Prakash Hebalkar: Mapping the faults in MAPIN-UIN

In a classic display of Nehruvian-socialist suspicion, SEBI has seen fit to demand that anyone who has the temerity to invest a sum as small as one lakh rupees (the tax-exempt limit for income tax purposes) in the stock market will have to provide fingerprints like a common criminal to get a MAPIN-UIN.

This applies not only to companies, directors, brokers and their relatives and direct investors in equity markets but oddly also to indirect equity market investors such as mutual fund investors.

However, despite their heavy involvement in the largest recent stock market scams, public sector companies have been exempted from this regulation, presumably in deference to the prejudices of left-party supporters of the current government.

One hopes that the sharp-minded Finance Minister realised that this intimidation will encourage the growth of black money, as those so inclined to avoid the taxpayer would rather hide their fingerprints along with their transactions.

If he did, then it would appear that a hamhanded act of bureaucracy has defeated the FM's sagacity and visited new rules on millions of ordinary investors for the sins of a handful of scamsters, most of whom have been unpunished to date.

As stated, this new requirement is to enable tracking of market manipulation, but in reality this is really mere perpetuation of the licence-permit raj in yet another form.

At a time when the Finance Minister and Prime Minister are seeking even greater investment from foreigners, another arm of the government is demanding that even citizen investors seek a licence to invest their own hard-earned money in a public company on a public market.

The egregious nature of such a licence is only further highlighted by the fact that the MAPI-UIN is needless, error-prone, capable of misuse and its stated objectives can be defeated easily.

Needless

First, the requirement for yet another identifier, which is what the MAPIN-UIN is, is needless.

The existing laws require that all investments in market instruments including mutual funds be made by cheque if they exceed twenty thousand rupees, and so all such investments can be traced to a bank account with the requisite account-holder-photographs and address-proof requirements of those records.

Further, the Income Tax department already requires stock brokers and mutual fund managers to report all transactions over fifty thousand rupees together with the permanent account number (PAN) of the investor.

As every market participant who trades over a lakh of rupees worth of shares or mutual funds would thus be covered by this requirement already, and as the PAN too is a unique identifier, where is the need for yet another identifier?

Why, each taxpayer is even required to obtain an identity card known as a PAN-card to show during a wide