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IT is unlikely that the stock market would get a boost, as envisaged by the expert committee of SEBI, if banks were asked to expedite their equity offerings. The harsh reality is that investor interest is extremely low for bank stocks with the exception of State Bank of India, HDFC Bank and perhaps the Corporation Bank. The slew of public sector banks that came out with initial public offerings in the last two and a half years as well as most private sector banks find their shares struggling to trade above the face value. Where such offers carried a premium element, the plight is even worse. So even if some PSU banks were to rush with IPOs now, they may not provide any pep to the overall investor sentiment. They would be better off setting their houses in order and awaiting a more opportune moment to enter the market. The fact that there is evidence of interest in stocks of one or two well-run banks with relatively clean balance sheets also supports such an approach.

Butthe committee's recommendation regarding equity offerings by multinational corporations needs to be commended and pursued with vigour. Quite a few MNCs have entered the Indian market with an understanding that they would offload a part of their equity in the markets. So far no MNC has done so. This is where activism could help deepen the markets as MNC shares may command good investor attention and attract decent valuation as well. In fact, it would have been appropriate if the committee had looked at the policy framework for MNCs as a whole. In the last one year or so, quite a few listed MNCs have taken the voluntary open offer route and are moving to delist themselves. What started off as a trend involving small and mid-cap MNC stocks is now beginning to envelop bigger units: Cadbury India perhaps is a celebrated example. A look at the market capitalisation of MNCs shows that barring Hindustan Lever, every other MNC could be headed for a similar path as the move towards a 100 per cent stake does not entail much cost for the global parent. There is a strong case for requiring MNCs to share a part of the wealth created with Indian investors. There is evidence that in other key markets MNCs have not shied away from listing, if it were mandated. Given the huge market that India offers, a listing stipulation with a float of even 10 to 15 per cent may be no deterrent. Hopefully SEBI will press on with the idea towards a larger policy prescription that would require all MNCs to list. This would lend considerable depth to the Indian equity markets and be in the interest of investors.

The other key recommendation seeking better disclosures from companies when they merge or de-merge ought to be widely welcomed. Virtually every merger or de-merger effectively involves a fresh issuance of equity except that there is no cash flow involved. This means investors should be offered disclosures that are on a par with rights offers. But at present companies get away with disclosures that tell little about the implications of the merger or de-merger. And when the merger involves one or more unlisted companies, the shareholders of the listed company involved are left virtually in a blind alley. The sooner SEBI acts on this recommendation, the better it would be for investors.

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