The Finance Ministry is considering to reduce the lock-in period for Rajiv Gandhi Equity Savings Scheme to one year from the proposed three years to make it more attractive to retail investors.
“The investors can put money in top 100 companies listed in BSE and NSE (under the scheme). We are looking at reducing the lock-in period requirement,” said an official source.
Sources said, however, that investors will not be allowed to shuffle equity portfolio before the end of the year of investment.
In order to encourage savings and improve investment in capital markets, the Finance Minister, Mr Pranab Mukherjee in his 2012-13 Budget had announced Rajiv Gandhi Equity Scheme, under which 50 per cent tax deduction would be allowed to retail investors with annual income less than Rs 10 lakh, for investment up to Rs 50,000, with a lock-in period of 3 years.
Sources said this type of scheme was first introduced in Belgium, followed by France and some Eastern European nations.
“The scheme was highly successful in France and had helped in increasing retail participation in Equity market from 7 per cent to 17 per cent,” a source said, adding it was also appreciated by IMF chief, Ms Christine Lagarde in her recent meeting with Mr Mukherjee.
The Finance Secretary, Mr R S Gujral had earlier said that a formal guideline on the scheme, aimed at channelising savings into the stock markets, will be issued within a month.