Corporate Governance, Trust Contributed To Stock Market Growth: NSE Chief

Corporate governance and trust have significantly contributed to the overall health and growth of the country's stock market, NSE chief Ashishkumar Chauhan said on Thursday.

"There is no way this stock market would have come up without corporate governance," he said here.

Speaking at the Global Economic Policy Forum, organized by CII, the Managing Director and CEO of NSE said that the total number of unique investors directly investing in the stock market has grown to 83.5 million.

These unique investors amount to around 17% of households directly investing in the Indian stock market through NSE's nationwide network of trading members.

"If the NSE were a country, we would have been the 20th largest country in the world," he said.

Apart from corporate governance, trust is another key element that has significantly increased the performance of stock markets, Chauhan said.

With a market capitalization of $4 trillion, India is now the fourth largest country in the world, excluding Hong Kong — whose market cap is mainly due to the listed Chinese firms there.

The country is behind the U.S., China, Japan, and Hong Kong in terms of equity market capitalization.

This massive growth signifies confidence in government governments, judiciary, and policy of regulators, Chauhan said.

"It not only shows the confidence in government governments but also the judiciary and policy of regulators. It's actually a vote of confidence in Indian entrepreneurs and that is why I will say what we manufacture in capital markets is trust," he added.

As far as investing in entrepreneurs is concerned, India has become a very trustworthy country over the last 30 years.

Meanwhile, Rajnish Kumar, Chairman of Mastercard India, said that there is a need to develop a bond market akin to equity markets.

This could boost liquidity, diversify investment options, and provide alternative funding sources for businesses.

"The banking market has a regulator, the equity market has a regulator but the bond market has two regulators. The ball always falls between two fielders and both think it is their catch," Kumar said.

"When it comes to the bond market, we are very risk averse, regulator is risk averse, the public is risk averse so this is risk aversion unlike it happens in the U.S. For risk, You have to do a lot of due diligence that investor doesn't have to do," he added.

According to him, excessive regulations can pose challenges for corporations seeking to raise funds through the bond market.

"We have so much of regulation today that it is not easy to raise (funds) from the bond market. So corporate feels that it is better to go to a bank,' Kumar said.