When Capital Markets Become Public Good, SMEs Flourish — India’s US$15 Billion Example

JAKARTA, Investortrust.id — India’s capital markets deliver their greatest national impact when they operate as public-good institutions that channel risk capital into small and medium enterprises, Bombay Stock Exchange CEO Sundararaman Ramamurthy said in Jakarta. He pointed to India’s ability to convert US$800 million raised by 671 SMEs into US$15 billion in market value through technology, transparency, and mass investor participation — principles Indonesia is now embracing as it targets market capitalization worth 120 percent of GDP by 2045.

Capital Markets as Public Infrastructure, Not Just Trading Venues

Speaking before Indonesian regulators, industry leaders, and policymakers at the Investortrust Capital Market Forum, Ramamurthy began by reframing what exchanges are meant to achieve. The global history of capital markets, he argued, shows a decisive shift: what began centuries ago as a private arena for traders has evolved into a national institution responsible for fueling economic development.

“The capital market is no longer simply a vehicle for private wealth creation. It is a vehicle of public good,” he said, emphasizing that broad-based capital formation ultimately supports job creation, income growth, national productivity, and long-term economic well-being. “When capital formation happens, job creation, income generation, and GDP growth follow.”

The philosophical framing resonated strongly with Indonesia’s policy direction. Earlier that day, Arief Wibisono, Special Advisor to the Minister of Finance for Financial Services and Capital Markets, emphasized that Indonesia’s economic ambitions for 2045 require a financial system capable of serving the entire population.

“In 2045, our target is for capital-market capitalization to reach about 120 percent of GDP. This is an ambitious target,” Arief said. “A deep, inclusive, and efficient financial sector is not merely a complement to growth — it is one of its engines.”

He added that Indonesia is currently navigating an era of rapid technological, demographic, and geopolitical change. For the country to achieve 8 percent long-term growth, the capital market must play a more central public role. “The financial sector is the foundation and the driver of Indonesia Emas 2045. Government cannot do this alone, and the private sector cannot do this alone. Universities, investors, industry — all must contribute,” he said.

SMEs as the Core of Public-Good Capital Formation

Ramamurthy linked this public mission directly to SME development, noting that SMEs are the backbone of employment, entrepreneurship, and regional economic dynamism in both India and Indonesia. India’s capital market, he argued, only fulfilled its public-good potential when it began to serve millions of smaller enterprises that banks alone could not finance because of debt-servicing constraints and collateral limitations.

In India’s case, the introduction of an SME board opened a new path. Over the past decade, 671 SMEs have listed on the exchange, raising US$800 million in fresh capital that has since expanded to US$15 billion in market value. “That is the power of getting listed. Always the beginning is small and grows big later,” he said. For Indonesia, which also has tens of millions of SMEs, the lesson is that public markets must be engineered so smaller firms can raise risk capital without prohibitive cost, complexity, or delay.

Arief of the Ministry of Finance echoed this vision, warning that Indonesia’s current financial structure remains too shallow to support its long-term ambitions. He noted that limited financial literacy, high transaction costs, and uneven access to investment products restrict participation from both households and SMEs. “Our priority is expanding access and ensuring that every Indonesian — from households to micro enterprises — can participate in the financial system,” he said. Strengthening long-term funding sources and widening the investor base, he added, are essential pillars of this transformation.

Technology as the Organizing Principle of Modern Markets

Ramamurthy then introduced the force that binds together investors, regulators, asset managers, and national policy: technology. Reflecting on the evolution of India’s markets — from open-outcry trading rings to fully digital architectures — he said technology has become the single most important determinant of market liquidity, accessibility, transparency, corporate governance, and investor protection.

“Technology helps in liquidity. Technology helps in democratization of access to markets and information. Technology helps in corporate governance, investor awareness, and risk protection,” he said.

He noted that India’s current trading ecosystem processes more than a billion derivatives orders each day, supports millions of daily trades, and handles two million orders per second at peak throughput. The country also now has 225 million registered equity investors — a 400 percent increase in five years — supported by simplified digital onboarding and paperless account creation. Mutual-fund transactions flow across a nationwide network of more than 80,000 distributors, generating roughly US$3.5 billion in monthly systematic investment-plan inflows.

The shift from physical trading floors to mobile-first participation, he said, reflects how digital rails lowered barriers almost to zero. “Entry becomes easy. Exit becomes easy. And when both are easy, participation grows,” he said, recalling how India replaced weeks of paperwork with a process far closer to tapping a smartphone screen.

Arief, speaking earlier, reinforced this point from Indonesia’s perspective. Strengthening market transparency, boosting liquidity, lowering transaction frictions, and improving systemwide security, he said, all depend on capital-market technology infrastructure. “This is the strategic moment for Indonesia, because we are confronting global changes that demand a stronger digital backbone,” he said.

Investor Protection and Institutional Trust

Ramamurthy was clear that mass participation requires confidence that investors’ money and securities remain safe. He described India’s architecture in which payments and stock deliveries flow directly to investor accounts, brokers cannot misappropriate client assets, and settlement-guarantee funds backstop transactions. He also emphasized the role of mandatory digital disclosures, which allow market-sensitive information to reach the public simultaneously.

“If everybody has to participate, all these ingredients are very important. Liquidity, transparency, democratization of access, good governance, risk management — these are what give people the confidence to enter the market,” he said.

Arief similarly acknowledged that Indonesia still faces structural weaknesses in consumer trust and financial literacy, adding that comprehensive reforms are underway to address these barriers. “We must ensure that our financial infrastructure allows people to participate safely and confidently,” he said.

A Shared Road Ahead

Ramamurthy emphasized that India’s model should not be seen as a prescription but a proof of concept. Indonesia’s circumstances differ, but its aspirations — from expanding market depth to empowering SMEs and widening investor participation — mirror the path India took over the past three decades. He noted that Deputy Minister of Finance Thomas Djiwandono’s recent visit to India, where he met BSE, regulator SEBI, and leading asset managers, signaled Indonesia’s intent to learn from India’s experience.

He closed with an offer of collaboration. “India and Indonesia have been enjoying a wonderful relationship. Any assistance from our side, we will be available at your disposal,” he said.

For Indonesia, which now seeks to turn its capital market into a central pillar of economic transformation, Ramamurthy’s message was both philosophical and practical: see the stock exchange as a public institution, empower millions to participate, channel capital to SMEs, build the technology that makes it all seamless — and the growth will follow.

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