What Sebi Chair Madhabi Puri Buch says on development of market, capital formation

Madhabi Puri Buch, Sebi Chairperson, on Monday touched upon the theme "Development of the market and capital formation" in an "out of syllabus press conference." Buch said India is in a wonderful position where it has a strong and robust economy, which continues to grow despite global headwinds.

Buch said she is not an economist but when she talks with foreign investors she prefers to look at tax collections and power consumption as key metrics. "If I want to have a sense of where the economy is today and where it is headed, I look at these two numbers. Nobody pays taxes unless they have to. We also have a concept of advance tax numbers. When we have GST numbers and when we see the month-on-month numbers looking so robust, we get a comfort that the economy is doing exceedingly well."

"At the same time, when we look at advance tax numbers, in a way, that is a forward-looking statement by corporate about where they see their profits at the end of the year. When we see that also improving, it gives us tremendous comfort to share with the global investors that the growth of the economy is real," she said.

"At the same time, when we look at advance tax numbers, in a way, that is a forward-looking statement by corporate about where they see their profits at the end of the year. When we see that also improving, it gives us tremendous comfort to share with the global investors that the growth of the economy is real," she said. 

The power consumption also is an indicator of real economy, Buch said. That's where manufacturing happens, she added. Buch said there are the two indicators she strength of numbers when foreign investors come to visit Sebi.

"Our role in the capital formation acquires even more importance. The appetite is there, we need to ensure facilitation," Buch said.  

Steps in right direction

Buch said in many places, any delay costs the companies in the process of capital formation. In many places, she said, time is considered from the time of communication. At Sebi, Buch said, the market regulator is looking at time from the point of admission of application. Buch added that pendency has declined for equity raising applications to under three months.

Buch said confidential of filing has been allowed and that IPO prospectus can be made public only if firm feels confident. 

On flexibility of confidential filing of draft of a document, Buch said there was a "request from new-tech companies" and that many had expressed this requirement, which the regulator has decided to implement.

"They can do confidential filing, test the market and, only when they are confident that they want to go forward with the IPO, then the prospectus is made public," she said.

Buch said since Sebi has a mandate of the development and regulation of the market, and investor protection, it would take up three thematic discussions in a year to see how things panned out over the last one year on each of the three areas. Buch said Sebi will soon be discussing on the second theme. 

Buch recalled that she talked about how Sebi is conscious of the fact that capital formation is the core reason why it exists. Everything else is important but peripheral to the key task of capital formation in the economy, she said.

The Sebi Chair said: "Today we are all in a very fortunate place as a country, as market participants and market observers that India is in a wonderful position where we have a very strong and robust economy, which continues to grow despite global headwinds." Buch said she looks at where is our economy today.

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