Indian capital markets’ active users below 1 crore, Zerodha founder sounds alarm

Zerodha's founder and CEO Nithin Kamath on 30 June while commenting on the 2022 RBI financial stability report said the monthly active users (MAU) on Indian capital markets is below 1 crore across India, which is much lesser than what most people expect.

Sharing his feedback, Online stock trading platform's founder took to Twitter and wrote, "Monthly active users (MAU) on Indian capital markets from the 2022 RBI financial stability report. This is first time I am seeing this data in public. MAUs <1 crore across India, much lesser than what most people expect. My guess is the dip will be a lot more by the end of June."

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Earlier in the day, the Reserve Bank of India released its 'Financial Stability Report' for June 2022. In the report, the apex bank cited front-loaded monetary policy normalisation in response to persistently high inflation which is imparting high volatility to global financial markets as reasons for uncertainty in global economy. It also cited war in Ukraine, elevated commodity prices, supply chain disruptions and darkening growth prospects as other reasons.

Considering the case of Indian economy, RBI said, "High-frequency indicators point to a gradual but unevenly strengthening recovery in the first quarter of 2022-23, in spite of headwinds from the geopolitical situation, elevated commodity prices, especially of crude oil, and volatile financial conditions, as global spillovers endeavour to unsettle domestic financial markets with bouts of turbulence."

However, RBI mentioned the Indian economy remains on the path of recovery, though inflationary pressures, external spillovers and geopolitical risks warrant careful handling and close monitoring.

"Banks as well as non-banking financial institutions have sufficient capital buffers to withstand shocks," the biannual report said.

Adding more details, RBI report said, "Capital to risk weighted assets ratio (CRAR) of scheduled commercial banks (SCBs) rose to a new high of 16.7 per cent, while their gross non-performing asset (GNPA) ratio fell to a six-year low of 5.9 per cent in March 2022. Also, the CRAR of urban co-operative banks (UCBs) rose to 15.8 per cent in March 2022 while that of NBFCs stood at 26.9 per cent.

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However, if the macroeconomic environment worsens to a medium or severe stress scenario, the GNPA ratio may rise to 6.2 percent and 8.3 per cent, respectively, the RBI said.

Latest systemic risk survey (SRS) conducted by the Reserve Bank in May 2022 show global spillovers and financial market volatility moved to the ‘high’ risk category.