On Friday, Ananth Narayan, a whole-time member of SEBI, voiced serious concerns regarding unregistered investment advisors and research analysts, labeling them a significant “menace” as they exploit the growing public interest in investments. Speaking at an event hosted by the Association of Registered Investment Advisors (ARIA), he highlighted the importance of self-regulation in the financial advisory space.
SEBI’s Efforts to Combat Misinformation
Since October 2024, SEBI has collaborated with social media platforms to eliminate over 70,000 misleading accounts and posts. Narayan emphasized the need for more registered investment advisors (IAs) and research analysts (RAs) while advocating for stronger self-regulatory practices. He suggested that ARIA consider evolving into a quasi-self-regulatory organization (SRO), drawing inspiration from the successful Association of Mutual Funds in India (AMFI) model.
- Key Actions by SEBI:
- Partnered with social media companies to tackle misinformation.
- Advocated for ARIA’s growth into a quasi-SRO.
- Issued consultation papers to enhance business operations for IAs/RAs.
Addressing Foreign Portfolio Investment Trends
In light of recent foreign portfolio investors (FPIs) selling off equities, Narayan reassured that the overall investment landscape isn’t as dire as it appears. He highlighted that FPIs continue to maintain substantial investments in India, with Rs 62 lakh crore (over $700 billion) in equities and approximately Rs 5.9 lakh crore (around $68 billion) in debt as of February 2025. He noted an uptick in FPI investments in debt instruments, spurred by India’s inclusion in global indices, which has positively influenced portfolio diversification.
The Rise of Domestic Investment
Celebrating the increase in domestic capital flows, particularly from mutual funds, Narayan pointed out the urgent need for quality investment options. He noted that in FY24, equity issuances totaled only Rs 2 lakh crore, while mutual funds and FPIs injected a remarkable Rs 5 lakh crore into the market. “Ensuring an adequate supply of fresh investment opportunities is vital for fostering new business ventures and supporting economic growth," he stated.
Investor Awareness and Financial Planning
Narayan concluded with a call for investors to stay vigilant about potential risks associated with their financial choices. He urged individuals to engage in responsible financial planning, emphasizing the importance of appropriate asset allocation.
In summary, the dialogue surrounding unregistered investment advisors, the dynamics of foreign portfolio investments, and the surge in domestic flows highlights the evolving landscape of India’s investment ecosystem. For investors, maintaining awareness and strategic planning remains crucial for navigating this complex market.
