Corporate Communications

The Economic Times

Only 36% investors have adequate stock market knowledge, says Sebi Chairman, shares 4 tips to avoid scams

Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Monday issued a stern warning about the rising wave of financial scams targeting retail investors. He pointed out that only a small fraction of investors possess high or moderate knowledge of the securities market, leaving many vulnerable to unscrupulous actors.

"Only 36% of investors possess high or moderate knowledge of the securities market. This knowledge gap is a vulnerability that exposes our investors to risks and makes them susceptible to fraud," the Sebi Chief said even as he acknowledged the growing clout of Indian investors.

A Sebi survey revealed that 63% of Indian households translating to 21.3 crore households are aware of at least one securities market product. As on August 31, the number of unique investors stood at 13.4 crore.

"The rise of Indian investor has been celebrated over the last few years, and rightly so. This has happened on the back of increased access, simplified on-boarding, and wider awareness has led to the number of unique investors in the securities market ecosystem," Pandey said.

He was speaking at World Investor Week 2025 organized by the NSE. The theme for this year was 'Fraud and Scams Prevention and Basics of Investing.

While digital infrastructure has brought the markets to one's fingertips, it has also equipped fraudsters with new tools to mislead investors, Pandey lamented. Unsolicited messages on messaging apps, dubious finfluencers and fake trading platforms are all promise something the markets can never deliver -- guaranteed returns, he warned.

"This is a challenging proposition for a nation where nearly 80% of households are fundamentally risk-averse and prioritize capital preservation. Fraudsters exploit this by creating a false sense of security, luring cautious savers into high-risk schemes disguised as safe investments," the Sebi chief said.

Sebi has been running investor awareness and education programmes, the most recent UPI ID for Sebi registered intermediaries and grievance redressal mechanism.

Read more: Sebi rolls out validated UPI handles to safeguard investors from cyber frauds

Pandey's 4 big advices to investors:

1. Invest your Time: Be well informed when making investment decisions, even in today’s fast-paced investment environment.

2. Verify, don't trust blindly: Check every entity’s registration status on the Sebi website.

3. Question Unrealistic Promises: Any promise of "guaranteed" returns goes against the very nature of our markets.

4. Do Your Own Research: Do not be swayed by rumours. As Warren Buffett said, "Risk comes from not knowing what you're doing."

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