SEBI Proposes Overhaul Of Household Financial Savings Computation Process
The revised approach will account for a wider array of securities, including equity, debt, and hybrid instruments in both primary and secondary markets.
Amid rising buzz surrounding the issue of household wealth moving from saving instruments towards securities investments, Securities and Exchange Board of India has proposed some changes to the computation methodology used to assess investor holdings and market activities.
The changes proposed will help compute exactly how much of this wealth is moving from the saving instruments and into other areas. The suggestions include computing based on both primary and secondary markets, considering a wider array of securities and having new categories of investors.
SEBI plans to categorise investors into two groups—individual investors and Non-Profit Institutions Serving Households. This division will be independent of income levels and investment sizes.
The revised approach will account for a wider array of securities, including equity, debt, and hybrid instruments in both primary and secondary markets. It will also include the assets under management data for mutual funds related to NPISHs.
The proposed method will include actual investments from both primary and secondary markets for equity, debt, mutual funds, real estate investment trusts, infrastructure investment trusts, and exchange-traded funds. Additionally, it will incorporate data from alternative investment funds starting from fiscal 2025.
The new methodology will use AUM data from the Association of Mutual Funds in India for individuals and NPISHs. It will also include holding data from depositories for various financial instruments, including equity, debt, REITs, InvITs, and AIFs.
Under the new methodology, resource mobilisation for financial year 2023 showed a rise from Rs 2.06 lakh crore to Rs 2.89 lakh crore, an increase of Rs 83,600 crore, incorporating additional funds from the secondary market transactions.
Total resource flows, including secondary market investments, are anticipated to climb from Rs 2.14 lakh crore to Rs 3.31 lakh crore, reflecting a substantial increase of Rs 1.25 lakh crore.
The value of mutual fund investments for the same fiscal is expected to grow from Rs 23.68 lakh crore to Rs 24.45 lakh crore, marking an increase of Rs 77,431 crore.
The total stock value, covering equity, debt, and hybrid instruments, is projected to surge from Rs 23.68 lakh crore to Rs 83.83 lakh crore, representing an increase of Rs 60.15 lakh crore.
