New Delhi: Government will strengthen regulations and bring in innovative practices to enthuse more household savers to become retail investors, Finance Minister P Chidambaram said today (Sep 14, 2004).

"Savers must become retail investors and what can be a better way of doing it than through mutual funds," he said at a function to sign a MoU (Memorandum of Understanding) between Department of Posts (DoP) and UTI Mutual Fund.

Admitting there was "suspicion" in the minds of people about the capital markets, which have been on a "roller coaster" ride in the last 10-15 years with scams hurting more investors than rewarding them, he said, "as regulations become stronger, I hope confidence in capital markets will be restored and more savers will become retail investors."

Chidambaram favoured investments through mutual funds as they were giving better returns than banks' fixed deposits, and current & savings accounts.

Referring to UTI Mutual Fund's efforts to tap the masses through the network of DoP, he said, "I think, these are innovative practices which ought to be encouraged. It is part of Government's efforts to encourage innovations."

"Ultimately, it is the welfare of the common man that is of paramount importance," he said, adding the bulk of country's savings come from the households.

IT and Telecom Minister Dayanidhi Maran said the tie-up between DoP and mutual funds would bring more retail investors to the bourses and provide the much-needed depth to capital markets.

DoP currently vends products of Principal, ICICI Prudential, SBI Mutual Fund and Oriental Insurance.