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Bombay Stock Exchange MD & CEO addresses City Management Students

Hyderabad|India|November'2011: Madhu Kannan, MD & CEO of Bombay Stock Exchange(BSE) addressed the first year students of management at The Institute of Management Technology(IMT), here in city outskirts at Shamshabad. He was the Chief Guest at the concluding session of the 12 Day Business Orientation Program organised with an objective to provide management students to have interaction with industry experts as part of their industry interface programme.

He spoke for three hours on Financial Markets in India and answered questions of the students.

Speaking on the occasion he said only 2per cent of the population of India is participating in the capital market. Remaining population is shying away from investing in stock market. The reason for the same is the Indian typical household balance sheet is comprised of investments in Gold, Real Estate, Fixed Deposits, Insurance and others. Investing in equity doesnt figure anywhere in their household balance sheet, said Madhu Kannan.

More than 90 per cent of Indian population is interested in risk free investments. They don’t want to deploy their hard earned money in stock markets. Where as in a USA 90% of investing population do invest in stocks. Their exposure to equity markets is much better than ours, he observed.

Indian economy is growing faster than ever before. More and more new companies are starting their operations. There is no dearth of labour force to run these companies. Each passing yar 15 to 16 million people are joining in organised labour force in this country, which is more than the population of Australia. Now that companies need is financial resources, which can come from equity market. But, large chunk of people shying away from it will only worsen the situation. So we need to connect people. We need a platform. So exchange is a platform that provides cost effective solutions to raise funds, he said.

We are not as institutionalise as we are. We are more of retail in nature. The active investors who contribute and become part of the BSE come from only two states--Gujarat and Maharashtra. So the reach of BSE should be much more and should be Pan India. Also we need to look at cost effective entry barrier for more brokers/members to enter BSE. Then only we can spread investment culture in India.

In order to reach close to investors, BSE plans to adapt four broad based themes, objectives to focus more on near future. 1. Technology. Innovation in Technology will have tremendous impact on the market he said. The second is innovation, third is distribution and fourth is service.

India enjoys excellent mobile phone connectivity. We have 750 million mobile subscribers. Where as 200 million only invest in stocks. Rest 550 million are also equally potential to invest in capital market. To reach such a large pool of investors, one needs to look at Mobile Technology, he observed. Use mobile distribution to get more investors into investment circuit, he said. Innovation in technology will change drastically how people access markets, he opined.

Financial products needs to be distributed the way FMCG companies do. I would like to see BSE change to service driven organisation, he informed. Speaking about regulations, he said, we have to live with them. There is a need to create a financial infrastructure platform. The way Indian financial markets are growing, they soon throw open lot of business opportunities he told the young and aspiring management students.

Kannan the former corporate strategist from Bank of America-Merrill Lynch, based out of New York said the investment culture needs to be spread in order to offer wealth to aam admi in this country.

He also emphasised that training in financial sector must be also taken up on war footing basis. It throws open lot of opportunities to young entrepreneurs, he added.

In a reply to a question posed by a student why we dont consolidate all the 23 Stock Exchanges in India into one, he said, time is not ripe for it. We need lot of political will to do so. It might take another five years to happen he said. And added that even if we have different stock exchanges, each must trade in all together a different financial product.

And said that out of somany exchanges many are non functional. Unfortunately, we don’t have any policies in place to close stock exchanges. That is why even if they are non functional, they are not yet closed. They remain in the state of suspended animation, he said.

BSE spends each year Rs 60 to 70 crore on technology. To set up a new exchange, we need lot of capital anywhere above Rs 100crore, he replied to another
question. Answering another question, he said.
BSE gives utmost care for safety of the transactions and irregularities. We have online surveillance teams in place, he informed

The programme was attended by Dr. V. Panduranga Rao, Director of IMT Hyderabad, Prof. Nikhil Rastogi, several teaching staff of the institute and 120 first year management students.

In past 12-days several industry experts from wide variety of fields visited campus and addressed the students. The Program according to Dr. V. Panduranga Rao, Director was designed with the objective of helping the students understand and appreciate the ‘big picture’ of business in the sectors; to enable the students to evaluate the diverse career opportunities that the sectors would provide; to inspire and motivate them by listening to the life experiences of these accomplished persons. The program would give the students an opportunity to interIn act with the who’s-who in the business world, discuss issues of a contemporary nature, debate on issues of importance in these sectors and also raise questions that concern them.

This program, is one among the few initiatives taken up by IMT Hyderabad. The institute aims to develop socially responsible and innovative business leaders.

-Nov 2011

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