{"id":57520,"date":"2025-07-08T08:00:00","date_gmt":"2025-07-08T02:30:00","guid":{"rendered":"https:\/\/www.equentis.com\/blog\/?p=57520"},"modified":"2025-11-07T13:27:03","modified_gmt":"2025-11-07T07:57:03","slug":"bse-turns-150-a-historic-journey-shaping-indias-capital-markets","status":"publish","type":"post","link":"https:\/\/www.equentis.com\/blog\/bse-turns-150-a-historic-journey-shaping-indias-capital-markets\/","title":{"rendered":"BSE Turns 150: A Historic Journey Shaping India\u2019s Capital Markets"},"content":{"rendered":"
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The Bombay Stock Exchange (BSE)<\/a> is celebrating a major milestone in 2025, marking 150 years since its founding. Established in 1875, the BSE<\/a> is not only Asia\u2019s oldest stock exchange<\/a> but also ranks as the tenth oldest in the world. <\/p>\n\n\n\n

What began as informal meetings under a banyan tree has grown into a modern, tech-driven financial institution<\/a>.<\/p>\n\n\n\n

This journey reflects India\u2019s own economic and social progress over the decades. <\/p>\n\n\n\n

Throughout its history, the BSE has played a pivotal role in developing India\u2019s capital markets, enabling businesses to raise funds and creating wealth for investors nationwide.<\/p>\n\n\n\n

Historic Milestone with New Index Launch and Policy Recognition<\/strong><\/p>\n\n\n\n

Earlier this year in April 2025, BSE marked a significant milestone with a grand celebration attended by Finance Minister Nirmala Sitharaman. She lauded BSE\u2019s transformation into a cutting-edge, technology-driven platform that now processes daily orders worth Rs 1,500 crore, an achievement she described as a clear reflection of India\u2019s dynamic economic progress.<\/p>\n\n\n\n

The Finance Minister also highlighted BSE\u2019s impressive market capitalization<\/a> of Rs 400 lakh crore, placing it among the world\u2019s top stock exchanges. She also unveiled the BSE 150 index, a new benchmark designed to track the performance of the top 150 listed companies based on market capitalization and liquidity.<\/p>\n\n\n\n

Source: newsonair.gov<\/a><\/p>\n\n\n\n

From Banyan Tree to Formal Foundation<\/strong><\/h2>\n\n\n\n

The roots of the BSE trace back to the 1850s, when informal stock trading began under a banyan tree near Mumbai\u2019s Town Hall. Gujarati and Parsi brokers traded securities, including East India Company shares, relying on trust and reputation, principles that would shape India\u2019s capital markets. <\/p>\n\n\n\n

On July 9, 1875, this informal group formalized into “The Native Share & Stock Brokers’ Association,” marking the official birth of BSE.<\/p>\n\n\n\n

By 1921, it had established its base on Dalal Street, and by 1930, it was a central platform for corporate financing in British India, supporting industrial giants like Tata<\/a>, Birla, and Bajaj.<\/p>\n\n\n\n

To provide a clear overview of this extensive history, the following table highlights some of the most significant milestones in the BSE’s journey:<\/p>\n\n\n\n

Year<\/strong><\/td>Milestone\/Event<\/strong><\/td>Significance<\/strong><\/td><\/tr>
1850s<\/td>Informal trading under a banyan tree<\/td>Roots of organized market<\/td><\/tr>
1875<\/td>Formal establishment as “The Native Share & Stock Brokers’ Association”<\/td>Birth of Asia’s oldest exchange<\/td><\/tr>
1921<\/td>Shift to Dalal Street premises<\/td>Centralization of operations<\/td><\/tr>
1956<\/td>Permanent recognition under Securities Contracts (Regulation) Act<\/td>Formal legal framework for operations<\/td><\/tr>
1986<\/td>Introduction of Sensex (Base 1979=100)<\/td>India’s first stock market<\/a> index and economic barometer<\/td><\/tr>
1992<\/td>Establishment of SEBI<\/a> (empowered)<\/td>Regulatory authority strengthened post-scam<\/td><\/tr>
1995<\/td>Introduction of BOLT (BSE Online Trading)<\/td>Transition to electronic trading<\/td><\/tr>
1996<\/td>Introduction of Dematerialization<\/td>Enhanced security, efficiency, investor participation<\/td><\/tr>
2001<\/td>Launch of BSEWEBX.com<\/td>World’s first centralized internet trading system<\/td><\/tr>
2005<\/td>Corporatization and Demutualization<\/td>Modernized ownership and governance structure<\/td><\/tr>
2023<\/td>Unveiling of new BSE logo<\/td>Symbolizing renewed vision and growth<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Where BSE Fits in India\u2019s Demat Account Growth Story<\/h1>\n\n\n\n

As more Indians embrace equity investing, BSE remains at the heart of this transformation \u2014 enabling millions of new investors to participate in India\u2019s growth story<\/a> with trust, transparency, and scale.<\/p>\n\n\n\n

Domestic brokerages added a record-breaking 41.1 million demat accounts<\/a> in FY25, taking the total number to 192.4 million. This marks the highest-ever annual increase in absolute terms. The monthly average stood at 3.42 million new accounts, setting a new benchmark for any financial year.<\/p>\n\n\n\n

Total Demat Accounts<\/strong><\/td>Change<\/strong><\/td><\/tr>
Year<\/strong><\/td>Count (in Cr)<\/strong><\/td>Absolute (in Cr)<\/strong><\/td>in %<\/strong><\/td><\/tr>
FY21<\/td>5.5<\/td>1.4<\/td>33%<\/td><\/tr>
FY22<\/td>9.0<\/td>3.5<\/td>63%<\/td><\/tr>
FY23<\/td>11.5<\/td>2.5<\/td>28%<\/td><\/tr>
FY24<\/td>15.1<\/td>3.7<\/td>32%<\/td><\/tr>
FY25<\/td>19.2<\/td>4.1<\/td>27%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Source: IBEF.org<\/a><\/p>\n\n\n\n

This surge in demat accounts was driven by easier account opening, rising smartphone usage, and strong market returns.<\/p>\n\n\n\n

CDSL: BSE\u2019s Trusted Partner in Secure Electronic Trading<\/h2>\n\n\n\n

Central Depository Services (CDSL)<\/a>, promoted by the Bombay Stock Exchange (BSE) in 1999, is one of India\u2019s key depositories, enabling electronic holding of shares, bonds, and mutual funds<\/a>. <\/p>\n\n\n\n

Though now a listed company, CDSL remains closely linked to BSE<\/a>, which is its largest shareholder. <\/p>\n\n\n\n

CDSL works with exchanges, brokers, and intermediaries to maintain investor records and streamline trade settlements. Its integration with BSE enables investors to manage and store their securities securely in a paperless environment.<\/p>\n\n\n\n

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Source: Business Standard<\/a><\/p>\n\n\n\n

BSE Still Going Strong: Potential for Deeper Market Reach<\/h2>\n\n\n\n

India\u2019s capital markets have experienced a significant increase in participation over the past few years. However, despite these gains, mutual fund adoption remains surprisingly low, with only 3% of India\u2019s population currently investing in mutual funds<\/a>. <\/p>\n\n\n\n

When it comes to demat penetration, only 8% of the population holds demat accounts, compared to 62% in the US <\/a>Monthly Systematic Investment Plan (SIP)<\/a> inflows have also surged, tripling to around \u20b925,300\u202fcrore, underscoring retail investors\u2019 growing preference for disciplined investment strategies.<\/p>\n\n\n\n

Yet, mutual funds\u2019 Assets Under Management (AUM) relative to GDP remain low at 17%, significantly behind the global<\/a> average of 65%. <\/a>Stock market turnover velocity also lags international peers at around 70% versus nearly 115% on NASDAQ<\/a>. <\/a><\/p>\n\n\n\n

Looking forward, robust demographics and rising incomes could propel further market growth. Over the next decade, an estimated 100 million people are expected to join the workforce, with a similar number of households entering the middle-income segment.<\/p>\n\n\n\n

Source: aninews.in<\/a><\/p>\n\n\n\n

Now let’s explore how BSE has overcome various challenges over time and transformed into one of the world\u2019s leading stock exchanges.<\/p>\n\n\n\n

BSE in the Planned Economy Era<\/h2>\n\n\n\n

In 1956, the BSE became the first stock exchange to gain permanent recognition under the Securities Contracts (Regulation) Act, providing a legal framework for regulated trading.<\/p>\n\n\n\n

However, the exchange struggled with poor transparency, malpractices, and slow, manual systems. Trades happened through open outcry, and price updates often reached investors late via newspapers. These issues limited participation and fair pricing, highlighting the need for modernization. These early inefficiencies eventually led to important reforms and the adoption of technology in later years to improve market access and efficiency.<\/p>\n\n\n\n

Liberalisation and Market Reforms in the 1990s<\/strong><\/p>\n\n\n\n

The 1990s marked a turning point for India\u2019s economy, triggered by the 1991 reforms aimed at deregulation, foreign investment, and trade liberalisation. These changes greatly boosted the capital markets. BSE\u2019s market capitalisation grew at 27% annually between 1991 and 1999, while trading volumes doubled in a year. The primary market expanded with fresh issues from private firms and mutual funds. Foreign portfolio inflows touched $3.8 billion by 1995, and SEBI gained full regulatory authority in 1992 to enhance market transparency and investor protection.<\/p>\n\n\n\n

1992 Scam Sparked Reforms in Indian Stock Market<\/a><\/strong><\/p>\n\n\n\n

During India\u2019s economic liberalisation, the 1992 Harshad Mehta scam<\/a> exposed major flaws in the stock market. By manipulating stock prices using fake funds, Mehta triggered a 12.7% crash in the BSE Sensex<\/a> on April 18, 1992. While it deeply shook investor confidence, the crisis became a turning point. It led to stronger powers for SEBI, the push for electronic trading, and enhanced transparency, proving that even major setbacks can drive essential reforms for a more robust and efficient market.<\/p>\n\n\n\n

Technological Revolution<\/strong><\/h3>\n\n\n\n

The launch of the fully automated National Stock Exchange (NSE)<\/a> in 1994 pressured BSE to modernize. In response, BSE introduced its electronic trading system, BOLT (BSE Online Trading), in 1995, replacing the outdated open outcry system and enhancing speed and efficiency.<\/p>\n\n\n\n

In 2001, BSE launched BSEWEBX.com, the world\u2019s first centralized exchange-based internet trading system, allowing global investors remote access to Indian markets, marking BSE\u2019s global push.<\/p>\n\n\n\n

A key milestone came in 2005 when BSE corporatized and demutualized under SEBI\u2019s direction. This governance shift enabled strategic partnerships with global exchanges like Deutsche B\u00f6rse and Singapore Exchange, cementing BSE\u2019s international presence.<\/p>\n\n\n\n

Sensex: The Nation’s Economic Barometer<\/strong><\/h3>\n\n\n\n

In 1986, the BSE introduced the Sensex, India’s first stock market index<\/a>, with a base value of 100, which was set in 1979. The Sensex rapidly became a crucial indicator of India’s economic health and a sensitive barometer of market sentiment<\/a>. Its early movements directly reflected significant economic policies and emerging industrial trends. <\/p>\n\n\n\n

Key Sensex Milestones and Their Triggers<\/strong><\/p>\n\n\n\n