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Business News/ Markets / Trust in financial statements key to investment flows, economic growth: NFRA chief
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Trust in financial statements key to investment flows, economic growth: NFRA chief

Regulators and high-quality financial reporting frameworks are at the core of financial and capital markets, Ajay Bhushan Pandey said at a conference in Delhi on Tuesday.

NFRA chairman Ajay Bhushan Pandey. Photo: MintPremium
NFRA chairman Ajay Bhushan Pandey. Photo: Mint

New Delhi: Trust in financial statements of businesses must be maintained and enhanced for India’s capital markets and overall economy to attract more investments and boost growth, National Financial Reporting Authority (NFRA) chairman Ajay Bhushan Pandey said on Tuesday.

Speaking at the inaugural session of NFRA’s two-day international conference on financial reporting and audit quality in Delhi, Pandey said a number of policy initiatives, a reduction in corporate tax rates, unique demographics, and the government’s increased emphasis on capital expenditure and responsible fiscal management have put the spotlight on India, resulting in increased investments from the private sector, foreign direct investors, foreign institutional investors and sovereign funds.

According to data from National Securities Depository Ltd (NSDL), foreign portfolio investors have made a net investment of 2.93 trillion in Indian equity and debt instruments so far in FY24. In FY23, there was a net outflow of 409.36 billion. Net FPI investments since FY93 stands at over 7.3 trillion. Pandey said that there are 11 crore demat accounts and 14 crore retail investors in the country.

“All these underscore a need to maintain and enhance trust in financial reporting, our capital markets and regulatory systems," he said, adding that investors, shareholders, creditors and other stakeholders need financial information that is trustworthy, transparent and fair. Regulators and high-quality financial reporting frameworks are at the core of financial and capital markets, he said.

NFRA has been trying to infuse greater discipline and compliance in the country’s statutory audit industry. NFRA covers large public limited companies, listed entities, banks, insurers and any unlisted companies referred to it by the government.

Highlighting the need for high-quality financial statements and audits, the NFRA chairman said India has emerged as a resilient economy with a growth rate of 7-8% and, according to an estimate, will contribute around 20% to the global economy over the next decade.

Pandey said India’s economy and capital markets are projected to become the world’s third-largest during this period, having grown two-and-a-half times over the past decade. Reforms have led to increased participation by Indian citizens, particularly retail investors, in capital markets, he added.

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Published: 05 Mar 2024, 03:50 PM IST
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