India Country Report Investor Education Programs

1. Association of National Exchanges Members of India India Country Report Investor Education Programs Dr. Naresh Maheshwari – President ANMI

2. Introduction Difference between Educating and Training • Education implies giving detailed information and knowledge on an area of specialization; whereas Training implies practice and building skills for repetitive tasks • Let us use the example of driving a car • First it required a knowledge of the laws to drive the car • Secondly a training in the skills to drive the car • Whereas Education would imply knowledge on how to design a car • The difference is between know how and know why • The know how - to drive the car and know why – to design the car • Know why is the final stage of education • Indeed both are important for effective education and interact with each other – else they create learning problems Association of National Exchanges Members of India

3. Regulatory Approach in India • Primary regulatory objective • To protect the interest of investors in securities • To promote the development and regulation of the Securities Market • Investor Education is in correlation to the above • Integration of Investor Protection in all regulatory areas • Understanding the potential toxicity of products before introduction • Understanding potential intermediary and investor conflict of interest • Study of retail investor skills, behavior and awareness level of products across demographic groups with a feed back on issues /policies / products • Disclosure Based Regulations & Enforcement to prevent product misuse • Extensive education before a new product or rule is introduced • Evolving regulation for intermediary and investor for market integrity • Educating the investor on product advantages and toxicity • Preventing misleading product information to investor • IE across demographic spectrum for informed decisions Association of National Exchanges Members of India

4. Investor Education & Protection Fund (IEPF) Establishment of the Fund • In the Budget Speech for the year 2006 - 2007 the government proposed inter alia • “to set up an Investor Protection Fund under the aegis of SEBI, funded by fines and penalties recovered by SEBI” • The initial corpus of approx US $ 2 Million (INR 10 Crores) was from the SEBI General Fund out • This was enhanced to approximately $ 3 Million out of the funds received from the closure of two exchanges • Current estimates of the fund would be over USD 140 million • The Fund is established under the Ministry of company Affairs (MCA) Association of National Exchanges Members of India

5. Investor Education & Protection Fund Further additions to the fund would come out of: • Further grants as may be made by the Board to the Fund • Grants and donations by the Central & State Governments and any other approved entity • Amounts lying in the Investor Protection Fund and any other amount lying with Derecognized Stock Exchanges • The Unpaid dividend accounts of the companies • Application monies received and due for refund • Matured unclaimed deposits • Grants and donations by government and other institutions • Interest out of investments made from the fund • Penalties levied on intermediaries • All amounts accruing to the exchanges out of the above are to be credited to the Consolidated Fund of India Association of National Exchanges Members of India

6. Activities of the Fund • Education Programs through the visual media • Through directed programs on TV including panel discussions on investor awareness in all languages • Advertisements in the National & Regional News papers • Organizing IE Seminars and symposia • All the major exchanges actively conduct investor education programs • The IEPF funds voluntary approved agencies to conduct IE and awareness seminars across the country – over a hundred such agencies have been approved so far • Financing research projects pertaining to investor education • Coordinating with Institutions engaged in Investor education • The IPEF funds the Indian Institute of Capital Markets to train ‘trainers’ in IE for the SEBI & NISM curriculum Association of National Exchanges Members of India

7. Some IPEF assisted Websites for IE • An Investors helpline www.investorhelpline.com • A website through Midas Touch Investors Association to provide a mechanism for Redressal of investor grievances and to create • Watch Out Investors www.watchoutinvestors.com • This is a National Registry of economic defaulters and covers information on convictions by various regulatory bodies. The registry contains over a 100,000 entries • IPEF Website www.ipef.gov.in • This is an excellent knowledge sharing platform on all investor related subjects – an excellent learning tool • We now move to the more structured initiatives Association of National Exchanges Members of India

8. Structure for Financial Education in India • National Institute of Securities Markets (NISM) is a public trust established by SEBI for evolving curriculum for the securities markets. NISM have organized a series of programs aimed at • Mandatory Competency Certification for intermediary staff • Continuing professional education programs • Academic Programs • Financial Education • Regulatory Studies • Corporate Governance and Research • NISM Consists of Six different Schools • School for Investor Education and Financial Education • School for Certification of Intermediaries • School for Securities Information and Research • School for Regulatory Studies and Supervision • School for Securities Education • NISM www.InvestorFirst.in Website for online IE • Financial Education in Schools • Out Reach Program – for Investor Education Association of National Exchanges Members of India

9. Structure for IE in India - 2 • The premise is an educated investor is a protected investor: • Who will exercise due diligence when making investments • And take informed decisions – and seek expert advise • Take responsibility for their decisions • The IE target is for the investor is: • To Know His Product • To understand his personal risk profile – and to avoid greed behavior • Understand his rights and obligations • To select products based on his risk appetite and financial ability • To understand market movements • Overall to avoid being influenced by Dream Merchants • IE products designed for every demographic group • The IE products include know how information relevant to the Investors probable investment and the know why information relative to understanding market regulation Association of National Exchanges Members of India

10. The Out Reach Program • Empanelling Content Providers For Financial Education • SEBI and NISM have together initiated a Train the Trainers program to build a base of qualified trainers for financial and investor education • The empanelled trainers will provide IE content in the regional languages across the demographic spectrum with a defined syllabus • The program is projected to reach out to every village in India • Resource persons available to Industry and NGO for training • The program aims to enhance an understanding of finance and an ability to understand investments • Support by the Ministry of Company Affairs (MCA) • Though in its infancy –this program in future is expected to enhance financial literacy from school & college levels, the home maker and the small retail investor Association of National Exchanges Members of India

11. Targeted IE Programs • NISM and SEBI have organized Training Curriculum for every demographic group • Financial Education Part A – For the average literate investor • Financial Education for School Children • Sessions for School Children • Pocket Money Program for schools • Investing for college students • Home Makers Module • Executives module • Middle Income Group • Investment Planning for retired people • Money Maxims – a general information module • Besides ANMI have published an Investor Education Booklet authored by Dr. Naresh Maheshwari – President ANMI Association of National Exchanges Members of India

12. Thank You Dr. Naresh Maheshwari – President ANMI Email – president@anmi.in Web: - www.anmi.in Association of National Exchanges Members of India