Regulations
PAC too criticises SEBI for wasting money on instituting and abandoning MAPIN

The Public Accounts Committee of Parliament says SEBI acted hastily in awarding the contract to NSDL that led to wasteful expenditure of about Rs12 crore

The Public Accounts Committee (PAC) of Parliament has criticised market regulator Securities and Exchange Board of India (SEBI) for wasting money on instituting and later abandoning its much-touted 'market participant identification number' (MAPIN) scheme.

The PAC has in a report said that SEBI acted hastily in awarding the contract for MAPIN database to the National Securities Depository Ltd (NSDL), which ultimately led to wasteful expenditure of Rs11.54 crore, as MAPIN was eventually suspended.

In July 2009, the Comptroller and Auditor General of India (CAG) had also deplored SEBI for awarding the database preparation work related to MAPIN to NSDL which resulted in 'unfruitful expenditure' of Rs11.54 crore of investors' money.

SEBI's former chairman CB Bhave was heading NSDL when the market regulator launched MAPIN. He was a big supporter of MAPIN and NSDL would have been a big beneficiary of the identification programme.

Earlier, in June-July 2005, after a six-member committee, appointed to re-examine the use, structure and feasibility of the MAPIN database-bowing to popular opinion-recommended an end to biometric identification for investors. Mr Bhave was one of the members who left the committee before it could draft and submit a report.

MAPIN registered fingerprints along with a photograph. Many retail investors believed that the use of fingerprints and photographs (used worldwide for identification of criminals) would be a punishment for honest investors, as no trickster would be so stupid as to undertake fraudulent transactions on his own ID. The other factor was that actual trading, at the time, did not involve biometrics and there was no way of verifying the fingerprints and photograph of an investor.

Besides, there were other avenues like depository accounts, brokers, permanent account numbers (PAN) and bank account numbers, available to regulators to track an investor and his investments.

In the first round of MAPIN, the stock market regulator issued about 4,00,000 UIDs, mostly to senior officials of various companies, institutions and brokerages, at a charge of Rs300 per ID.

The PAC, working under the chairmanship of Murli Manohar Joshi, submitted its report titled "Unfruitful Expenditure of Investors Money (SEBI)" to Parliament, which specifically mentions that the contract for MAPIN was awarded to NSDL without any competitive bidding.

Noting the concern about the infrastructure and data still lying idle with NSDL, the Parliament committee told SEBI to secure both the infrastructure and data without any further delay and keep it in safe custody so as to avoid its misuse.

The PAC said, SEBI should explore alternate schemes by completing all technicalities, including seeking public opinion through the media. It should be a priority for SEBI, as this can safeguard the interests of investors and provide credibility to the market regulator as well, the PAC added.

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COMMENTS

P Sharma

6 years ago

12 crores is only part of the story. The actual wasteful expenditure is many times this amount if you club the man-hours wasted by the registrars and the applicants, travelling costs, etc.

surendra

6 years ago

SEBI chief and there are many such examples which only reminds me MOHAMMED TUGLAK the badshah at Delhi who is famous for his ideas full of foolishness.

nirmal bhauwala

6 years ago

bhave bhave I CANNOT UNDERSTAND HIS MINDSETUP &NO BODY SHOULD TRY FOR IT.JO GUJAR GAYA WO KAL THA. NEW SAHEB KYA GUL KHILATE HAI .WAIT & WATCH.IF WANT TO DO SOMETHING THINK FOR ENTRY LOAD POSITIVELY

JAYANT VIDWANS

6 years ago

This amount only SEBI has spend. What about the money spend by individuals for making application for MAPIN id ( thousands of Photocopies collectedfrom all applicants taken together) Plus value of time spend by each top executives and their spouse, dependent childrens and parents.I know one fund manager who's Wife is medical practitioner. She has wasted her one day for doing MAPIN

No one to say anything against SEBI.

SUBHASH MEHTA

6 years ago

Mr. Bhave had earned too much criticism during his tenure due to various misdeeds. It seems

Now Let see what Mr. Sinha is doing? Investors & IFAs have high hopes upon Mr. Sinha due to his vast experience in Stock Market and M.F.industry.

SUNIL HEMNANI

6 years ago

Mr Bhave has blundered .This was too much of an exercise for the indian public .Now maybe an exercise could conducted in "returning" the money of investors.Lets see how far this request gets

Roopsingh

6 years ago

Bhave has proved himself as most corrupt and sold out regulator to NSSDL for his greed of money-he masked his acts by claiming himself as REFORMER for investors but actually this was all only ""acting"" to impress finance minister and media but actually he was making money for himself and NSDL and NSE by alloting all new ideas to them without any approval.His all actions should be questioned in parliament and in supreme court-and he should be punished for all his acts which gave undue benifit to his PETS and harmed the common man retail investor and IFAs.

REPLY

Madhusudan Thakkar

In Reply to Roopsingh 6 years ago

Roopsingh Ji, Bhave made mutual fund business for distributors unviable and justified wrongs.The classic example was he boasted to Mini Menon during his conversation with her on UTV-Bloomberg TV that he was the only person who saved Rs 1300 crores of investors[2% of the Rs 650000 crores inflows in 2009] He conveniently used this 2% for equity funds not for debt and liquid funds.It clearly exposed his mindset if he seriously thought distributors would be able to collect fee from investors the savings would not have happened.His Dadagiri was exposed when he selectively banned ONLY 14 life insurance companies for ULIPs.In a country of more than 100 crores we don't have 1 crore folios in mutual funds speaks for itself.

Roopsingh

In Reply to Madhusudan Thakkar 6 years ago

Madhusudanbhai,
chokkhi bhasha ma kahiye to tene khub note banaveli chhe,tene badha kam NSDL and NSE ne dhyan ma rakhi ne karela hata-AMFI howa chhatta tene NISM through certification no FATWO padelo hato,
Tena mate ek ja vat chhe ke HE WAS FULLY SOLD TO NSDL .

nagaraj

6 years ago

The association of IFAs should dig out the misdeeds, extravegences, harassments to investors/Distributors by the present and past regulators and bring them to books, even by filing cases wherever necessary. The PANCARDs are issued only after verifying ID Proof and Address Proof etc., then why it is again verified for issuing a KYC ? Why KYC is needed ? Is it not duplication / harassment ? It is just idiotic !

Madhusudan Thakkar

6 years ago

Bhave treated SEBI as his JAGIR during his tenure.Similar thing happened for KYD also.These things happen when we have weak and most corrupt Govt.In life insurance sector there are more than 25 lakhs agents and there is nothing like Know Your Agent concept.

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