"I am delighted to be here to inaugurate SEBI's new permanent home. My thoughts go back to 1992, when the Securities and Exchange Board of India came into its own as a statutory regulatory body. I had announced our government's intentions to make SEBI a statutory body endowed with all the privileges that such institutions enjoy all over the world. And I am happy, that I was able to fulfil that commitment in time. SEBI has been fortunate to have had men of integrity and commitment at the top and competent professionals at all levels. This has greatly helped SEBI establish its credibility in the market and with investors and in the process has enhanced our country's overall credit ratings in the world market.

The Indian capital market has come a long way in the past decade and a half. In retrospect, the decision in 1992 to open the Indian Capital markets to institutional investors from abroad and the establishment of the National Stock Exchange have turned out to be two major landmarks in the evolution of our capital markets. The importance of capital markets in the pricing of risk and opportunity is recognised as essential for financial stability all over the world. Financial markets are more susceptible than other markets to asymmetric information. Such asymmetry encourages non-transparency and creates opportunities for excessive profiteering. Things that can detract from well-functioning of the capital market. It not only discourages more widespread participation in the markets, but also enables market manipulation.

All modern economies, therefore, recognise the need for sound regulation of securities markets. This is needed not just for proper functioning of these markets, but also for their very survival. It is good regulation that will ensure that markets are safe and perceived to be safe by the public at large. It is good regulation that will ensure that necessary information is available to the public so that they can take informed decisions about investments. It is good regulation that will further ensure that while engines of growth are allowed to move at full speed, there is no space for manipulators in the system. Today securities market regulation has evolved to include three principal objectives: (a) Fair, efficient and transparent markets; (b) Investor protection; (c) Reduction of systemic risk. I am happy to say that SEBI is shouldering the responsibility in all these three areas with great deal of efficiency and commitment.

Today, India is experiencing rapid economic growth. If we want to share this prosperity with a large cross-section of our society, we must ensure that the ownership of equity is spread as widely as possible. Individual citizens can participate in the capital market, both directly and indirectly, through financial institutions, such as mutual funds, pension funds and insurance companies. It is the task of the securities regulator to look after the interests of the investor in our country. If the regulator is able to ensure that the price discovery process is both efficient and transparent, with high disclosure and regulatory standards and with sound liquidity and risk management in place, the concerns of individual investors will be adequately addressed.

I am very happy to note that it is now widely recognised all over the world that our systems are among the best in the world, and the Indian Capital Market is recognized as among some of the best regulated internationally. This is an achievement for which the successive management of SEBI deserves our nation's grateful regard. Protecting the interests of investors is the primary responsibility of any capital market regulator. Those who part with their savings in search of relatively risk free and reasonable returns, seek comfort in a regulatory regime that is responsive to their needs. In this context, great importance attaches to good corporate governance laying emphasis on ethical conduct, transparency of operations, effective disclosure norms and concern about the legitimate interests of all stakeholders. At the same time we need to mount a massive effort to promote investor education and protection in a country as vast and varied as India is. SEBI has been somewhat handicapped in its efforts at promoting investor education because of its lack of access to a suitable investor protection fund. I hope this gap will be filled, made good.

The Finance Minister had announced in his budget speech this year the setting up of an investor education fund with SEBI. This is to be financed out of the fines and penalties to be levied. I am happy to note that urgency is being given to undertaking a comprehensive amendment of the SEBI Act to create an appropriate fund as also to further empower SEBI to better address issues impacting investor interests.

The capital market is not mainly about equities alone. The bulk of transactions in the capital markets of advanced nations are in debt securities. Ever since the Asian Currency Crisis in the late 1990s, it has come to be accepted that a lively market in corporate securities helps the banking system to accurately price current and future assets. This helps to mitigate risk.

However, in our experience debt markets in India have not quite delivered on expectations. We, therefore, need to make efforts to understand why the debt market has not taken off and to take appropriate policy measures to make it deeper, broader and more liquid. While regulation may help in this direction to some extent, we need to reform our financial sector further if we are to have a larger debt market. We need to promote a widely held pension fund system. We need a much larger insurance sector with a higher capital base and more diverse products. It is these which will generate the necessary long-term funds for investing in a debt market and make available resources for the investment needs of our country particularly in the vital infrastructure sector. If we have to achieve our growth ambitions of 8-10% per annum, we need investments of a high order. These would be possible only by making our financial markets more efficient, more competitive and more global. We may currently be lacking a consensus on the needed reforms. However, I am confident that we will in the long run be able to forge a meaningful consensus and take reforms of the financial sector forward.

The Financial Sector in India has now come of age, even though there are a number of issues which need to be resolved. Indeed, it is such issues, even if they be controversial, which encourage discussion and debate and result in furthering our collective understanding. This is the basis of ensuring healthy progress. SEBI, along with other regulators, and civil society, has contributed immensely to this informed discussion and to the identification of relevant issues. This debate is extremely important for all policy makers.

Mumbai has the potential and it should have the ambition to be a great Regional Financial Centre. It is already the financial capital of India. In this context, the establishment of the new SEBI Bhavan is a step in the right direction. I am not only hopeful, but also confident that SEBI will scale new heights in establishing a world-class regulatory regime of which we can be legitimately proud.

On this happy occasion, I hope you will continue to meet emergent challenges and help widen and deepen capital markets at home. We have reasons to be satisfied with the work of SEBI so far. However, eternal vigilance is the price of market stability and market growth. It is SEBI's dharma to be that ever-vigilant umpire. I, therefore, conclude by wishing you all the best in your good work, the work that is so vital to the future progress of our nation."