Dear Mr Chairman:

We are a country with limited long-term risk capital. This is borne out by the facts that even after 15 years of reform, we have just about 3 million investors and over 80 per cent of trade on the stock exchanges is short term in nature.

While there are several reasons for this underdevelopment if one may call it so, two in particular merit a mention here.

• Even as scam after scam has hit the market/investor, there is little evidence of the guilty having been booked. There is a sense of disillusionment with respect to various initiatives of SEBI to bring the guilty to book.
  

• The more important point, in my view, is that even as the government has spent millions of rupees educating foreigners about the Indian markets and its world class processes and infrastructure and their potential (most of which currently are hedge funds and short term investors), little has been done to educate the vast majority of Indian who have come to think of the markets as a casino.
  So even as the country saves about 25 per cent of its national income, not more that one half of a per cent goes into the markets.

In light of this, one would expect the SEBI to encourage long-term investing by taking measures to restore confidence in the markets. Unfortunately, the sense I get is that we are going the other way.

Currently, there is a process on for building a central database of Market Participants (MAPIN). As per this regulation, all market participants, including investors, need to mention a MAPIN number every time they invest/redeem/sell shares or mutual funds (and other securities) of a value exceeding Rs 100,000. The number, of course, is procured after an elaborate process, which involves fingerprinting. This brings some interesting thoughts to mind:

1. The MAPIN card will probably be the sixth photo ID card which an average Indian will need to carry (the other being PAN, election, passport, driver's licence and a planned EPF card).
   

2. Up to Rs 50,000 of investment we will not require any additional identification; between 50,000 and Rs 100,000 we need to provide a copy of our PAN card; and now, over Rs 100,000 we need a MAPIN number. Although I am tempted to speculate what can happen going forward, let us just leave it at that.
   

3. Is it the small investor who needs to be tracked to ensure that the market functions properly? A Rs 100,000 transaction is not necessarily large as people invest not only from their regular income but also accumulated wealth.
   And, in any case, a PAN number is being provided, which can help in tracking. Should not the SEBI be focusing its efforts on 'large' investors who have repeatedly made a mockery of the system?
   

4. An individual can today go and buy, by giving cash, any amount of Kisan Vikas Patras. But when a genuine investor buys Rs 100,000 of units of a mutual fund scheme, why is he being asked to provide additional information (and above all give his finger prints!).  There are many such examples.
   

5. Some of the institutions being asked to collect the forms and issue the MAPIN cards are themselves market participants. So, has the SEBI taken measures to protect the privacy of the investor?
   

6. Finally, will this help in increasing the breadth of the markets in terms of larger numbers of long term investors? One only expect that investing as an activity will become even more urban centric as MAPIN registration facilities are not widely available. I leave it to the readers and the regulator to answer.

One only hopes that the SEBI will take measures to encourage participation from the retail investor.

Thank you.
Warm regards,

Signed: A long term, tax paying investor (with 4 ID photo cards and 2 more on the way).

The views expressed are of the author and do not represent the views of the organisation where he is employed.

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