The Securities and Exchange Board of India (SEBI) on Wednesday proposed changes in the calculation method to make domestic savings data more accurate. A change in the calculation method for obtaining savings-related information through the Indian stock market has been suggested in this report. Sebi said in a report that the change in methodology will make the data more accurate and improve the quality by capturing actual values ​​and including financial segments/products that are currently not covered in the stock market.
These are the three proposed changes
Three changes have been proposed in this to improve the calculation method. First, redefining the categories of investors, second, expanding the types of products that these investors can access and third, adding new components that are currently not covered. It was found that household savings through the Indian stock market are not fully assessed by the existing calculation method. This is because the Indian stock market has gone through many structural changes in the last decade. Moreover, the savings pattern of Indian households has also changed over time.
What is the current method?
As per the current methodology, the Reserve Bank of India (RBI) considers actual data related to mutual fund investments received from SEBI and Association of Mutual Funds of India (AMFI). While the data related to the stock and bond section is based on estimates or formulas. Also, some sections and products of the Indian stock market are not included in the current calculations.
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The report suggests including all domestic individual investors and HUFs (Hindu Undivided Families) in the investor category, irrespective of their income or investment size. It also proposes including non-profit institutions (NPISHs) such as NGOs, trusts and charities.
These are not currently considered.
The current calculation method includes retail, HNIs (High Net Worth Individuals), Hindu Undivided Families and individuals. In case of financial products, it is proposed to include investment data of Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) and Alternative Investment Funds (AIFs). Currently, these data are not considered.
For stocks and bonds, it has been proposed to include actual amounts from both the primary and secondary markets. Net investment in stocks and bonds by households and NPISHs will be calculated on a daily and annual basis.
Currently, only primary market data is considered. For mutual funds and ETFs, it is suggested to include net inflows to mutual funds and ETF transactions in the secondary market. Currently, only net inflows to mutual funds are considered.
