Initial public offerings, wherein unlisted companies raise market from the public markets and get listed, have become a vehicle for early investors rather than their original intent to raise capital, Chief Economic Advisor Anantha Nageswaran said while speaking at the CII Financing Summit, on Monday.
“India’s equity markets have grown impressively, but initial public offerings have increasingly become exit vehicles for early investors, rather than mechanisms for raising long-term capital. This undermines the spirit of public markets. India cannot rely predominantly on bank credit for long-horizon financing,” Mr. Nageswaran said at the event.
He flagged that many of the supposed measures of financial sophistication were “wrong” and people must guard themselves against considering them as milestones. “We must guard against celebrating the wrong milestones, such as market-compensation ratios or the volumes of derivatives traded. These are not measures of financial sophistication. They only risk diverting domestic savings away from productive investment,” Mr. Nageswaran added.
Later in the day, SEBI chairperson Tuhin Kanta Pandey commented that public market activity was business-as-usual, and markets needed “all types of capital being raised,” in the markets. On derivative trade volumes Mr. Pandey said, “I would like to say that the changes that SEBI made to the rules, they also changed the metrics. The open interest which was there earlier, we brought it to delta and it is weighted from delta and they were talking about premium versus open interest.”
The CEA further said that for India to grow as aspirations alone are not enough and must “avoid the temptation to celebrate prematurely when the road ahead is long.”
Published – November 17, 2025 09:31 pm IST
