The Hindu Business Line : ADR offerings: Concern over `export of capital market'

WITH more Indian companies joining the sponsored American Depository Receipts (ADR) bandwagon, the domestic capital market intermediaries are concerned that this trend may lead to "export of Indian capital markets."

Speaking at a panel discussion on `Securities market infrastructure' at a conclave on `Second generation financial sector reforms', Mr Udai Kotak, Vice-Chairman & Managing Director, Kotak Mahindra Bank, underscored the need for an appropriate regulatory framework to ensure that there is no "export of capital market" from India.

He said the capital market regulator should factor in the "competitive perspective" while framing its regulations. "It should not happen that the price of Infy on the National Stock Exchange will be determined on what is happening to it in New York Stock exchange or any other stock exchange overseas," he said.

Agreeing with Mr Kotak, the Chairman & Managing Director of National Securities Depository Ltd, Mr C.B. Bhave, said the threat of capital markets getting exported is a reality if we "do not get our act together." Mr Bhave emphasised the need to constantly "benchmark ourselves with the outside world."

Mr Kotak said the various steps that need to be taken to strengthen the securities market infrastructure. He stressed upon the need to strengthen the functioning of registrars.

"Registrar infrastructure will be a bottleneck if we are to have more than say five public issues every month. Our system is not geared to handle five to seven public issues in a month," Mr Kotak said.

He also called for simplification of application forms for public issues. "Too much information is sought and very little is used," he said. Mr Kotak also highlighted the need to put in place effective stock lending and borrowing schemes.

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