Pension Fund Assets Could Be Used In Equity Market To Increase Depth

New Delhi, October 17: | Updated: Oct 18 2002, 05:30am hrs
Sebi chief GN Bajpai has recommended channelising the assets of the pension funds into the equity markets to increase depth in the markets. He was addressing the gathering at a seminar on Design and Implementation of Pension Reform in India at New Delhi on Thursday.

The large sums of money from pension funds coming into the markets would help investors, as the depth in the equity markets would increase. This would also reduce the number of illiquid stocks on the bourses, Bajpai said. He was commenting on the observation of Professor R Vaidyanathan of Indian Institute of Management, Bangalore that a large number of investors are stuck with illiquid stocks and are not able to find a way out of the markets.

Mr Bajpai also emphasised on the need to create awareness about retirement planning during the seminar. Commenting on Gautam Chikarmanes suggestion to start a investor awareness campaign at a small scale Mr Bajpai said, While it is a good idea to start at a small scale with one or two towns as a pilot project, given the size and large population of India it is desirable to have a massive campaign. We cannot wait for long. Emphasising the need for financial literacy in the country, he said, Educating the educated is much more difficult than educating those who are illiterate. This is because the educated people first need to unlearn.

At the sidelines of the seminar, Mr Bajpai also disclosed that the a nationwide investor education programme would be launched on November 15 by Prime minister Atal Bihari Vajpayee which will aim to make investors aware of the need for investment and the various investment options available.

The regulator can only put systems in place to prevent frauds from happening but cannot ensure against such financial frauds. Thus, investor education is of utmost importance, Mr Bajpai said. Mr Bajpai also spoke about the risks in the derivative segment of the equity market, The derivative market is supposed to be volatile as it is meant for speculation and hedging. This is why we have segregated the cash and the derivatives markets. However, he added that it is the risk containment measures that should be in place to prevent frauds. We have risk containment measures that are world class, he said.