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Capital Market Key to the Economy; IRB invests efforts to expand investor base: Viral Acharya

Deputy IRB governor in departure of Viral V Acharya said on Saturday that capital markets play a key role in the country's economic development, and the Bank's reserve forces are making efforts to expand the base of investors.

Capital markets provide funding for long-term sustainable development of the economy, and is therefore considered an important element in the macrofinancial policy manual, Acharya said.

At the Indian Business School in Hyderabad, he spoke on developing a sustainable capital market – an Indian experience.

An American economics professor who resigned earlier this month as the deputy governor of the IRB – six months before the scheduled term of office – said that capital markets are also key to achieving goals such as financial stability and monetary policy transmission.

"The Reserve Bank has consistently and consistently sought to expand the investor base and thus the liquidity of the regulated market, while maintaining financial stability," Acharya said.

He argued that the Indian G-Sec investor base (state securities) expanded over the past decade in the form of an increase in shareholdings in insurance corporations and corporations, while a corresponding reduction in share in business banks was achieved,

At the same time, a calibrated approach to global investors through the FPI path helps expand the investor base, while at the same time bringing diversity of attitudes and trading strategies, he said.

The Global Financial Systems Committee (CGFS) established a working group in the period 2018-1919. For the purpose of examining global trends in the development of the capital market.

It is also in charge of identifying various factors, including legal, institutional, structural and economic, which encourage the development of robust capital markets and consider the role of politics.

The working group, co-chaired by the National Bank of China (PBOC, Li Bo) and the Reserve Bank of India (IRB, Viral V Acharya), focussed on issues that primarily concerned the development of bond and equity markets.

The CGFS report identified two types of capital market development initiators. One that creates a stimulating environment for financial development and others, more specific to the capital market, such as easy access to high-quality material information, investor-based diversity and an effective market ecosystem for trading, he said.

On the political front, Acharya said there was a favorable environment with macroeconomic stability factors due to stable growth and low inflation.

Among other things, Acharya said that promoting market autonomy through rationalization of regulatory guidelines and procedures, institution development and financial market infrastructure, and macroprudential management of investment restrictions for domestic and foreign investors, is a factor that has come from the political front for capital development. market in India.

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