The Comptroller and Auditor General of India (CAG) has rapped the Securities and Exchange Board of India (Sebi) and Insurance Development and Regulatory Authority of India (Irda) for keeping their surplus funds, worth over Rs 1,325 crore, collected through fee and penalty outside the government accounts in 2007-08.
The practice by the two regulators, market and insurance, is in contravention of the instructions issued by the Ministry of Finance that all departments of the government will ensure that funds of regulatory bodies are maintained in the public account, CAG said in its report on the Union Government accounts 2007-08.
Sebi has retained Rs 987.95 crore surplus fund, while Irda has kept Rs 337.54 crore outside the government accounts, the report said.
It added that in January 2005, the Department of Economic Affairs had directed all ministries and departments to ensure that funds of regulatory bodies are maintained in the public account.
CAG pulled up the regulators saying that the retention of surplus funds was not only a violation of the government’s norm but also “inconsistent with the Constitutional provisions”.
According to the constitution, “These bodies have been established by Acts of Parliament...The money collected by these bodies should be credited to government account.”
Further, CAG said Irda was directed by the Finance Ministry in 2002 to deposit the funds in the public account, while the ministry did not direct Sebi despite continued violation.