PM makes push for debt market

MUMBAI: Prime Minister Manmohan Singh on Friday stressed the need to develop the debt market, create a widely-held pension system and broadbase the insurance sector. He said urgent steps were being taken towards a comprehensive amendment to the Sebi Act to create a fund for promoting investor education and further empowering the market regulator.

Dr Singh was speaking at the inauguration of Sebi’s new headquarters at the Bandra Kurla complex. “We need to mount a massive effort to promote investor education and protection in the country,” he added.

“It is good regulation that will ensure markets are safe and perceived to be safe by the public at large. Good regulation will ensure that while engines of growth are allowed to run at full throttle, there is no space for manipulators in the system,” he said.

He also said further reforms in the financial sector were necessary for the development of the debt market. The prime minister pointed out that bulk of the transactions in the capital markets of advanced nations were in debt securities. “It has come to be accepted that a lively market in corporate securities helps the banking system to accurately price current and future assets, and help mitigate risks,” Dr Singh said, adding that, there would be policy support to make debt markets deeper, broader and more liquid.

He said the country needed a widely-held pension fund system and a much larger insurance sector with a higher capital base and more diverse products. “We may currently be lacking a consensus on the needed reforms. However, I am confident that we will soon be able to forge a consensus and take reforms forward,” he said.

Dr Singh said a strong capital market was a must if the fruits of India’s rapid growth was to be shared by a large cross-section of the society.

Speaking at the same occasion, finance minister P Chidambaram said Sebi had the dual task of assuring ordinary investors that the Indian capital market was a safe place to invest their money in, and at the same time overcome the irrational opposition of another section of people who feel that the capital market is a capitalist device to rob the common man of his earnings for the enrichment of a few.

Mr Chidambaran also said the concept of self-regulatory organisations had not really taken off in India, and this was an area that Sebi would have to address.

He pointed out that while bodies like Amfi and Association of Merchant Bankers did a lot to propagate the cause of their members, they did little to regulate them.