Financial Daily from THE HINDU group of publications
Thursday, May 16, 2002
Regulatory Bodies & Rulings
SEBI chief details plan to lure retail investors
Mr G.N. Bajpai, Chairman, SEBI (right), with Mr K.K. Nohria, President, Assocham, addressing a seminar on corporate governance in the Capital on Wednesday.
NEW DELHI, May 15
THE Securities and Exchange Board of India Chairman, Mr G.N. Bajpai, today outlined a four-pronged approach for bringing back retail investors to the capital market in a significant manner.
"Restoring the confidence of retail investors in the market will be an important task of SEBI. Investor education, better corporate governance, transparency and enforcement of regulations would be the four pillars which will help achieve this objective," Mr Bajpai said, at a meeting organised by Assocham and the Asian Centre for Corporate Governance here.
Mr Bajpai told Business Line that the capital market regulator was thinking in terms of holding a "national campaign on investor education'' to create awareness and also enhance the level of knowledge of investors in the functioning of the securities market in the country.
He said that the role of the regulatory body in improving corporate governance would be "prescriptive, preventive as well as punitive". He held that the absence of good corporate governance practices could be one of the reasons for the absence of a very vibrant capital market in the country.
"We will have to ensure that the decision-making of corporates is in the larger interests of the investing public. It is important that public good be kept ahead of private good," Mr Bajpai said.
He said that SEBI had already initiated talks with credit rating agencies for evolving a corporate governance measurement mechanism that would assess the performance of corporates in terms of wealth creation, wealth management and wealth sharing. "The rating process is very difficult. There is no harm in making an attempt," the SEBI chief said.
Mr Bajpai later told presspersons that he was not in favour of a super regulator for the entire financial sector, despite the frequent occurrence of various market misconducts and irregularities in the various segments of the financial sector. "It's just that we need better co-ordination," he said.
He held that the regulatory framework governing the capital market was not weak. "The capital market is also not speculation-driven," Mr Bajpai said.
Some of the board members of companies suggested that the "effectiveness of punishment process'' should be improved.
The SEBI Chairman also endorsed the new mechanisms being evolved by some of the companies for compensating the non-executive directors of companies. "There is nothing wrong in the idea of profit-sharing with non-executive directors. At the same time, it should be ensured that such a form of compensation does not affect or influence their independence,'' Mr Bajpai said.
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