The expanded powers of Securities and Exchange Board of India to regulate Ponzi schemes and conduct search and seizure operations are likely to be ratified by the NDA government through a law in the monsoon session.
The market regulator was given these powers through an Ordinance in 2013. It was repromulgated thrice. Disruptions in Parliament and delay by the standing committee on finance in finalising the report did not allow for the bill to be cleared by the legislature, before the general elections. The third extension made on March 29 required a clearance from the Election Commission since the model code of conduct had already come into play.
The ordinance among other things provides Sebi access to call data records to track stock market related crimes. While the ordinance provides Sebi with powers to regulate any money pooling scheme of over Rs 100 crore, the fresh Sebi bill could build in some checks. The new bill by finance minister Arun Jaitley will replace the Ordinance.
A government source told The Indian Express, “Most of the powers that have been recently provided to Sebi will be kept intact so as to ensure stringent regulations in the capital markets and to regulate fund raising through illegitimate collective investment schemes.”
The ordinance now in place gives Sebi the right to go after companies like Sahara for instance, which ran collective investment schemes without obtaining the regulator’s approval.
Speaking at the Idea Exchange event of The Indian Express, law and telecom minister Ravi Shankar Prasad indicated that Sebi’s enhanced powers would continue.
“Transparency in the stock market ought to be there. There should be transparency in how investments are made. But the existence and exercise of power should not be in a manner that genuine people become hesitant to conduct economic operations. How we blend the two is the larger issue,” said Prasad.
There are around 15 authorities that have surveillance powers like the ones Sebi has been given. However it will have to be decided if the bill would need to travel to the standing committee on finance, again.