When Rome was burning, SEBI was...

IIPM MANAGEMENT INSTITUTE

New products can wait; fundamentals need an immediate attention
There are three kinds of people in Indian financial markets – first, who make things happen (alright, you’ve heard this before) and massively profit due to such happenings; second, like us, who keep garbling away to acerbic glory about all happenings that are going wrong with the financial world (you’ve surely not heard this before); and the third, who never even tried to wonder what was happening all along. And to this benign third category belongs our tried and trusted SEBI.

The markets were witnessing never before seen FII-profiting volatilies, B&E and the likes kept shouting hoarse on control measures, and guess what SEBI was busy implementing? In a move akin to Nero’s famed violin skills, in July, SEBI introduced the historic “Real Estate Mutual Fund” (applause!). The ostensible objective behind the launch was to enable small investors to participate and gain from the ongoing real estate boom. Real estate boom?!?! And retail investors?!?!!

As Amit Saxena, all India Head, Planman Financials, snappily pronounces, “The whole idea of MFs was about channelising housing savings to stock markets, fetching retail investors above normal returns with relatively less volatility. But forget introducing newer types of ostensible MFs, the Indian government has comprehensively failed in even mobilizing a minority of retail investors.” Noted expert Prithvi Haldea acknowledges, “Unlike the US where 47% of the households have their savings invested in MFs, India has a pathetic 1.4%.”

Sadly, the true beneficiary of even the most recent Real Estate Mutual Fund brain-wave would be corporations, rather than retail investors. SEBI has to stop fiddling, and start pro-actively undertaking the most cliched advice even a novice would know with clarity; and that is – encourage retail investors!

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Source : IIPM Editorial, 2006, Editor - Prof. Arindam Chaudhuri

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