Securities & Exchange Board of India chairperson Tuhin Kanta Pandey on Thursday highlighted the need for deepening and diversifying the investor base in infrastructure securities.
“By encouraging institutional investors like mutual funds or pension funds as well as retail investors to systematically allocate to infrastructure securities, we can broaden participation,” he said at the NaBFID event. “The more hands we have holding these instruments, the stronger and more liquid the market becomes.”
Pandey on Centre’s asset monetization plan
Pandey recognised the role of the Centre’s asset monetisation plan in developing the market for InVITs. “Going forward, there is a need to accelerate asset monetization in sectors such as roads, railways, ports, airports, energy, petroleum & gas and logistics.” he said, noting that barring a few, the state governments are yet to crystalize asset monetization plans to provide a further boost to infrastructure creation.
“This gap needs to be addressed. A variety of products and models exists for such monetization such as InvITs, REITs, various forms of public private partnerships and securitization,” Pandey said.
Pandey on the importance of capital markets
According to him, public resources alone cannot meet the capital demand infrastructure requires. “The government and banks cannot, and should not, carry this burden by themselves. This is where the capital market steps in – as a powerful engine for mobilizing long-term funds, diversifying risks, and ensuring that capital finds its most productive use.
He noted three challenges faced by the regulator in bridging infrastructure with capital markets. The first one being scale – funds raised so far are impressive compared to the past but still inadequate compared to the need. He noted that the investor base is still narrow as retail and foreign investors are cautious. “A third challenge lies in project readiness and credibility. Many municipal bodies struggle with weak balance sheets or delayed clearances.”