Participation among retail investors in the Indian equity markets is significantly lower than other nations such as the US with physical assets such as gold being given preference over financial assets by retail investors in Asia's third biggest economy.
The upcoming budget could see an amendment in the eligibility norms of the Rajiv Gandhi Equity Savings Scheme (RGESS) in a bid to boost more participation into stocks through this scheme which at present is open to investment from all resident individuals having gross total income under Rs 10 lakh and who are investing in stocks for the very first time.
In a bid to boost retail participation in mutual funds, the Indian financial regulators may have to agree on universal 'know your customer' norms.
Despite a well-established savings culture among Indian households, only a minute amount of money is getting channelized into financial assets, a matter of severe concern for the Indian Financial industry.
Some retail investors have been forced to turn away from investing in stock markets as they faced a flurry of questions while opening demat accounts despite having bank accounts.
Clearly, the process of investing in equity markets must be made simpler and less tedious.
"We have too many regulations. It is important KYC norms for all intermediaries under a market regulator converge and become one set of norms. We cannot have multiple KYC norms for intermediaries and participants under one regulator. And worse, different sets of norms between different regulators," said P Chidambaram, Indian Finance Minister.