Promoting Spot Trades: SBI Chief’s Call for Action
MUMBAI: In a pivotal address at a National Institute of Securities Management event on Friday, SBI chairman C S Setty issued a clarion call for critical reforms in the Indian financial landscape. Setty urged the expansion of the pool of listed companies and the promotion of spot transactions to enhance price discovery in the market. These changes are deemed crucial as an over-reliance on derivatives has been hindering market depth and liquidity, according to Setty.
Emphasizing Transparency and Accountability
Setty underscored the necessity of establishing a dedicated market infrastructure institution to monitor the utilization of funds raised by businesses through equity and debt markets. This move, he believes, will instill confidence in investors and bolster transparency. “We will require a viable mechanism to track the actual use of these funds, to ensure that the funds are utilized for the purposes they have been raised for,” Setty remarked.
Scaling Up Capital Markets for Economic Growth
The SBI chairman outlined the critical role of Indian capital markets in mobilizing domestic savings, encouraging long-term investments, and reducing dependence on volatile foreign capital inflows. Setty emphasized that the Indian capital markets must expand significantly to mobilize the substantial amount of equity – Rs 643 lakh crore – needed by 2036 to support economic growth, raise the investment rate to 35% of GDP, and boost domestic savings to 33.5% of GDP.
Focus on MSMEs and Climate Finance
Addressing the pivotal role of Micro, Small, and Medium Enterprises (MSMEs) in India’s economy, Setty called for targeted measures to tackle credit information gaps that hinder their growth. While acknowledging the progress made through initiatives like SME platforms and digital credit assessment systems, Setty stressed the need for further efforts to formalize and consolidate data sources to enhance credit accessibility.
In a forward-looking stance, Setty also shed light on the pressing need for climate finance to support India’s ambitious net-zero goals by 2070. With a staggering $10.1 trillion estimated requirement for this endeavor, Setty highlighted the necessity of innovative institutional mechanisms to efficiently mobilize funds, especially in the power sector where $8.4 trillion is needed alone. He noted that annual green financing needs could soar to 2.5% of GDP, calling for proactive strategies to meet these demands effectively.
**In an era where financial resilience and sustainability are paramount, Setty’s advocacy for robust market reforms and responsible capital utilization resonates deeply. As we navigate the complexities of economic growth and climate challenges, his vision for transparent, inclusive, and efficient financial systems offers a beacon of hope for a brighter future. Let us heed his call for action and work together towards a more resilient, equitable, and sustainable financial ecosystem.**