The Securities and Exchange Board of India has started using artificial intelligence for processing draft documents of initial public offers, Ananth Narayan, a whole-time SEBI member, said on Friday.

“We have started the pilot use of ChatGPT for first-level processing of draft public offer documents,” said Narayan. “That’s a public document, so we can subject it to ChatGPT. A PPM of alternative investment fund, on the other hand, is a private document, so we have to be careful about putting it out there. But we are using in-house machine learning programmes to see if we can feed all of the information into the memory and do first level processing.”

Capital formation

Narayan said the regulator is working hard on the efficiency front, and is hoping to bring down the time taken for adjudication, investigations and 11B matters. “The aging is coming down dramatically,” he said.

Narayan said the regulator’s role was to aid capital formation. REITs and InvITs can be a huge area of capital formation in the country. There are a number of opportunities in green and sustainable finance.

“We need a tremendous amount of capital for reducing risk for climate change. As of now we are not creating enough capital for that cause,” Narayan said.

He said there was a need to think about financial literacy and responsible education. “We need to differentiate between good, high quality education programmes and finfluencers peddling returns and misleading investors. This is a huge area of challenge that we continue to grapple with,” Narayan said.

He said the transition to T+1 was a huge move towards efficiency and making things easier for investors to get in and out their money.

“We are moving towards T+0 on an optional basis. Most retail investors anyways have money in their account and part with it on day zero itself when they purchase shares, so why can’t they get their shares the same day? On the flip side, if you sell shares why can’t you get the money on the same day?,” said Narayan.

Growing investor base

The last few years has seen a fantastic journey of savers converting to investors, said Narayan. As on March 2020, before Covid really caught on, the country had about 2.2 crore unique mutual fund investors. Today, that number has crossed 4.7 crore unique investors. Unique demat holders rose to 9.7 crore from 4 crore in the same period. The total number of investors through direct equity and mutual funds who come under the SEBI umbrella has crossed 11 crore two months back, said Narayan.

The mutual fund AUM has crossed ₹53-lakh crore from ₹22-lakh crore. Within that, the individual component has crossed ₹30-lakh crore from ₹12-lakh crore.

“The sachetisation of savings is truly unique in the Indian context, with SIP as low as ₹500, an average ticket size of ₹2,400 and B30 growing rapidly,” said Narayan. “Earlier, if FPIs sneezed, we would catch a cold. Between October 2021 and June 2022, we saw ₹2.5-lakh crore of outflows from FPIs. Any other time, we would have seen a big problem in the currency and equity markets. Not so this time because retail inflows was more than ₹1-lakh crore during this period.

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