Calling mutual funds one of the biggest untapped growth levers, Pandey told an event organized by business channel CNBC-TV18 in Mumbai on Friday that “huge opportunities lie in deepening mutual fund penetration. AUM of mutual funds is still less than 25 percent of our GDP, much lower than in other jurisdictions.”
While awareness about mutual funds is rising, actual participation remains low, especially outside metros. “Urban participation in securities markets stands at 15 percent, compared to just 6 percent in rural areas,” Pandey said, adding the regulatory objective is to double the investor base within the next five years and that new investor education campaigns will cover digital, physical, and multimedia formats.
On recently announced regulatory costs and caps for mutual funds, Pandey struck a balanced tone, saying “the cap is a cap, it’s a ceiling. We are discussing whether the ceiling is too low. Transparency in costs remains non-negotiable.”
The chairman said to broaden the market access, Sebi and the industry association Amfi have revised distributor incentives to encourage onboarding of first-time women investors and those from beyond the top 30 cities.
“Financial inclusion will remain incomplete unless women are equally represented,” Pandey said, adding the regulator has strengthened mechanisms to monitor and curb mis-selling and distributor misconduct.
Pandey also drew attention to the proliferation of unregistered advisers, fake apps, and fraudulent schemes misleading investors online. He said Sebi has intensified surveillance under its ‘Sebi versus scam’ campaign, with over 1 lakh misleading social-media content flagged for takedown. Exchanges have been instructed to maintain verified lists of broker apps, while Sebi’s “Valid UPI” and “Sebi Check” tools now allow users to confirm intermediary credentials and payment details before investing.
The chairman reiterated that investor protection begins with education and that the regulator’s focus on “optimum regulation” aims to make markets both safer and more inclusive.
“Mutual funds must be products that retail investors can trust,” he said, calling trust and participation the twin pillars of India’s next phase of capital-market growth.
On the roaring primary market, Pandey noted though the market has raised Rs 2 trillion so far this year, said the next phase of growth will come from deeper domestic capital and more investor base.
Noting that the capital markets are no longer a mirror of the economy, but a core pillar of our growth story, he said as the economy continues to demonstrate “remarkable growth and resilience, the capital markets are not just a barometer of the economy, but central to the aspirations of a developed nation.”
Underlining that the health of the primary market remains robust, with Rs 2 trillion already raised from public issues this year, he said “we will continue to streamline the capital-raising process, and the ongoing reforms aim to make the markets faster, more transparent, and more inclusive.”
The Sebi chief said the regulator will soon finalise a futures options framework, one that aligns with global standards but remains “tailored to our needs.”
Stating that “derivatives play a vital role in price discovery,” Pandey said, “Sebi’s approach to F&O will be calibrated and data-based.”
A discussion paper outlining this approach is expected soon, he said, confirming a weekly F&O is working well, providing certainty to market participants.
Noting that our securities lending and borrowing mechanism (SLBM) remains underdeveloped compared with other jurisdictions, he said to address this, Sebi will comprehensively review the short-selling and SLBM frameworks.
He also said the regulator would examine buyback norms to enhance transparency and investor confidence.
Pandey also pointed to the need for further deepening of the bond market, saying while several measures have been taken, “much remains to be done.”
He further said Sebi will soon undertake a review of the listing obligations and disclosure requirements (LODR) framework, a key regulation governing listed companies, to strengthen corporate governance and transparency.