The topic means different things to different people—to some, it means financial inclusion and reaching basic banking services to every Indian. To others, it means using technology and microfinance to either provide or improve livelihoods across the country. To those in the capital market, it is the need to increase India’s investor population by eliminating fear and distrust, now that technology has created the capacity to expand reach. All this was reflected in the views of the panelists.

Dr AK Khandelwal (former chairman, Bank of Baroda): Frankly, I wasn’t quite sure where the RBI (Reserve Bank of India) would take us in terms of financial literacy. But the passion with which the RBI and Ms Thorat have guided us has got us thinking seriously about the issue. I believe that we must start discussing the right things to do at least 20 years before they happen. In that sense, the choice of this topic by Moneylife is a really good step. It is important to recognise that there is financial illiteracy even among literates. Also, the conduct of some market participants has not inspired confidence among investors. Over a period of time, people have felt cheated and looted by some companies when they came out with initial public offerings (IPOs). Some people view the market with a gambler’s instinct. What is required is a paradigm change in attitudes. I am delighted with the RBI’s initial steps in this regard and I am confident that, if this continues, we may even have stock exchanges in rural areas in another 20 years.

Shailesh Haribhakti (founder partner, BDO Haribhakti): I’d like to place before you three big trends we are witnessing. For the first time in India’s history, the fastest growing field for the SME sector is education. Second, I find that the total number of retail investors in the financial market has really not grown over the past 10 years which should make us sit up and think about why this has not happened. Is it because trust has not been established among people? Is it because the awareness is missing? Or is it because people have been burnt so significantly that they have withdrawn from the markets?

The third and most important point is that the world has completely shifted to delivering almost every service, thought and activity off an electronic platform. It is predicted that the convergence of technologies for achieving singularity and synergy will occur at such a rapid pace that we may be just a decade away from a whole new paradigm of operations. New knowledge, and the pace at which it is being created, will energise and open up new possibilities. The challenge remains to provide the right experience by segmenting every part of the population that is willing to get this education and address their needs specifically and in a concerted manner to make sure that awareness and trust is created. We can use the power of technology today and the power of a trillion-dollar economy to ensure that participation in financial markets actually comes about.

Madhu Kannan (CEO, BSE): Financial literacy is extremely important in the Indian context, given the size of retail investor participation in markets. We, at The Stock Exchange, Mumbai (BSE), are ensuring that we communicate more effectively with investors in non-metro cities on every aspect of the various products that we trade on the Exchange. We have placed significant importance on training—both in terms of content and mode of delivery. From the Exchange’s perspective, given that around 60%-65% of trading volumes come from retail investors, this is very critical, especially when an increasingly higher percentage of that is coming from non-metro cities. The BSE has already launched its website in three different languages; it will soon be expanded to other regional languages as well. The BSE is trying to construct customised programmes based on asset classes. We are also trying to engage various stakeholders in this effort. We have significantly ramped up our training institute and are starting to offer not just customised training to institutional customers but also entering into partnerships with educational institutions across the country to offer focused training programmes. We are proactively using the investor protection fund to educate current and potential investors. Given the retail focus of our market, if the confidence gets shattered in a particular product, it could potentially stifle the innovation exercise that is going on.

Amitabh Mohanty (head, fixed income, Reliance Capital Asset Management): The days when we could put money in long-term bank deposits and earn double-digit returns or, in effect, when passive investment was a viable option, are gone.

Today, we have to start investing early and smartly. We are fortunate that different segments of the capital markets, the regulators as well as service providers, are now starting to work towards this goal. Earlier this week, the BSE and the NSE established platforms for retail investors to buy mutual funds through stock exchanges. The whole blossoming of technology is going to be a huge force multiplier. We don’t need to have feet on the street nowadays. Yes, at some point of time, we will need to do that in the rural segment, but if you look at the Internet penetration in some cities and towns, I think we already have a platform which we can use, at least to make the first decisive moves towards taking financial markets to the masses. It is up to us to try and address basic factors like designing our training programmes, disseminating information, encouraging people at large to start investing and giving them the ability to ask the right questions. It surprises me when a person spends Rs20,000 on a fridge only after careful analysis, but invests a few lakh rupees based on a tip. It is this behaviour which is very perplexing.

Investment is not rocket science. It works on the same philosophy that you would adopt to choose a good doctor or a good mechanic. You have to educate yourself with the basic concepts. This is where we can do a lot through the means already available to us.

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