The Hindu Business Line : `Investors must be made to look at alternative options'

MR Kirit Somaiya, Member of Parliament and President, Investors' Grievances Forum, has spoken out strongly against the system that indirectly encourages investors to stay satisfied with narrow and ineffective options by curbing their motivation to look at alternative channels for wealth building.

Mr Somaiya, who favours the return of the small investor to the securities market, underlined the need for eliminating misuse of the existing legal framework by vested interests.

"Small investors contribute hugely to the economic and social development of the country," he said, adding that their requirements were somewhat different from corporate and institutional investors who were better positioned to safeguard their interests. He was speaking at a meeting hosted by the Institute of Chartered Accountants of India (ICAI) on Friday.

Elaborating on his point, Mr Somaiya said that the savings schemes run by post offices were still the favoured option for numerous ordinary investors. There are around 13 crore savings accounts, run by such investors in the country's post offices. In Mumbai alone, there are approximately 10 lakh individuals who have chosen the postal department's monthly income option.

"It is crucial that the money saved by this very large community of small investors is channelised properly. There are many aspects of law that work to their disadvantage," he observed.

He urged chartered accountants and other professionals to help create a system that supports the greater cause of the ordinary public. Such a system should actually prompt investors to stay put in the capital markets.

Later, speaking at the same ICAI function, Mr Ravi Sharma, ED of Microsec India, underlined the need for efficient wealth management strategies. The latter should ideally embrace a number of tried and tested methods, he said.

While corporates should work hard to attain leadership positions and increase profitability, investors need to preserve and build their wealth through various sensible means. Individuals should avoid putting their surpluses in one basket; instead, there is need to diversify their investments by choosing various alternatives.

"Investors should actively leverage facilities like derivatives in order to maximise their wealth. If they cannot do this by themselves, they should consider taking the advice of professionals," Mr Sharma said.

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