Investor Protection Paradigm in India: Mounting Criticality of Digitalisation

Abstract

With the advent of digitalisation and expansion of the retail market in recent years, India has experienced a significant shift in its financial landscape, necessitating an increased emphasis on investor education and protection. This article delves into the intricate relationship between investor education and investor protection, emphasising the pivotal role of the government, regulators and financial institutions in framing protective measures for investors. With the rise of digitalisation, particularly fintech, the financial services sector has witnessed transformative changes, influencing access to investment opportunities. This exploratory article reviews the existing architecture for investor protection and stresses the need for a dynamic and well-coordinated approach, robust complaint resolution mechanism, and comprehensive research to enhance investor protection in this evolving financial ecosystem. It discusses notable initiatives, including the National Strategy on Financial Education and its 5C strategy, suggesting an additional ‘6th C’, that is, a class-oriented approach to serve as a key driver in creating a financially aware and empowered India. The strengthening of the regulatory framework with adequate cybersecurity measures, launch of an online portal for claim settlement and the establishment of a Centralised Grievance Redressal system are highlighted as crucial steps in building a comprehensive investor protection framework. The authors also highlight that investor protection is a two-way approach involving the government and regulatory bodies on the one hand and investors on the other, with both sides being equally accountable, alert and watchful in the digital era. JEL Codes: D02, D14, D18, G18, G21, G22, G23, G28