Need to improve credibility of market institutions: Arun Jaitley

The inflow of savings from Indian households into the Indian financial markets is likely to increase if the country has the right policies and a much bigger private sector according to Union Finance Minister Arun Jaitley.

Speaking at an event organised by the National Securities Depository Ltd (NSDL) in Mumbai on Saturday, Jaitley observed that Indians were cautious spenders who felt that savings rate had declined despite India’s savings rate of about 30 per cent.

The custody value of NSDL – which holds more than 89 percent of the securities in dematerialised mode in the country – is higher than the aggregate deposits across banks in India.

“In a few sense it becomes a boom for us”, the finance minister said. Jaitley said, “even in globally adverse circumstances we can maintain a comfortable 7-8 per cent growth what would happen if current challenges were not there”. “Exports have slowed. There have been two continous years of below par monsoon”.

“You had sectors of the economy which stressed the private sector… private sector investment is a little low”.

On the rising bad loans in the banking system, which crossed 13 per cent of the system in the June quarter, he said this is reflective of the stress in a few key sectors of the economy like power, steel and other metals and expressed the hope that the recent measures will be fruitful. “We need to improve the credibility and integrity of our market institutions, the regulators, corporates and other market-makers, to attract more retail funds into the market”, Jaitley said. “Today those who support reform outnumber those who oppose” he said, while remembering his first taste of capital market aberration, appearing as lawyer in India’s first insider trading case in an era when there was no Securities Appellate Tribunal.