Indian capital markets far ahead of the curve: Padmaja Chunduru of NSDL

The Indian capital market has seen a paradigm shift in the last one decade, be it in terms of technology in the payment and settlement systems, improved regulatory mechanism or modern market infrastructure. According to Padmaja Chunduru, MD & CEO, National Securities Depository (NSDL), Indian capital market as well as the stock market is far ahead of the curve, and startups should consider listing their companies in India or float a part of the share in the country.

Citing the example of the T+1 stock settlement mechanism, she said that India is set to become only the second country after China to move to this settlement mechanism by October this year. Most of the countries in the world, including the United States, follow T+2 settlement cycle, which means securities transactions settle within two business days of their transaction date.

“The top 500 companies will come on T+1 mechanism by October this year and this is happening seamlessly. There is no pledge and this is happening through the exchanges, depositories, and settlement clearing system,” says Chunduru, while speaking at Fortune India's 40 Under 40 Awards today.

The veteran banker further states the successful handling of LIC IPO, the largest in India's capital market history, further validates the credentials of the Indian capital market. “The numbers were handled very smoothly, which was considered a stress test for the capital market,” she says.

Speaking about the startup ecosystem in the country, she says the central and the state government are doing a lot for nurturing new businesses in India. “There are a lot of policies and under current policies that are actually enabling the system. On the periphery, we see the success of startups or unicorns that keep on increasing and hopefully it would touch 1,000 startups a year.”

Currently, there are more than 100 unicorns and 76,000 startups in the country as compared to just 100 odd startups four years ago.

Chunduru, who had previously worked with the State Bank of India for more than three decades, urged startups to list their ventures in India or float a part of their businesses in the country to support the economy. She said that under the new Reserve Bank of India (RBI) guidelines, startups are being offered loans of as much as ₹50 crore under the priority sector, which would help businesses to grow. She also talked about GIFT City, designed to be at or above par with globally benchmarked business, which would offer competitive edge to financial services and technology firms.

Chunduru says that companies are going global nowadays and they are representing India on a global stage. “I think coming from an emerging market perspective, whatever the startup or entrepreneurs do, good or bad, is amplified and magnified across the world. And there are investors watching every move of the country."

Talking about the recent success of the startup industry in India, she says that there is a lot going on in the ecosystem, and any negative development around it, be it accounting irregularities, ethics, or governance, which we can do without, can be very costly at this stage of development.

At a crucial time when the country is witnessing real outflows in terms of capital by foreign portfolio investments (FPIs), the businesses must stick to financial discipline, she says. The recent monetary policy tightening by the Federal Reserve in the backdrop of soaring inflation and the Russia-Ukraine war have prompted foreign investors to withdraw money from emerging markets like India. The only thing that limited losses for the Indian share market and the rupee was the continued support by retail investors. The domestic investors remained bullish on the economy during this difficult time which was unprecedented in the stock market history, she adds.

Responding to a question related to NSDL’s plan to reduce charges for demat account, she says, “Yes. As the numbers are increasing and even SEBI is looking at the final cost for the investors. I think that’s been our focus and I am sure you will very soon happy to get that information.”