With an ordinance having lapsed that granted extra powers to Sebi to take on fraudsters and defaulters more effectively, Chairman U K Sinha today said it is up to the government to take a call on this issue.
Sebi was given these powers last year through an ordinance, which was first promulgated in July and for second time in September, but it lapsed on January 15 as a Bill in this regard could not be passed in Parliament.
As the proceedings in Parliament continue to remain stormy, it is unlikely that the Bill amending relevant Sebi Acts would be passed in the current session. However, the ordinance can be again promulgated for third time after end of this session, which is expected to continue till February 21.
Asked about the ordinance, Sebi Chairman Sinha said this evening that the government would need to take a decision on this issue.
He was speaking to reporters after a meeting of Sebi board, which among others, cleared path-breaking changes in corporate governance norms for listed companies.
Asked whether the ordinance issue came up for discussion at the board meeting, Sinha said it was not the board, but the government that needs to decide on this matter.
The additional powers granted through this ordinance included freezing bank accounts, attaching properties, conducting search and seizure operations and launching recovery proceedings.
Before lapse of the ordinance, Sebi had initiated more than 300 attachment proceedings in about 65 different cases for recovery of close to Rs 2,000 crore from defaulters and fraudsters, including those having raised money through illicit money-pooling activities.
While this ordinance has lapsed, actions taken by Sebi till January 15 would remain valid and the recovery proceedings will continue in these cases.
The Securities and Exchange Board of India (Sebi) was seeking these powers for long to better regulate markets and take to task fraudsters and other defaulters more effectively.
Soon after the promulgation of the ordinance, Sebi began exercising these powers and also put in place necessary operational mechanism, including those requiring changes in the manpower deployment.
Under its recovery mechanism, Sebi was authorised to order attachment and sale of defaulter's movable property and immovable properties, freezing of bank accounts, arrest of the defaulter and his detention in prison, as also appointment of a receiver for management of movable and immovable properties.
Sebi has also appointed a Recovery Officer at its Head Office in Mumbai, while it is appointing more Recovery Officers at regional offices to expedite the recovery process.
A training programme was also conducted for Sebi officials on search, seizure and recovery procedures. In order to have uniformity in the recovery process, a recovery was made for internal guidance in line with the procedures adopted by the Income Tax Department for recovery of tax.
While finalising this manual, inputs were also taken from the senior income tax officials.
