Govt promises to make RGESS more attractive

Feb 10 2013, 00:40 IST
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SummaryThe government might take steps to make changes in the Rajiv Gandhi Equity Savings Scheme in the upcoming Budget to make it more attractive to retail investors, finance minister P Chidambaram said on Saturday.

The government might take steps to make changes in the Rajiv Gandhi Equity Savings Scheme (RGESS) in the upcoming Budget to make it more attractive to retail investors, finance minister P Chidambaram said on Saturday. Speaking at the launch of RGESS, he said the ministry will revisit the tax incentive section in the scheme to address investor concerns.

Admitting that concerns have been raised about the RGESS being too complex for a small investor to understand, he said, “We have expanded to include a large number of demat account holders who may not have transacted in equities through a demat account and not undertaken any derivatives trading till date....”

Sebi chairman UK Sinha said RGESS was an important milestone as it would help mobilise savings from domestic households. “At Sebi, we will be keen to help promote the scheme, which I am sure will pick up in a big way in time,” he said. He also admitted that there was a need to take a relook at the scheme to make it more beneficial for retail investors. “We are in talks with the government for this,” he said.

The finance minister also made a case to converge KYC norms for different financial sector regulators so that retail participation becomes seamless in financial instruments. “I think it is very important that KYC norms for all intermediaries and market regulator should converge and become one set of KYC norms. The next step is to converge the KYC norms for different sets of regulators,” he said.

“We cannot have multiple KYC norms for intermediaries and participants who are under one regulator, and worse, to have different set of norms for different regulators... That puts off the investor,” Chidambaram said.

He also expressed surprise that if one has a bank account, then why can’t one open a demat account straight away. “Life must be made simple, and we must be able to sell (to) the investors that by participating in the capital market, investing in financial instruments, investing in capital markets is good for the savers in the long run, good for the system and good for the country,” he added.

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