The Hindu Business Line : Need to deepen capital market: Chidambaram

THE Finance Minister, Mr P. Chidambaram, on Wednesday underscored the need for policymakers and the regulator to find ways and means to deepen the capital market and bring a larger number of retail and institutional investors in the market.

He held that the inadequate attention on development of the capital market has constrained the ability to raise resources and come in the way of making investments for achieving growth.

"Our capital market is not deep enough, broad enough and still dominated by brokers and some intermediaries who have an equally important role to play. The market has not developed to the extent we would like them to be," Mr Chidambaram said after releasing two books written by the capital market regulator chief, Mr G.N. Bajpai.

While one book (paperback version) is on marketing of insurance products, the other is titled as `The Securities Market — The quest for new benchmarks in regulation and human resources'.

The Finance Minister used the occasion to raise a few critical issues about the functioning of the capital market. He cited the recently concluded initial public offering (IPO) of Tata Consultancy Services through the book building route and pointed out that 97 per cent of the retail investors applied for the issue at the cut-off price.

"We must ask why the retail investors are not keen in participating in the book-building process and merely opt for the cut-off price. Then what is this great book-building all about? Should books be built in India without involving retail investors? These are the questions that need to be asked," Mr Chidambaram said. Referring to the recently concluded IPO of Google in the US, Mr Chidambaram said that "we must ask ourselves as to how many years are we away from the Google experiment". He also pointed out the mismatch between the number of retail investors in the capital market and the number of demat accounts that has been opened.