Government may look at division of shares for retail push

NEW DELHI: The government is examining suggestions to allow fragmentation of shares for greater retail participation, while also seeking a review of the limits on bank loans against shares.
The two issues were flagged at a meeting of market players, experts and economists with finance minister Nirmala Sitharaman on Friday, where there was a suggestion for “fragmentation” of shares, given that some scrips had become “unaffordable” for a retail investor. One of the participants at the meeting pointed to MRF shares to make a case for fragmentation of shares.
The tyre maker’s shares with a face value of Rs 10 closed at Rs 71,730 on the BSE on Friday. While it is possible to split such shares and allow for a smaller face value but even at that price, it may be unaffordable.
The discussions come at a time when the government has announced the listing of LICwhich many expect would be among the most valuable companies to trade on Indian bourses. Given the small equity base, even a 5% float will mean that the issue price is very high, making it unaffordable for retail investors. This is expected to result in the government having to pump in money to expand its capital base.
Sources present in the meeting said that there were some issues related to NBFCs, which were flagged at the meeting and the department of financial services is expected to seek details and act on them.

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