“Financial
literacy and financial inclusion are integral to each other and are important
because they are integral to attacking poverty. They are two elements of an
integral strategy; while financial inclusion provides access, financial
literacy provides awareness”.
-
Dr. D. Subbarao, Governor, RBI at the RBI-OECD-World Bank Regional Conference
on Financial Education in New Delhi.
RBI in its letter dated January 20, 2011, addressed to the Chairman of
all regional rural Banks, has conveyed that banks should make ‘investor
awareness’ as one of the agenda items in their periodical meetings with their
customers at semi urban/rural branches so that more people are covered under
the programme. But are they accountable and if so, to whom? is there a
periodical report on the utilisation of the specific funds earmarked for this
purpose? May be there. But the average investor for whom it is meant, may not be
aware of it.
Take a look
at the numerous “Funds” created for “protecting” the investors and creating “awareness”,
from the investors” money:
1.
By the Ministry of Corporate Affairs, Government of
india
a.
Investor Education and Protection Fund, MCA, GOI
2.
By the Regulator:
a.
Investor Protection and Education Fund, SEBI
3.
By the Stock Exchanges:
a.
Investor Protection Fund, NSE
b.
Investor Protection Fund, BSE
4.
By the Depositories:
a.
Investor Protection Fund, NSDL
b.
Investor Protection Fund, CDSL
5.
By numerous Regional Stock Exchanges – RSEs
These funds are
created out of own funds, contribution from Government and various other sources
including the contribution from:
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(a)
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amounts in the unpaid
dividend accounts of companies;
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(b)
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the application moneys received by companies for allotment of any
securities and due for refund;
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(c)
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matured deposits with
companies;
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(d)
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matured debentures with
companies;
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(e)
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the interest accrued on the amounts referred to in clauses (a) to (d);
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(f)
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grants and donations given to the Fund by the Central Government, State
Governments, companies or any other institutions for the purposes of the
Fund;
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(g)
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the interest or other income received out of the investments made from
the Fund
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Securities
and Exchange Board of India (SEBI) has issued SEBI (Depositories and
Participants) (Amendment) Regulations, 2012 on 11th September, 2012. According
to these Regulations, Depositories are required to establish and maintain an
Investor Protection Fund (IPF) for the protection of interest of the
beneficial owners and every depository is required to credit twenty 5 % of
its profit to Investor Protection Fund. The norms towards contribution to and
the utilisation of IPF are yet to be specified.
During the
quarter ended 31st March, 2013 NSDL has calculated IPF contribution of Rs. 8.63
lakhs being 25% of the annual profits of the company before tax, available
after making such contribution.
CDSL has
transferred Rs. 13.26 Crores to the IPF in 2012-13 as per their website.
Stock
Exchanges do collect and transfer to this Fund. It is estimated to be in the
region of Rs. 1,000 Crores.
These Funds
are supposed to be used for the following purposes among various other
related purposes:
1) The Fund shall be utilised for the purpose of
protection of investors and promotion of Investor education and awareness in
accordance with these regulations.
(2) Without prejudice to the generality of the object
in sub-regulation (1), the Fund may be used for the following purposes,
namely:-
(a) educational
activities including seminars, training, research and publications, aimed at
investors;
(b) awareness programmes
including through media - print, electronic, aimed at investors;
(c) funding
investor education and awareness activities of Investors’ Associations recognized
by the Board;
(d) aiding
investors’ associations recognized by the Board to undertake legal proceedings
in the interest of investors in securities that are listed or proposed to be
listed;
The Corpus of Rs 1,000 plus Crores can
generate revenue of Rs.100 Crores per annum approximately, which translates
to Rs. 8 Crores per month. There are many ways this money can be
utilised more productively to reach out to a large number of investors, with
Rs 25 lakhs to spend on a daily basis!
Conducting
investor awareness camps & programs is one way of spreading knowledge.
However, invariably it ends up reaching out to the same set of audience, who
get bored after a couple of meetings and stop coming. Those who come, look
for investment “tips” from the “expert” speaker, than knowledge. What are the
other ways this money could be effectively utilised?
1.
A huge online library on investment books.
E-books, Journals, magazines, research papers, etc may be created for the
benefit of the registered user/investor, free of cost. This will be useful
for the younger generation, students, teachers, researchers, house wives,
businessmen, retired people, alike.
2.
The investor Associations may be encouraged to come out
with better ways to reach out to potential investors in untapped areas. More
money should be spent on continuous basis to create, update, sustain and run
the website –both in English as well as Vernacular.
3.
Technology may be used to reach out to maximum number
of investors at low cost. SEBI, NISM and Exchanges have started this. But
there is a long way to go. Simple educational materials can be uploaded in You
Tube and Face Book to reach the genext.
4.
Lot of Audio – Visual material can be developed
in regional languages, to reach out to the young audience in schools &
colleges.
5.
Every school & college can be empowered to have a Finance
Club / Stock Lab, with the necessary infrastructure, books, short films,
audio books, etc with Trained Teachers.
6.
Finally, there should be a strict ban on
conducting Investor Awareness Programs in any Star Hotels!
The basic
purpose is to reach out effectively to a large number of new investors at
lower cost per investor. Creating a responsible investor is the key to any
financial markets and it certainly adds to the depth and breadth of the
market, steadily over a period of time. Money is there, everywhere. It’s
not at all an issue. Concerted,
dedicated and well-co-ordinated effort is the need of the hour from all the
Governmental agencies and Exchanges to achieve this end.
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