Securities Market and Investor Awareness Programmes | Money: It touches all aspects of life

A liquid asset that allows us to settle our daily transactions and obtain what we need to live
Securities Market and Investor Awareness Programmes | Money: It touches all aspects of life
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Recently, a four-member expert team from Securities and Exchange Board of India (SEBI), Central Depository Securities Limited (CDSL), Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) visited valley and jointly organised a special daylong seminar on “Investor Awareness Programme” for the Srinagarites, at a local hotel. The event was aimed at highlighting the issues and challenges faced by the investors and also provide a brief about the functions of SEBI and CDSL. The four-member team was headed by Mr Harbinder Singh Sokhi (BSE-IPF): and Mr Ashish Kumar (DGM SEBI), Mr Inderjit Singh (Manager CDSL) and Mr Poonam Chand (BSE) as its members. The theme chosen for the event was “Higher Returns Are Not Achieved Overnight: Ensure That You Invest Regularly- Invest Right Toh Future Right”. The seminar was attended by almost 50 people from all walks of life viz; Academics, Bankers, Investors, Students and others who were educated about the available investment avenues.

In all, there were three sessions held. In the first session, the speaker from SEBI dwelt at length on the Role, Importance and Functions of SEBI, Trading in Securities Market, Dos and Don’ts, the Need for Precautions on the part of Investors and amply provided an insight into the Stock Market Trading. In the second session, the speaker from CDSL threw light on Services offered by Depositories, Transmission of Securities, Pledge, Margin Pledge and Pledge Re-pledge, Basic Services Demat Account, Consolidated Account Statement, CDSL Digital services, Investor Grievance Redressal, etc. In the third session, Mr Harbinder Singh Sokhi highlighted and deliberated upon the need for meaningful and result-oriented Investor Awareness Programmes (IAPs).

Thereafter, the team members interacted with the audience that was aimed at improving comprehension skills, clearing certain doubts and seeking participants’ feedback on a 5-Point Likert Scale. The team was happy and satisfied when many participants shared their views on the subject. It was unanimously decided that more such programmes and campaigns be undertaken which should evenly be distributed in all districts of J&K so as to increase the financial and investment awareness and competence (attitude, knowledge and skills) amongst the public at large especially our potential investors. It was emphasized that Colleges and University Departments should conduct such programmes through debates, seminars, symposia and workshops and invite experts from organizations concerned for the purpose.

In light of the above event, let us elaborate on the need and importance for having these IAPs. In our everyday financial transactions, we deal with “Money”. It touches all aspects of our lives. It is a liquid asset that allows us to settle our daily transactions and obtain what we need to live. There are two ways to manage our earnings: either to maintain what we have or grow it. As money does not grow on trees, we need to work hard, perform varied economic activities and earn money for making our current/future life comfortable. Obviously, effective income management is vital for our financial well-being. Therefore, for achieving goals in life and securing financial future, it becomes absolutely imperative to manage hard-earned money in a prudent way for making sensible financial decisions and attaining financial security. It is an admitted fact that income can grow only when people save and invest wisely. No matter how much or little income we have, the important thing is to educate ourselves about the basics on saving, investing and available investment opportunities. No one can guarantee that people will make quick returns from investments they make. But if they get the facts about sav­ing and investing and follow through with an intelligent plan, they should be able to gain financial security over the years and enjoy the benefits of managing their earnings (https://www.investor.gov). Once an individual has set aside a monthly saving goal, it is time to invest. When he invests his savings, it grows and gives him more income in return. As the life of a human being is full of uncertainties, it is essential to save from present earnings for safeguarding future. However, just saving earnings and keeping them idle does not make any sense as the purchasing power of earnings gets depreciated over the period of time. Hence, the income saved should be properly invested so that its value gets appreciated. As an investor, shaping of financial future is as important as many other roles we play in life. Today, we have more earning potential and more influence over financial decisions than ever before. As such, empowering ourselves with the right kind of knowledge on the pros and cons of varied investment avenues like keeping money in Saving Bank Accounts, Fixed Deposits, buying Gold, Silver and other Precious Metals or investing in Real Estate, can yield us good returns over time. It may be stated that the risk bearing capacity of an individual is different depending upon his age, income, perceptions and beliefs. Remember, smart investing may also allow our earnings to outpace inflation and increase in value.

An important investment option available in the market is channelising our savings into productive use by investing them in the securities market. The securities like equities, bond, debentures, mutual funds and other financial products are issued to raise funds. The primary function of the securities markets is to help in transfer of surplus resources to others who have a productive need for them. Corporates, financial institutions and government institutions raise capital to finance operations by selling securities to investors who in turn take a certain amount of risk with the hope of receiving returns from their investment.

In the context of J & K, it was during late 1990s that J&K Bank took a lead in inculcating a financial temper for investing in securities market when it came up with an initial public offering (IPO) representing the Bank’s first major sale of equity securities to the public. Following this, many people made huge investments in the Bank’s newly issued equity shares but many more stayed away from making securities market participation choices due to certain apprehensions though these equities offered various financial benefits. They could have otherwise become the beneficiaries of Bank’s financial eco-system like diversification of risk, flexibility, liquidity, tax benefit, cheap access to stocks and stocks being managed professionally. The reasons identified for lack of enthusiasm, among other things, are incomplete financial knowledge on the part of investors about the working of securities markets and portfolio management. Besides, some fraudulent practices/scams resorted to by some unscrupulous market players duped many gullible investors of their hard-earned money. Reportedly, there are a few investors in our state who have invested in equities at the behest of their friends’/relatives’ advice without taking any cognizance of financial environs who later suffered heavy losses. This simply means that to be successful in investing in securities markets, it requires attitude, knowledge, skills, expertise and experience to navigate through the complex markets.

From what has been stated in the preceding lines, it is evident that organizing IAPs becomes essential in current economic scenario as investment decisions are highly influenced by such programmes. Investors need to be made aware and taught about the stock/securities market activities and its role. In order to make trading on the stock market, investors should be enlightened about the various listed companies and the products they are trading in. There is ample research evidence that, in addition to these IAPs, real-life trading experience helps to achieve better performance on the securities markets and has a significant impact on investors’ financial decisions including stock market participation choices and risk-taking behaviour. In view of this, increasingly large, complex, dynamic and challenging scenario of securities markets demand a wide range of competence (knowledge, attitude and skill-sets) from the market professionals to meet enhanced expectations of various stakeholders.

This being so, the Ministry of Corporate Affairs (MCA) is organising various IAPs in different parts of the country amid rising instances of fraudulent investment schemes/scams. For this purpose, the Ministry has engaged the services of some organizations (https://www.mca.gov.in) like the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI) and the Institute of Cost Accountants of India (ICAI). There are many other institutions that organize such programmes. For example, the Reserve Bank of India with other regulators like SEBI, Insurance Regulatory and Development Authority of India (IRDA) and NSE, has been organizing various IAPs to spread the awareness and knowledge regarding investments in securities (https://www.rbi.org.in). Again, National Institute of Securities Markets (NISM) offers a bouquet of uniquely designed academic programmes that prepare new age market professionals. It conducts capacity building and advanced training programmes for securities market participants, including regulators. The programmes allow securities professionals to stay abreast of the latest market legal framework, products, processes and technologies. The institution also provides capacity building support for the initiative of SEBI in promoting financial and investor education. For this purpose, individuals and organisations are being identified and trained as per the criteria laid down by SEBI. After training, these individuals/organisations impart investor education under the supervision of SEBI (https://www.nism.ac.in).

Notably, SEBI is a statutory regulatory body that monitors and regulates the Indian capital and securities market while ensuring to protect the interests of the investors, formulating regulations and guidelines. The objective of SEBI is to ensure that the Indian capital market works in a systematic manner and provides investors with a transparent environment for their investment. It sponsors and undertakes Investor Education Initiatives at educational institutions across the country. It also organizes joint public meetings for the ‘First Time Investors’ and grievance redressal guidance meetings along with other market intermediaries like CDSL and NSDL (https://www.sebi.gov.in). CDSL and NSDL are the depositories registered by the central government to hold multiple forms of securities like stocks, bonds and more as electronic copies and are mandated to redress the investor grievances. The only difference between both the depositories is their operating markets. While NSDL has the NSE as the primary operating market, CDSL’s primary market is the BSE. It may be indicated here that the stock exchanges in India have established their Investor Protection Fund (IPF) Trusts with the focus of spreading awareness among investors through various forms of education initiatives. These IPF Trusts conduct IAPs across India regularly in regional languages with the distribution of Information Booklets to the common people so as to bring more retail investors into the market ambit. The programmes emphasize “Dos” and “Don’ts” while investing and the diligence that an investor needs to adopt.

Lastly, it can be concluded that the awareness on investment opportunities in securities seems to be lacking. Thus, there is a dire need for organizing more and more awareness programmes with the twin objectives of educating/protecting the interests and building up the investment capacity of prospective investors in times to come. This would surely help in mobilizing the retail participation base in J&K.

The writers are former Commerce Teachers and Life Members of Indian Accounting Association

Disclaimer: The views and opinions expressed in this article are the personal opinions of the author. The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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