GFF'25 Speakers: Sid Swaminathan, Vijay Shekhar Sharma, Gaurav Kumar, Amarjeet Singh

As we welcome our panelists for our session on democratizing wealth creation, leveraging technology to enhance capital access and inclusion. We have amongst us Mr. Gaurav Kumar, the founder and CEO of UB. I'd like to welcome him with a nice warm round of applause. We also have amongst us Mr. Sid Swaminatan, Managing Director and CEO of Geo BlackRock AMC. I'd like to welcome you up on stage and let's keep the applause going, ladies and gentlemen. We also have amongst us Mr. Vijay Shakar Sharma, founder and CEO of Paytm. Welcome, sir. And I'd like to invite up on stage Mr. Amjit Singh, whole-time member of WTM Securities and Exchange Board of India, who will then now moderate the session. And we're looking forward to active participation from each and every one of you. Welcome, gentlemen. Please do take a seat.

And I request Mr. Ammojit Singh, sir, to kindly take the session forward.

Thank you. So good afternoon everyone. It's a pleasure to welcome all of you to this session on democratizing wealth creation. This topic I believe is very timely, especially with our markets buzzing very actively as we speak. The kind of momentum that we've never seen before. Retail participation, just to give you a little flavor, retail participation as many of you would know is at an all-time high. The rise of digital platforms is actually transforming how Indians invest in the markets. While access is expanding, a large segment of our population still remains outside the formal market ecosystem. So just to give you a data point, there are about 12 crore unique investors as per the NSE database, and you have about 66 crore PAN holders which are linked with Aadhaar database. So the gap is huge and there's a huge potential to grow further. We also have a very vibrant startup economy and we have three stalwarts sitting here. Yet much of that wealth potential remains concentrated within private markets. Now, there is a bit of a competition between private markets and public markets, and that's the subject I want to touch upon today. So how do we, as I said, wealth potential remains concentrated within private markets. So how do we open those doors wider? That's what we will unpack today. How technology can help bridge these gaps by creating smooth pathways from private to public markets. How can we enhance last-mile accessibility and ensure inclusive and responsible growth? We are privileged to have a very distinguished panel with very distinct and rich perspectives. They don't need any introduction, but very quickly. Vijay Shakar Sharma, the founder of one of India's most well-known startups. He brings the experience of steering a new-age tech company from private to public markets. And if I can share it with you, when Vijay was doing his IPO a few years back, we called him over along with his team. We wanted to understand his business model a little better. So he came with a big team of merchant bankers and his senior officials with him, and then he said he will make the presentation. And I still remember a very passionate presentation about what he was doing, what he was setting up, and what his vision was. Sid is MD and CEO of Geo BlackRock Mutual Fund, offering the mutual fund industry's perspective on retail participation and financial inclusion. And of course, Gaurav, founder and CEO of UB Global, he called on me very recently and I was quite impressed with his thoughts and vision on fintech, a fintech innovator bringing in the perspective of how technology can enhance access to capital and expand market participation. So without further ado, let me get into the discussion with my esteemed panel. Our discussion will unfold in three parts. The first round I want to cover broadening access and participation that syncs with the theme of the panel. The second piece will be on investor protection, and the third piece, if time permits, I'll do a fun round with them, some rapid-fire questions with one-line answers. So let's begin and I'll start with Mr. Vijay Shakar Sharma.

So Vijay, as I mentioned about private markets. Private markets, as we all know, fuel innovation with flexible and patient capital. That is the main attraction of the private markets, while public markets drive inclusivity and wealth democratization. As regulators, we are interested in both. We seek more high-quality listings, of course, to build resilient markets. So how can we create effective pathways, if I can call it, between the private market and the public markets in the country, and your experience based on your experience of transitioning from public to private markets? What regulatory reforms or investor readiness measures would smoothen this migration from private to public? And lastly, how can technology help?

Yeah, thank you. So you know, if I can respond to your regulators should be welcoming, we are very welcoming. And not only that, we had to cross the bridge in terms of allowing loss-making companies, not only loss-making but also no profit inside for the next few years, companies bleeding every day in terms of cash flows. So we have to cross that bridge with adequate safeguards for investors, which we did. But anyway, today I'm not supposed to be answering. I think you are supposed to be answering for the change.

So you know, recently we did one. We've brought in a requirement that the company has to upload a small video about the IPO highlights.

So your suggestions are being picked up.

So let me move to Gaurav now. Gaurav, my question to you is about the trading opportunities in the unlisted space. And let me give you a bit of context here. So we are seeing a trend where companies are choosing to stay private for a long time. And resulting in this is not for India, let me say that very clearly. This is more of a global observation. There is a decline in the IPO markets in many jurisdictions today and lack of opportunities for retail investors. In India, we are lucky. While the mix is healthier, a large part of the wealth creation opportunity still remains concentrated in the private market space. You know, the so-called alpha people are moving to private space. A number of online platforms are attempting to bridge this gap by enabling retail participation in private companies, sometimes with ticket size as low as 5,000 rupees. So what is your view on these trends? Should there be regulated platforms for trading of unlisted shares for better investor participation and protection, as well as serving as a pathway for companies to transition from private to public markets? And also, how can technology facilitate such transition?

Sure. Thank you. And I think one point which I will also kind of resonate with what Vijay said. I think you know, look at the regulator. One thing could be to shut the door and take interest on what is happening on the private market. And here the kind of dialogue which the regulator is happening with most of us in the ecosystem is to really think through this more as a continuum and not think through this from a jurisdiction saying okay I'm regulating something which is around public market, so let me kind of have those walls much higher on what is happening in the private market. So I think that to my mind, like Vijay said, has been really refreshing in our own engagement with SEBI over the last many years now. What we are seeing, and I just wanted to leave some thought to what sir said, largely in three parts. So if you look at what is happening globally and what is happening in India, you are now largely seeing a very well-oiled continuum on the private market side where you are seeing large amount of money coming into venture capital, the venture capital guys taking a lot of risk and backing a lot of startups like many in the room. And then you are seeing that continuum going to growth capital, from growth capital to private equity. And last two years, if you look at globally, most of the large funds are actually transitioning to something called perpetual funds, right? Where they can actually hold companies private much longer. And in fact, the jury is out where they are saying, you know, why do you want to go public? You can actually remain private and keep compounding as long as you want, and we will provide you liquidity and we will provide you access to capital which is required for you to remain in the public market. And their pitch actually to the founders and shareholders is as you go public, you will have tremendous amount of scrutiny and then you will have quarter-to-quarter outcomes. And if you're building something long-term, do remain private for a very long time. What we have started seeing in India, just to leave it with you, I think again one of the initiatives taken by SEBI, to my mind three or four years back, when SEBI came out with a clear category around online bonds platform, right? And we have been talking about deepening of debt markets for the last 20 years. And what we are now seeing with SEBI's initiative and a lot of platforms which are out there, we have started seeing a lot of private companies now accessing debt on the listed side, right? But what we have also started seeing on the equity side, as you must be seeing, that a lot of family office participation has started coming in on the private side, right? So you're seeing a new class of investors, whether it is family office, ultra HNI, and some of the retail participants trying to come and get a share of that private market. But that today is very limited, right? And to a certain extent, what Vijay was mentioning, even on the private side, what we see is that access to that private company is limited to very few fund houses and family offices. Right now, what is happening is you are seeing a steep curve when a company is actually moving from remaining private for 10 or 15 years and all of a sudden going public. What we have started seeing, just a few data points to what sir said, that when a company is actually going public, you are seeing the price of the shares actually at a much steeper discount to what those shares were actually trading in the gray market, right? And you have very less information, to what Vijay was mentioning about the same companies, where you are seeing volumes and volumes of investment and securities being traded in the private market. I think what technology has done is given that access to a very large number of investors. Now on the private market side, we are seeing those numbers scaling significantly. And now if we have that kind of platform, a regulated platform, I personally truly believe that we have a regulator which has a phenomenal open mind to see this market being very vibrant. And for every company, this is almost like a journey and continuum. So what a regulated technology platform on the private side will do: first, it will build tremendous amount of transparency. Second, I think a lot of investor education around pricing, around governance, around what the company is all about. And then also gives that company a very clear journey on how they should be transitioning from private market to public market. And I think if that's the case, the company will, if the company needs liquidity, they will have enough and more forms of liquidity opportunities, and they don't have to actually go public. And the last point I will leave it with you is that today, if you look at a lot of private companies, they should actually be going public when most of their leading indicators and lag indicators are actually in green, so that you're not exposing a lot of volatility after you are going public. Right? So if a bridge and continuum is provided between the public market and private market, a lot of companies can still remain private but still will benefit from some of the perks of going public.

Yeah. I think a lot of interesting points you made, and I think we need to pick up this conversation in more detail separately. Sid, turning to you. This question is more from the retail investor's perspective. While India's retail investor base has grown exponentially in recent years as we all know, still only about 10% of Indian households are invested in equities. What tech solutions can boost last-mile accessibility, particularly for rural and semi-urban investors, to further democratize public market participation? What is the most promising distribution model according to you for achieving this, and how can we as regulators facilitate?

Yeah, thank you. I think it's obviously a very relevant question for us. And we're just getting started, but we've already had a lot of learning, so hopefully I can share some from our journey so far. What we're observing is that, and we've talked a little bit about this already in terms of the education and the building of the trust, right? I think those two are key, because once we get that right, what we have already seen so far is that the technology and the phone is the biggest liberator, equalizer, whatever you want to call it, right? And now that's already there. There's a fantastic job being done already by SEBI as well as the mutual fund SIP campaign, but I think we can go a step further on that front. I think with the technology that we have now, with AI, there is really the ability to deliver educational content that is hyper-personalized, regionalized to every corner of India. I think that's a reality now. And this might feel like science fiction to a lot, but it's not far away where you can deliver an educational piece about a fund or a stock that's going to come up, and it gets delivered to an individual, but then reprogrammed by AI into content that is more natural to them. Like it could be someone's a very big cricket fan, and it just gets delivered in cricket analogy so that they understand it better. The entire goal has to be to simplify and then do it in local languages. And I think with the technology that we have now, that's becoming more and more possible. So I think that's one very important enabler. The second piece is frictions. So once you have built the education, once you've built the trust, people are very willing to come on their phones and do things in the financial markets, but then the frictions from that point onwards have to be reduced. So I think while the overall financial tech stack here is way more advanced than anywhere else, definitely more than the UK where I've come from, I still think there are elements where things like KYC and onboarding could be a lot smoother. Once the user has provided the content or the consent, the data is already there, and for them to be able to onboard to a new service provider should be made as easy as possible, because attention spans are reducing as time goes on. So I think that's an easy win in most ways, and I think any help we can do from a regulatory standpoint there would be massively helpful in growing the investor base. And then I think finally, in terms of the distribution, while I see this pure digital model working really well, and I said we're just at the beginning of what we're doing, but even in the small sample set that we have in our 3 months of launch, we can see over 10% of the investors that have come in are completely new to mutual funds. So we're still only scratching the surface. There's a long way to go, but we're starting to make a difference. So I think that's really good to see. But I think as we want to get further up that curve, we will need to find ways to supplement that with some physical interaction as well, right? So there is going to be always a segment of the population that needs that human touch, that needs to talk to that human being at the end to help them make their decision. So I think to get to the kind of hyperscale that we want to get to, we're going to have to really push on the digital and then complement it where necessary with some physical distribution.

Very quickly, at a broader level, how has been your experience so far? You talked about your launch the last 3 months. How has been the broader experience?

Yeah, I think for us, it's been very positive, is what I would say. For us, we came to the market with a very differentiated set of products. So we didn't really have a benchmark for how we would think about success for now, to be perfectly honest. We had a set of funds that we were bringing with differentiated ideas. We're doing one right now. We are direct digital in a market that is predominantly driven by physical mutual fund distribution. But just the level of engagement that we're seeing from investors to the content that we're putting out, and most of our content is all educational, that's really been positive. And the participation that we're seeing through each of our NFOs for us is way beyond what we expected. So that's a really encouraging sign. Now again, to your point from earlier, we're still at a very low base. So the potential is immense. So for us, we just want to keep carrying on this track, keep executing, and I think the people will come.

Right. So Vijay, I'm tempted to ask you one more question since you made such a nice shift from private to public markets, and I remember having some conversation with you at that time also on this question. So in the IPO space, what tech or policy shifts could encourage disintermediation or alternative listing models? And pardon me, the merchant bankers in the room won't like this question. Do you think there is an appetite for direct listing in India on the lines of what Spotify did several years back in the US? How can technology facilitate this disintermediation? Also, one more point, any thoughts on improving IPO space? And one more request as a timekeeper, I'm mindful of. So keep your answers short from now onwards.

And the SME space is I'll continue to go back to open. See, we need to increase quality SMEs and we need more of them, right?

How do we? And we are somewhere falling short.

Okay, we'll think about that. So let me move to the second round. This is on investor protection. So my first question is to you, Gaurav, on the governance failures and frauds in companies which unfortunately keep happening from time to time, especially in the SME segment which I was just talking about. How can technology and data analytics help in flagging these risks at an early stage?

I think, sir, both points as you rightly said and Vijay was answering. I think if you're looking at something which is almost like a digital twin, right? Because today the risk perception on the SME side is perceptually much higher because of limited amount of information. The size of some of these IPOs might be limited, and there is not enough data which is there in the public domain, given some of these companies which are going and getting listed on the SME platform. What we need to see there, sir, is largely a continuum of moving from static risk to dynamic risk, right? And I think if you're able to build a digital twin, to Vijay's point, where you are able to, because today if you look at all the infrastructure which is around us, which is your entire ITR, GST, all of this which is largely going and feeding into your lagged indicator which is nothing but your balance sheet and P&L, right? And what is the degree of validation you are able to build tying that back with your data creditors and as well as related party transactions, right? So today, I think there is a great opportunity to almost use AI and build a digital twin and embed that on the SME platform, where thereby you are able to transition what we see today as static risk, which is much more form factor reporting at a lag, and that's where a lot of governance issues start creeping in. The last point I'll leave it with you, sir, is largely not only breaking down the P&L and balance sheet and tying that into the digital twin, also looking at non-financial information, because wherever we have seen these kinds of governance issues coming in, there has been a lot of chatter and the underbelly in social media in very different prints, and you are able to actually embed that and build a lot of early warning signals. So I think this is a great opportunity to build a digital twin in this space.

It enhances CPM. Public information framework. SMEs large. There will be more information and there will be more discipline and more acknowledgement of what is coming forward. My idea is this could be on a voluntary basis. Could bring a pre-listing reference, you know, the voluntary disclosure without any vetting. Do you think it will create some risk? They may highlight the brighter side. Let them sell what they want to. So automatically, sir, market forces take care. We need to think of some out-of-the-box ideas. This is one of those challenges for us as a regulator. We have to maintain that balance between ease of staying listed, ease of accessing the market, and investor protection, right? The only risk is unfiltered, unverified information, whether it is in the interest of public or not. We need to think about.

Yes, sir. I think just one point. Like you said, I think what we have seen, for example, even on the NBFC side, if I take that parallel to your point, I think if you're able to have graded disclosure and much more frequent disclosure. What is happening today, sir, is that all of this information today because of the India Stack is actually available.

Right. What is that validation? You're filing on ITR, GST, creditors data triangulation. But because of the current reporting, we get to know with a significant lag. Right. So if you are an SME with a certain turnover below, you might actually have to do it much more real-time or very high frequency compared to a company which is much more mature, sir.

Right. Okay. No, thanks for these ideas. So let me move to you, Sid. We have introduced SIF as you know, an innovative product recently, and we are beginning to see some traction there. And micro SIPs also, they are designed for low-income households. So we are trying to increase the scope of inclusion. I mean, that is our attempt through micro SIPs at least. However, these do bring in heightened risks of misselling, especially if the investors do not fully understand the product like SIF. So how can technology help in flagging instances of potential misselling and in ensuring that the right product reaches the right investor? Keep it brief, please.

Yeah, absolutely. And yeah, I think these two are classic examples of innovations that are really broadening the market, right? Because you're addressing at one end a really small denomination and the other end, let's say, an HNI type of investor. So that's great that the market's evolving. Technology, I think, in terms of the ability to leverage technology to perform surveillance, I think is a very powerful tool. And I know SEBI is doing a fantastic job of that already in terms of being able to monitor data. For example, are you selling a very high lock-in period product to someone that is over 80 years old? I think these things can now be easily monitored. And I think that's super powerful. And the fact that the industry has all the data and has made this data available for the rest of the industry to look at, but also for the regulator to look at, is super important because you can combine all of that with the technology to then put in place these checks and balances. And in addition to just the regulators doing it, we're also mandated by the regulations to do it ourselves. So all of the asset managers are also doing that. The governance is super tight in terms of how the products are classified, who are the investors in these products. We're able to see all of that. So I think that's extremely powerful in terms of monitoring. The last point I'll make is that what technology can also enable now is hyper-personalization of the investors' appetite themselves. So you can address it at the source rather than monitoring at the end. Through structured data and unstructured data, you are now able to put together what we call an equal-to-one view of that individual and really recommend portfolios that are personalized to where they are, what state of life they're in, what their goals are. So that you can really tailor investment products to individual needs. So we are now able to address it at both ends: at the source and then also at monitoring. I think those are the two big innovations.

Right. So Vijay, one more question for you. So this is on the rise of artificial intelligence platforms that have led to users turning to these platforms for personal finance and decision making. So some of the AI platforms today are offering access to stock market data and company earnings also. What risks does this pose in terms of AI biases or misinformation, and how can we bring in accountability in AI-driven investing tools?

You want to increase our job, right? So sorry, sir.