The Securities and Exchange Board of India’s (Sebi’s) first such survey, conducted by research firm Kantar across 90,000 households across 400 cities and 1,000 villages, showed that a large number of investors exit the market following financial losses, while a staggering majority are ignorant of official channels for grievance redressal.

A disconnect in education

The findings point to a glaring mismatch between investors’ learning preferences and the methods currently employed for financial education. The demand for digital-first education is overwhelming, yet participation in official programmes is negligible.

The survey indicates that 70% of respondents prefer receiving educational content via social media and 60% through mobile apps. Despite this, less than 1% of those surveyed have ever attended a formal Investor Education Programme. Even among this small group, only 21% found them “highly useful.”

Compounding the outreach challenge is a profound linguistic divide, with a combined 94% of respondents preferring materials in Hindi or other regional languages over English (5%).

The content investors seek is not speculative, but protective. The top priority for 59% of respondents is learning to identify financial frauds and scams, followed by understanding risk management and investor rights, both cited by 44%. This underscores a demand for foundational knowledge that builds confidence and protects against market pitfalls.

The investor exodus

The consequences of this educational gap contribute to a significant number of “lapsers”-formerly active investors who stopped participating in the securities market for at least a year. The primary driver, cited by 84% of this group, is poor performance.

According to Paramdeep Singh, founder of Long Tail Ventures, an investment firm, this suggests the industry is failing to properly manage investor expectations about market volatility. He explained that communication often emphasizes the upside without conditioning investors for drawdowns, causing disappointment when returns do not match the “straight-line” growth investors imagine.

This is reflected in the survey, where lapsers cited the following reasons for exiting: lower-than-expected returns (28%), high market volatility (26%) and direct financial losses (26%)

The survey also reveals the powerful influence of social circles.

According to Singh, “herding magnifies fear,” as hearing peers talk about losses reinforces panic and leads investors to copy behaviour without considering their own goals. This aligns with the survey finding that negative experiences shared by friends or family were a contributing factor for 32% of lapsed investors.

According to Singh, the antidote is continuous education and personalized advisory. “Advisors must act as translators of complexity,” he says, explaining that their role extends beyond product recommendation to explaining risk, diversification, and fraud red flags in simple terms.

A hazy path to justice

The survey exposes a profound lack of awareness among investors regarding Sebi’s official grievance redressal mechanism-the Sebi Complaint Redress System (SCORES).

Overall awareness of the platform is critically low at just 6%, and even among active investors, it remains at only 20%. Consequently, 64% of non-investors and 43% of current investors reported their first point of contact for a financial grievance would be the police, not the market regulator.

According to Akshaya Bhansali, managing partner at Mindspright Legal, a law firm, this confusion has serious consequences. “When investors are unaware of Sebi’s SCORES system and instead approach the police or general courts, it weakens investor protection and creates serious risks to market integrity,” Bhansali states. She adds that regulators lose access to an important stream of complaints that can reveal misconduct patterns at an early stage. “Without this channel, enforcement blind spots emerge, deterrence is weakened, and public confidence in the capital markets gradually erodes,” she warns.

Effective route

The paradox is that the system, for the few who find it, is highly effective. Among the 4% of aware investors who have ever filed a complaint, 88% reported being satisfied with the resolution process. This suggests the mechanism is robust, but its potential is being squandered due to a massive communication failure.

Bhansali notes that while official campaigns exist, they “have not yet achieved the scale or cultural impact” of mass movements like the Swachh Bharat mission. To bridge this gap, she suggests practical, design-led reforms like digital accessibility through multilingual, mobile-friendly design.

However, Bhansali cautions that the real hurdles are practical, like bridging the digital divide, ensuring Sebi has the capacity to handle larger complaint volumes, and building investor trust that grievances will be resolved in a timely and effective manner. “Unless the mechanism is both visible and credible, awareness alone will not translate into meaningful redress”, Bhansali concluded.