According to Sebi Chairman Tuhin Kanta Pandey, India's investor population could potentially expand to twice its current size within the next three to five years, given the current low levels of equity market participation.

Pandey stressed that continuous economic growth will be crucial for directing a more substantial portion of domestic savings into the capital markets.

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"In the future, this economic expansion will be the primary mechanism through which we can invest our internal savings into our capital market," he remarked during his speech at the CII National Financing Summit.

He highlighted that domestic investors, including households and institutional investors, now collectively own a more significant portion of listed equities compared to foreign portfolio investors (FPIs), with the country currently hosting approximately 135 million unique market participants.

“There will always be external risks, whether trade-related or from global financial markets. But India’s growth story is supported by solid fundamentals, demographics, a deep talent pool, and sustained public and private investment. These factors, combined with investor trust, act as a shield against shocks,” he said.

A comprehensive survey conducted by Sebi across the country revealed that 63 percent of participants are knowledgeable about the securities market, yet merely 9.5 percent of households are actively investing.

 

Additionally, an additional 22 percent of respondents are contemplating market entry within the upcoming year — a development that, according to Pandey, imposes a significant obligation on regulatory bodies, securities issuers, and market intermediaries to guarantee the security and quality of investment opportunities.

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He emphasized that the Securities and Exchange Board of India (Sebi) maintains an ongoing collaborative effort with the Reserve Bank of India to develop analytical frameworks that monitor interconnected financial risks, with a particular focus on potential liquidity challenges and investor redemption scenarios in mutual fund investments.

On the rapid adoption of AI, algorithmic systems and tokenisation, Pandey said Sebi’s regulatory stance is anchored in “innovation with responsibility and accountability.” Innovation, he said, is “unstoppable,” and regulation must evolve dynamically to de-risk emerging technologies without stifling progress.

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He also cautioned that as digital participation rises, so does exposure to cyber fraud. Ensuring that new investors enter the market safely and responsibly, he said, will be key to lifting India’s capital markets to “a different level” over the next five years.