‘Enhanced governance is key to growth in Indian capital market,’ says a study released by PricewaterhouesCoopers (PWC) and ASSOCHAM.

The report titled ‘Indian capital market: growth with governance’ analyses India’s economy and financial markets which have undergone radical changes since the onset of liberalization in the early 1990s.

The study was released at the National Conference on capital markets-growth with governance held by ASSOCHAM on Thursday.

According to the study the Indian capital market has evolved significantly over the past two decades and has further potential to grow through enhanced governance.

The study maps the journey of the Indian capital market from pre-reform era (1991) to the liberalized market of this decade. It says the Indian market has evolved to an unprecedented level of sophistication and complexity. Also, the capital market has seen enormous upheaval in the last decade with BSE sensex reaching 20,000 mark and then declining sharply due to market pessimism based on global cues.

The points out that enhanced governance is imperative for the functioning of the capital markets. The establishment of the Securities and Exchange Board of India (SEBI) as the supreme capital market regulator, with a clear mandate of protecting investors and restoring confidence was a step in the right direction.

Further the establishment of the national stock exchange (NSE), supported by a strong legal framework and technological base to strengthen the governance structure has been the highlight of the Indian capital market in the last decade.

“while a lot has been achieved in the last few years, we can do more to encourage further innovation and to enable the capital markets perform their function, of financial intermediation within the governance framework, to meet the needs of this fast growing economy,” said Bharti Gupta Ramola, transaction leader, PWC.