‘Along with legislation,we need to improve enforcement’https://indianexpress.com/article/news-archive/web/along-with-legislation-we-need-to-improve-enforcement/

‘Along with legislation,we need to improve enforcement’

U K Sinha,Sebi chairman,discusses the regulator's successes and challenges with Sandeep Singh and George Mathew

U K Sinha,Sebi chairman,discusses the regulator’s successes and challenges with Sandeep Singh and George Mathew

What would you count as Sebi’s biggest achievements in 25 years,and do you think the markets are safe for investors?

There has been a democratisation of the markets. Earlier,a few select people sitting in a limited geographical area in Mumbai were controlling the market but the way Sebi has been able to change the trading pattern and infrastructure,the disadvantage of geography has gone.

Earlier,there was an apprehension whether a trade will be settled or not,and there were various mechanisms to avoid a settlement. Now we have a rolling settlement-and-risk management system in place. No amount of volatility has been able to disrupt our system.


A third area is the way we have been able to structure the flow of funds from foreign portfolio investors. It means they have faith not only in the economy but also in the regulatory system.

What are the challenges you still see for Sebi?

Technological developments are taking place globally. We can’t be complacent. These technological challenges require that Sebi update itself,which we are doing. A second area is to retain the faith of foreign investors. Another challenge is to attract more and more money from within the retail sector. We will take steps in these directions.

What additional powers would you seek to improve the regulatory system?

Sebi has full powers in drafting its regulations,also the role of legislating. We feel improvements are required in enforcement. Penalties of almost Rs 125-150 that we imposed have not been recovered. We need to have the powers to recover our penalties ourselves,like Income Tax and Competition Commission have.

Also,when we conduct an investigation,we have reason to believe that in some situations the documents are tampered with or removed. We have to go to a magistrate for permission and that delays things. We seek that in situations where we can search and seize materials,the power should come to us.

Another point is access to call data records. That power has not been given to us. These are some of the things we have recommended.

What is your estimate of the illegal money collected by collective investment schemes?

It is difficult to put an estimate but at a forum I said it is around Rs 10,000 crore. However,even within Sebi,there is a view that it is an underestimation. There is no centralised agency or database to know how much has been collected by whom. One of the proposals we have given is that for CIS,there should be a single regulator.

When a company comes under probe like Saradha Group currently is,who is doing the recovery?

Sebi can pass an order that you stop raising fresh money,and whatever you have collected,you refund to the investors within a certain period. Imagine a situation where they disobey,then what does Sebi do? I will have to go to civil court and you can imagine this is not going to work. If we are given the powers to recover our dues,these things can be expedited.

The Srikrishna Commission talked about a single regulator,subsuming Sebi,PFRDA,and other regulators. What is your view on that?


Going by some of the episodes we have seen,there are multiple agencies looking at a similar set of things giving scope for people to take advantage of loopholes. There is a need to have a single agency but who that agency will be,what the shape will be,is not something I would like to comment on.