The revival of retail investor interest is an issue that needs attention, well beyond the immediate imperative of hawking public-sector shares to meet disinvestments targets. Regulators and policy-makers need to understand that the preparation required to start investing in the capital market is itself the first turn-off. It is expensive and cumbersome and risky from the word go. All brokerage firms insist on investors signing a Power of Attorney (PoA) giving them the right to move your shares/money in and out of the designated bank and depository accounts. SEBI says that a broker cannot ‘insist’ on a PoA from investors who intend to buy and hold a few shares for the long term. But it cuts no ice. Brokers flatly refuse to open accounts without the PoA and this keeps a large swathe of potential investors out of the market. Market sources say that the PoA is just an excuse; in fact, brokers are uninterested in clients who do not intend to trade regularly and generate brokerage commissions.
If you are a regular investor and want to open accounts with two different brokers, they will both insist on separate depository accounts. This involves double the expense on fees and charges. Again, it is a take-it or leave-it option.
The government may want to attract retail investors by offering them PSU shares at a discount, but it is a long journey to even get to that point. SEBI officials say they will act against specific complaints, but most investors prefer to stay away from the market rather than fight to open an account. — Sucheta Dalal
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