Union Minister P. Chidambaram, on Saturday, asked the regulators to simplify procedures, especially the integration of KYC (know your customer) norms, to attract more people to invest in financial products rather than gold and real estate.
Launching the Rajiv Gandhi Equity Savings Scheme (RGESS) here, Mr. Chidambaram said, “There are too many regulations. KYC under single regulator must converge in the first phase and, thereafter, there should be convergence of KYC under different regulators in the market.”
He promised that the government would make the RGESS scheme, announced in the Bueget 2012-12, more attractive for small investors. Mr. Chidambaram admitted that initially the RGESS was considered a complex instrument. He conceded that the tax incentive on investment up to Rs.50,000 was not adequate.
“We have tried to be creative to make it more attractive. We have allowed mutual funds to participate in RGESS, and we have broadened the definition of first-time investor to include demat account-holders who have not transacted previously.”
There are already 11 mutual fund schemes conforming to RGESS. Five new mutual fund RGESS schemes — SBI Mutual, LIC Noumura, IDBI, UTI and DSP Blackrock — were launched on Saturday.
Meanwhile, Mr. Chidambaram said the GDP (gross domestic product) growth would be at 5.5 per cent during the current fiscal, rather than 5 per cent as estimated by the Central Statistics Office (CSO). It was wrong to label 5 per cent growth as the lowest. The GDP growth during 2000-01 and 2001-02 was below the 5 per cent-mark, he pointed out. The economy grew at an average of 5.4 per cent during the first five years of the 21 century, 8.4 per cent during 2005-09 and 7.3 per cent thereafter.
Mr. Chidambaram said an 8 per cent growth rate was imperative for the country’s development. It was only at this growth rate that the economy would be able to absorb the new entrants into the job market, he said after inaugurating MCX-SX, the third nation-wide stock exchange, here.
The Finance Minister said the growth rate was going up more like a ‘U’ rather than a ‘V’. He said various policy initiatives would ensure green shoots in the economy.
Mr. Chidambaram said the markets needed to gain the trust of retail investors by stopping insider trading.
The Finance Minister also launched the IL&FS Infrastructure Debt Fund, promoted by IL&FS and the LIC of India, to finance long-term infrastructure projects, and inaugurated 101 branches of State Bank of India.