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Sebi may be allowed to bite news
Our Markets Bureau
29 October 2001

Mumbai: The Securities and Exchange Board of India (Sebi) is set to get more powers from the Central government, which will effectively raise its status from being merely a barking entity to a more effective biting one.

Sources say the following two steps would soon be taken to increase Sebis powers to punish wrongdoers:
1) Raising the penalty limit (which Sebi will be allowed to impose) to Rs 25 lakh or three times the amount involved, whichever is higher, from the present limit of Rs 5 lakh.
2) Impound and retain documents furnished to Sebi during the course of an investigation.

Initially Sebi was keen on acquiring search-and-seizure type of powers, which other agencies, like the income-tax department, are blessed with. Nevertheless, Sebi decided against it as it found that search and seizure would become out of bounds for the capital market watchdog.

Sebi had in the past complained about its lack of power to impose punishments or to effectively curb irregularity on the bourses. Right from the days of vanishing companies to the recent Ketan Parekh scam, Sebis one-point excuse has been the lack of punitive powers. How much the latest move will help Sebi to curb capital market crimes, only time can tell. The sources said the government is likely to issue an ordinance in this regard.

Sebi is also likely to have its board representatives raised to eight from the current figure of six. The government is likely to amend the Sebi Act in this regard. Both the additional members would be full-timers. Currently there is only one full-time member on the Sebi board in addition to the chairman.

Normally Sebi board should have had six members, but presently there are only four: chairman D R Mehta, RBI deputy governor GP Muniappan, director of company affairs V K Dhall and chief economic advisor Rakesh Mohan, who however resigned recently. The public nominee posts, occupied by Kumarmangalam Birla and J R Verma, too, have been lying vacant. The government is likely to fill all these posts and empower Sebi with more teeth.




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Sebi may be allowed to bite