New Delhi: Concerned at the poor standards of corporate governance that had led to stock market scams, Prime Minister Atal Behari Vajpayee on January 17 asked the regulator, market intermediaries and investors to join hands to make the country's capital market the "safest place" to invest.

"While the technology and the regulatory framework of capital markets has improved, I am pained to say that the standards of corporate governance have not kept pace," he said, launching the securities market awareness campaign organised by market regulator Securities Exchange Board of India (SEBI).

Noting that stock market scams brought a bad name to the Indian business community and that the Unit Trust of India (UTI) fiasco has caused hardship to millions of small investors, Vajpayee said, "We have to learn the right lessons from our experience of the past few years.

"We need markets that are known for their safety and integrity. We need knowledgeable investors. And we need to build a sustainable, high-growth economy, which will ensure better living conditions for our people, now and in the future," he said.

"I urge all of you present here – regulator, market intermediaries and investors – to join hands to make our capital market the safest places to invest in the world.

The fact that very few companies had tapped the primary market in recent years was certainly a cause for worry, Vajpayee said, adding it was regrettable that there were many companies that often used "questionable and even illegal means" to achieve their ends.

"We have come across far too many instances of companies that have raised money from the market by creating hype and then defrauding their investors," he said, adding many of them issued shares at a hefty premium, most of their scrips are now trading well below their face value.

Stock market scams brought a bad name to the Indian business community, he said, pointing out that this was how boom became bust and hopes turned to dust for many gullible investors.

"This is how the investor community lost confidence in the market, leading to prolonged stagnation. This is how investible savings turned to non-financial assets or safe bank deposits," he said.

Asserting that a high rate of domestic savings, channelled into productive investments, were important to achieve 8 per cent growth in 10th Plan, Vajpayee said, "We need to encourage present savers to save more and also to bring in new savers."

PTI