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Investor protection is one of the most important elements of a thriving securities market or other financial investment institution. Investor protection focuses on making sure that investors are fully informed about their purchases, transactions and the affairs of the company that they have invested in. Investors protection is a very popular phrase with all these concerned with regulation of the capital market, stock exchanges, SEBI, MCA, RBI, Investors Association, or matter of fact the companies themselves – Various Procedures, Guidelines, Rules and Regulations have been issued in the Legislations to protect the Investor’s right and repose the confidence. Keeping the above in view, this lesson will enable the students to understand the concept and need for Investor Protection and Education, Rights and responsibilities of investors, legal framework for investor protection in India, measures and initiative, taken for financial literacy in India and SEBI SCORES system.
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The securities market operations promote the economic growth of the country. More efficient is the securities market, the greater is the promotion effect on economic growth. It is, therefore, necessary to ensure that securities market operations are more efficient, transparent and safe. In this context, the investors need protection from the various malpractices and unfair practices made by the corporate and intermediaries. As the individual investors’ community and the investment avenues are on the rise, it is interesting to know how the investors shall be protected through various legislation. Securities market in general are to be regulated to improve the market operations in fair dealings and easy to access the market by corporate and investors. The present positive attitude of investors is heartening though investor sentiments have been shaken by the various scandals. Even though, there are various opportunities available for investment, investors are scared of investing. In this situation,
the individual investors’ protection becomes necessary to sustain the economic development of the country.
The desired level of economic growth of a country is dependent upon availability of protection to its investors’. Globally, there is increased evidence to suggest that investor protection has assumed an important role in the economic development of a country. Integrity of the financial markets and economic well being of the country depend on corporate accountability and investors confidence. The global concern to make capital markets safer and transparent can be achieved by strengthening financial system and managing the crisis efficiently. The revival of investors’ protection in the corporate securities market is necessary to make market more efficient by means of converting savings to investment. If the investors are not protected properly by way of providing fair rate of return and safeguarding their capital, the corporate will not be able to mobilize funds from the market at reasonable rate in times to come. In view of the foregoing with a view to gain the confidence of investors in the securities market it is necessary to provide adequate rate of return on investors’ capital by corporate through their operational efficiency. This will enable us to lure back investors to the capital market. This can be done by a series of systematic measures which would build their confidence in the systems and processes and protect the interest of investors.
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