As the debate continues on extra powers given to the Securities and Exchange Board of India (Sebi) to take on fraudsters and defaulters, the number of attachment orders passed by the capital markets watchdog has crossed 700 for recovery of about Rs 1,600 crore.
Sebi got the powers to pass attachment orders and launch of recovery proceedings against fraudsters and market manipulators, among others, through an Ordinance that has been promulgated thrice and needs to be replaced by an Act after passage of the same by Parliament.
The Ordinance was first promulgated on July 18, 2013, followed by re-promulgation on September 16, 2013. and for a third time on March 28, 2014.
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While it is unlikely these powers would be completely withdrawn from Sebi, discussions are underway for dilution of some of these or for additional safeguards in the relevant Acts, sources said.
The discussions have followed letters written by some members of Parliament to the prime minister and the finance minister against the “sweeping powers” given to Sebi through this ordinance.
A complete withdrawal of these powers is also unlikely, as they have been very effectively used for taking on the fraudsters, especially those collecting money from investors through illicit public deposit schemes, a senior government official said.
Also, there is a wrong perception that the Ordinance was essentially brought in by the previous government to empower Sebi in its fight against Sahara group, he said, while adding that the fact remains that all actions taken against Sahara group were ordered by the Supreme Court.
"People are also saying that such sweeping powers should come with necessary safeguards, but the fact is that there are many safeguards that have been provided under the ordinance," he said.
According to sources, certain corporate lobbies have also been very active against the Ordinance, but the government's dilemma is two-fold in this matter.
If they allow the ordinance to lapse, and some other type of illicit deposit-collection scheme comes to the fore, the government will have no defence, another senior official said.
"Besides, the Congress party would make this an issue and say that the last government went out of way to get this Ordinance promulgated three times, including at a time when the election code of conduct was in place," he added.