SEBI Outlines Three-Pronged Strategy To Tackle Ponzi Menace – Business Line – 24-Nov-2014

November 25, 2014 - Uncategorized

India’s ranking on the shareholder protection parameter of the World Bank’s Ease of Doing Business ratings has shot up to 7 in 2014 from 49 in 2012, ahead of even advanced economies such as the U.S., Securities and Exchange Board of India Chairman U. K. Sinha said here on Saturday.

“Our steps for ensuring diversity on corporate boards by mandating appointment of at least one woman director and other regulations for related-party transactions have pushed up India’s shareholder protection ranking even ahead of developed countries,” Mr. Sinha said.

He was interacting with reporters at the inauguration of a Bombay Stock Exchange’s Investors Service Centre here on Saturday.

Mr. Sinha also said that State governments were working with SEBI and the Reserve Bank of India to curb the menace of ponzi schemes such as Saradha. Twenty States and Union Territories have already enacted a Depositor Protection Act. Six more have passed the legislation that is waiting for Presidential assent.

A three-pronged strategy had been adopted to deal with the menace of these collective investment schemes and unauthorised deposits, said Mr. Sinha.

The State depositor protection acts empowered district magistrates to take action against any entity collecting unauthorised deposits by way of searching its premises, attaching property — both personal and acquired through the collected sums — and even order arrest of the accused, said Mr. Sinha. It also enabled the DM to disgorge or distribute the impounded assets among the affected people, he elaborated.

Besides the state depositor protection acts, as directed by the Financial Sector Development Council (FSDC) (that is headed by the Union Finance Minister), State level co-ordination for exchange of information had also been set up and the new provisions of the amended SEBI Act were being used to crack down on ponzi schemes, he said.

Coordination committees, headed by the State chief secretaries, had been set up in all States, he said. Officers from SEBI, RBI and other regulatory authorities and investigating agencies were members on them, he added.

The new provisions of the amended SEBI Act made it mandatory for money pooling schemes collecting in excess of Rs.100 crore to register with SEBI unless already registered with another regulatory agency, Mr. Sinha clarified.

He also said that SEBI was working towards reducing the time lag between the closing of an initial public offer and the commencement of trading of its scrip at the stock exchanges to under six days from the 12 days at present.

The Hindu

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