India Boosts Investor Education to Tap Market Potential
The government is taking steps to enhance investor education in India. Experts like Rajash Kelkar highlight the need to focus on issues that matter to people and refine messaging. Currently, only 5% of the population has high risk tolerance for investments.
The securities market penetration is less than 10% nationwide, indicating a vast untapped potential. However, complexity and information gaps act as barriers to investing. Most households prioritize capital preservation over returns, with 80% favoring stable and reliable returns.
To address these challenges, the government plans to introduce risk-return relationship knowledge at an early stage in schools. It also aims to review and improve investor awareness programs. The concept of risk is primarily linked to confidence in future income, influencing money allocation to equity or equity-linked assets.
Mutual funds play a significant role in investor education. They are required to set aside 0.02% of their assets under management annually, amounting to Rs 1,440 crore. This fund is boosted by steady flows from pension and provident funds, as well as increased monthly investments through systematic investment plans.
While investor education programs have raised some awareness, their effectiveness is a concern. To foster a wider investment culture, the government must ensure these programs are well-spent and targeted effectively. By doing so, India can tap into its vast potential for securities market growth.
