough for creating investor awareness. Once you reach one level there is another benchmark to be covered. The one point that is clear is that we are not doing enough because this is obviously a large thing,” opines Ambarish Datta, MD & CEO, BSE Training Institute. While awareness and education are often used interchangeably in the investing context, there is a clear demarcation between the two concepts. This distinction comes out very clearly in the various initiatives that are presently being pursued by organisations.

In terms of awareness there is a lot that is being done by the BSE in association with CDSL and other partners, including DSIJ. In fact the BSE had created an investor protection centre way back in 1986 and the money is being spent on investor awareness programmes, not just now, but for a long time. “We are mainly engaged in investor education and other things that are related to investor awareness.  A secretariat was created in August 2010. We tie up with other organisations to cater to investor education.” informs C Vasudevan, General Manager, IPF Secretariat, BSE.

Investor education, on the other hand, has more to do with the creation of a sound workforce to cater to the market. It is more like training the trainers and many institutions have taken the lead in this too. “There is a huge difference between investor awareness and education. Awareness is a very small part of education which is very focused. We cannot do both at the same time. Both have a different perspective altogether,” Datta says. On the investor education front there are various initiatives that are presently trying to do their bit in this space. There is, for instance, the National Institute of Securities Market (NISM). This is an initiative supported by the regulator. The institute has been actively taking up various programmes which include courses offered in different categories.