This article is worth reading and quite an eye opener .. 

 
Then came a further jolt. Of the 43 lakh frozen accounts, as many as 22 lakh had no shares in their accounts. While many of these could be the complimentary ones, a large number would be of those who sold off their balances before 31 December to escape detection under the PAN regime (year-end liquidations need to be investigated). What’s also intriguing is the huge balance of 21 lakh accounts that had shares but where investors failed or did not bother to claim these. Who are these people? Dead? Moved abroad? Had minuscule shareholdings not worth the effort? Were joint accounts where only one holder provided the verification? Willing to give up holdings for fear a possible audit trail?

Surely, there would be some investors who had hoped for yet another extension to the deadline. But not only had a long extension already been given, advertising and individual letters had alerted investors of the change — and obtaining a PAN is now easy.

 
While we’re being fed with feel-good numbers of growing retail investors, recent revelations confirm my suspicions
 
Going through my files, I found that there were 40 lakh demat accounts as on January 15, 2003. Over the years, this number was supposed to have grown to almost a crore. But exactly four years later, we are back to square one!

The reasons for this growing investor apathy may be classified into issues of confidence, policies and processes. On the confidence front, the small investor has gone into a shell, ravaged by scams and unnerved by volatility.

Policies, too, are responsible, though the facade is that these are for his benefit. IPOs are no longer a retail draw now that companies are allowed to offer only 10% of their capital to get listed, and worse, only 35% of it is reserved for small investors. This means that allocation to the retail sector is a meagre 3.5% of a company’s capital. This used to be 60% not too long ago! It doesn’t help either that bookbuilding IPOs are not available outside the top cities/towns.

All this, even as the retail investment processes turn more inconvenient and expensive, right from proving ones’ identity to the elaborate IPO application. Many would think that I worry unnecessarily because small investors are now moving towards mutual funds. This does not appear to be true. First, the low allocation of household savings to the capital market is inclusive of mutual funds. Second, it is non-retail that comprises the dominant investor base of mutual funds. Third, the growing corpus has been substantially aided by the rising share prices. Fourth, equity constitutes only a minor part of their corpus. Amazingly, the numbers flagged around are of folios, which are meaningless, as one investor would be counted as 25 in case he has invested in five schemes of five mutual funds or even made 25 applications to the same scheme.

Ten years ago, nearly 25% of household savings were invested in the capital market. Worrisomely, this had fallen to just 1% two years back, with minor improvement last year. We need a serious study on the vehement rejection of the capital market by Indian households. Would the finance minister and/or the Sebi chairman, given their passion for small investors, appoint a high-powered committee to address this ‘financial emergency’? Or else, should we let our public market become a private club?

—Prithvi Haldea is MD, Prime Database. These are his personal views

Quite interesting.

The article is quite revealing.

I never thought the number is so miniscule that we call it a private club.

Certainly the finance minister and SEBI has a lot to do about it.

Earlier a small investor was given preference in  allottment of a new company's shares. The share base used to be wide and more number of investors were having few shares.

Kulmanji, u r absolutely right. Still scams r happening.recent one being Nissan Copper.SEBI first impose a ban and then after few days or months lift it up.

Like 'Rich Dad, Poor Dad' fame Robert Kiyoski would say.. Financial Education should be part of our schools & colleges....

By that time.. I hope all TED'ians  would have made their financial future secure and be out of the sensex impending big crash and sipping martini in sunny Hawaii..

Absolutely Rich Dad poor Dad 1st book is a must read for anyone ..Arouses the need in the reader to make the money work..

I am refering to the big crash at end of the long bull market ( the likes of 1929 crash or Japan crash after it touched 40K), not the smaller crashes in middle of a bull market..