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
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
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