Mutual funds (MFs) should use the stewardship code to ensure that the retail investors are heard at the general meetings of investee companies and increase participation, Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch said on Thursday.
Speaking at the launch of Bharat Nivesh Yatra by the Association of Mutual Funds of India (Amfi), she underlined the need to build the corporate bond market ecosystem so that it matches the growth of the equity segment.
Highlighting the “sovereign trust” the industry has gained over the years, Buch said mutual funds are a vehicle for financial inclusion and a suitable product for citizens to participate in wealth creation.
The Sebi chairperson urged the industry to use the stewardship code — the framework for MFs and insurance firms to monitor and engage with investee companies — to become the voice of the retail investors.
“The reality is that a retail investor does not vote in the AGMs even today. The reality is that he does not have the consolidated power to assert himself as the shareholder of the company,” said Buch.
Noting that there is huge value in the stewardship code which has been adopted by the industry, she asserted that it is a “vehicle for working towards ensuring that the investor has a voice and that the voice is heard, and that the entire ecosystem works in the interest of the shareholder”.
In a veiled reference to the allegations levelled against her by Hindenburg Research and by the Congress party, Buch said whenever she talks about real estate investment trust or ICICI, “conflict of interest” props up.
Buch has been in the eye of the storm amid allegations of conflict of interest, which she and her husband Dhaval Buch have refuted, denying any wrongdoing.
On the corporate bond market, the Sebi chairperson detailed the steps taken to increase participation, including bringing transparency and regulatory clarity along with online bond platforms to facilitate retail participation.
Buch added that while the primary debt market has been robust, there are issues with the secondary market.
She also added that pending approval from the Reserve Bank of India (RBI) could help increase the trading volumes on the AMC Repo Clearing (ARCL), which has surpassed Rs 20,000 crore turnover in a month.
According to market players, the ARCL is not classified as a Qualified Central Counterparty (QCCP) which restricts the participation from banks and primary dealers — and approval for it is required from the RBI.
She also touched upon the measures taken by the market regulator to use artificial intelligence (AI) to speed up the approval processes at Sebi.
First Published: Sep 26 2024 | 8:56 PM IST
