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.
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.
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.
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.
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.
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.