Capital market regulator Sebi has made notable progress in reducing the time taken to process mutual fund and initial public offering (IPO) applications, according to Madhabi Puri Buch, Sebi’s Chairperson. Speaking at a symposium organized in collaboration with stock exchanges and depositories in Mumbai on January 10, Buch emphasized the regulator’s strides in improving operational efficiency and boosting market inclusivity.
Reduction in Pendencies
Buch provided data underscoring the progress. As of November 2024, only two IPO applications had been pending for over six months—a stark improvement from March 2022, when eight such applications were delayed. Similarly, mutual fund applications witnessed a significant drop, with just one pending application over six months old in November 2024, compared to 69 in March 2022.
These reductions reflect Sebi’s efforts to streamline processes and foster a more efficient market ecosystem. Buch reiterated the importance of timely clearances, highlighting that they not only boost market confidence but also ensure that capital is deployed more effectively.
Focus on Rights and Preferential Issues
Buch also shed light on the growth of equity capital-raising initiatives in India. While primary market activities have surged, she pointed out that rights and preferential issues often go unnoticed. To address this, Sebi has introduced measures such as a fast-track rights issue mechanism, designed to bring more attention to these methods of capital raising.
Driving Financial Inclusion with Micro-SIPs
The Sebi chairperson emphasized the importance of financial inclusion as a cornerstone of economic growth. In this context, she highlighted the upcoming launch of a micro-Systematic Investment Plan (SIP) with a minimum contribution of ₹250. This initiative aims to bring more individuals into the fold of mutual fund investments, particularly those from underserved communities.
Buch called upon State Bank of India Chairperson Challa Sreenivasalu to support this initiative by leveraging SBI’s mutual fund network to promote the micro-SIP. Though the official launch date is yet to be announced, the initiative is expected to significantly enhance retail participation in the financial markets.
Growth Potential in REITs, InvITs, and Muni-Bonds
Buch also underscored the potential for Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and municipal bonds to drive capital formation in the coming decade. She stressed the need for greater awareness and participation in these investment vehicles, as they offer a promising avenue for both institutional and retail investors.
India’s Growing Global Market Share
India’s rising weight in the MSCI Emerging Markets Index highlights its growing appeal among international investors, driven by consistent economic reforms, robust corporate governance, and expanding market depth. This increase in passive fund inflows not only signals global confidence in India’s economic trajectory but also strengthens liquidity in domestic markets, enabling higher participation from both institutional and retail investors. Furthermore, as global funds diversify their portfolios to tap into emerging markets, India stands out due to its stable macroeconomic environment and promising growth sectors, solidifying its position as a key player in the global investment landscape.
This growing share in global passive fund inflows also creates opportunities for Indian companies to access international capital more effectively. As India’s market weight increases, it attracts a wider pool of global investors, enhancing market stability and paving the way for sustained economic growth. This trend not only boosts investor confidence but also reinforces India’s role as a dominant player in emerging markets.
Conclusion
The concerted efforts by Sebi to streamline application processes, enhance financial inclusivity, and promote innovative investment vehicles are paving the way for a more robust and dynamic capital market. The regulator’s focus on reducing delays and fostering growth aligns with its broader goal of making the Indian financial ecosystem more efficient and inclusive.
As India’s equity markets continue to attract global attention, initiatives like the ₹250 micro-SIP and advancements in REITs and InvITs are expected to play a pivotal role in shaping the future of financial investments in the country.
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