Securities and Exchange Board of India (Sebi) on Wednesday proposed three changes, including the category of investors and investment instruments used by participants for computation of household savings through the securities market.
The Reserve Bank of India (RBI) in its statement on Flow and Stock of Financial Assets and Liabilities of Households and the Ministry of Statistics and Programme Implementation (MoSPI) in its National Accounts Statistics publishes data on household savings generated through various segments.
The market regulator said it has been noticed that the RBI’s data, published in the monthly bulletin, on savings of households through the Indian securities market is not captured fully through the existing methodology of computation.
“Three sets of changes are proposed to the computation methodology: firstly, regarding the category of investors, secondly, regarding the instruments that such investor categories participate in, and thirdly, the components proposed for inclusion that are absent in the existing methodology,” as per the recommendation of a working paper on ‘Household Savings through Indian Securities Market’.
The paper said that in the existing methodology, RBI is considering the actual data relating to mutual fund investments sourced from SEBI and AMFI (Association of Mutual Funds in India), while the data relating to equity segment and debt segment are based on estimations or formulas which attempt to derive the extent of savings through such segments.
The paper has proposed to categorise investors as individuals – all domestic individual investors irrespective of income/extent of investment and HUFs (Hindu Undivided Families), and non-individuals – NPISHs (Non-Profit Institutions Serving Households), which include NGOs, charities and trusts. As per the existing methods, investors are categorised as retail, high net worth individuals (HNIs) and HUFs.
In terms of instruments, the paper suggested that for resources mobilized through equity and debt, actual amounts from primary and secondary markets should be considered. Presently, for both equity and debt instruments, primary market is considered. Also, only 35 per cent of total equity investments and 40 per cent of total debt investments is being considered currently.
For mutual funds, the paper has proposed to take into consideration the net flows into mutual funds and ETF (exchange traded fund) transactions in the secondary market, as against just net flows into mutual funds. The paper also recommended that funds mobilised through Real estate investment trusts (REITs), Infrastructure investment trusts (InvITs) and Alternative Investment Funds (AIFs) should be considered.
The paper said resources mobilised through primary market – preferential issuances and offer for sale should be included in the equity segment. In the debt segment, private placement of debt, municipal debt securities, securitized debt instruments (SDIs) and listed SRs (security receipts) should be included.
