SEBI directs BSE to allow inspection of files under RTI; stock exchange disregards directive a second time

Yogesh Mehta, a former member broker, has for over three years been demanding information with respect to market making by the BSE. He says this resulted in a cost of nearly Rs90 crore and benefitted just a handful. The stock exchange will not cooperate, saying that it is not a public body and that the information is confidential

Both the National Stock Exchange (NSE) and he Bombay Stock Exchange (BSE) have been adamant about their stance on the Right to Information Act and have resisted the attempts by activists to get information. However, in a recent case, the public information officer at the Securities and Exchange Board of India (SEBI) has directed the BSE to allow an RTI applicant to inspect files. Even as the BSE continues to try its best to obstruct the move, activists believe this is a good start.

The appellate authority at SEBI has issued the same directive twice, in favour of the applicant seeking documents relevant to the BSE's market-making activities. But the BSE denies being a 'public authority' subject to the RTI and refuses to see any public interest in the matter.

Describing the documents sought as 'confidential', the BSE replied to one of SEBI's letters saying, "The BSE has consistently been of the view that it is not a public authority. Disclosure of such information shall cause serious harm, injury and prejudice to the interest of BSE, which does not outweigh any public interests in any matter."

SEBI had slapped BSE with a show-cause notice in November 2009, for engaging in market making without acquiring approvals from the regulator. Market making is artificially creating volumes in the derivatives segment, which infuses liquidity. Market makers quote both 'buy' and 'sell' for a financial instrument or commodity, hoping to make a profit on the trade.

Yogesh Mehta, a former member broker of the BSE, had filed a complaint against the BSE over market making in 2008. According to Mr Mehta, the BSE's stint with market making cost the bourse Rs85crore-Rs90 crore, and he alleged that only a handful of persons profited from the process.

After SEBI hauled up the BSE, Mr Mehta filed an RTI application with the market regulator in January 2011, seeking documents relevant to this matter. SEBI directed the BSE to provide the documents, but the BSE refused to see any 'public interest' in this matter and refused to comply with the order.

The BSE said it was not a 'public authority' and went on to outline the duty of the principal information officer (PIO) of SEBI, saying, "The PIO of SEBI is required to grant information which is available to him. Procuring the information sought by the applicant and then making it available is not envisaged under the RTI Act."

Unconvinced with the BSE's reply, Mr Mehta appealed to SEBI again. In an order dated 1 March 2011, Prashant Saran, in the chair of the appellate authority, directed the information officer to get the files from BSE and allow the appellant to inspect the files. "If an applicant keeps demanding inspection of documents, it is better for the respondent to allow inspection… to avoid appeals alleging that not everything was disclosed," he said.

A sulking public information officer then allowed the inspection, but BSE refused to disclose information related to the third party, that is the BSE in this matter between Mr Mehta and SEBI. Mr Mehta wrote to SEBI alleging that the BSE was uncooperative and that he was being provided information in a piecemeal fashion.

The BSE then filed an appeal with the Central Information Commission (CIC), challenging the order passed by Mr Saran, and thus, Mr Mehta's request for inspection of all files was dismissed.

Mr Mehta again wrote to SEBI, citing several court rulings in disparate cases, which said that mere filing of appeal does not amount to a 'stay', without a formal prohibitory order, requesting for spot inspection of files.

Though the appellate authority observed that the precedents cited by Mr Mehta did not apply to the present case, it directed the information officer again 'to provide whatever information had already been offered, as well as any other information… other than the third party information under consideration of the honourable CIC… free of cost within 15 working days." This order was issued on 30th June.

But BSE is taking its time and has not reverted to Mr Mehta on this. "They have not said anything about granting inspection, though much time has passed," Mr Mehta said. "I will wait for a few more days, and then I will go for a second appeal in Delhi."

Clearly, the fight isn't over yet. But SEBI directive in favour of the applicant has opened up a new field, which gives the RTI activists a reason to hope.



sathya cumaran

5 years ago

i have been cheated by IIFL for which nse bse and sebi are party to it tomy unofficial source the trade had been unofficially done to extent of rs5000 crore and all the accounts of the stock broking firms are fudged which i am going to disclose it in media and also wikileaks site as most corrupt organisation in india

suresh soni

5 years ago

(1) It is good news / information to RTI activists, that mere filing of Appeal before the Central Information Commission, (CIC), the institution like the Bombay Stock Exchange Ltd. (BSE) cannot deny the required information to the RTI applicants, just that BSE have filed appeal before CIC. It is the experience of the RTI applicants that NSE and BSE and many more institutions, who want to hide their wrong doing, are denying the information to applicants. Forget about RTI Act, 2005, to take action against BSE or NSE, even SEBI has failed to take actions under its SEBI Act and other powers given to SEBI under SC(R)A Act, to take actions when their wrong doing is brought to SEBI’s notice.

(2) Not only mere filing of Appeal before CIC, the information cannot be denied, even Central Public Information Officers (CPIO) and NSE, BSE also can not deny the information to RTI applicants saying that the matter is sub judice and thereby wrongly taking advantage of section 8 of RTI Act. Here also CPIO, NSE, BSE cannot deny the information under section 8, just that the matter is sub judice. There must be PROHIBITORY Order from the competent court, and which amounts to contempt of Court’s orders.

(3) It seems that there is misunderstanding in reporting this good article by Moneylife about denying information by BSE. SEBI’s appellate authority cannot direct BSE to give information to Applicants. The only correct way under RTI Act, is that the 1st Appellate Authority of SEBI, can ask the CPIO of SEBI to get the information from NSE or BSE and then provide the information to applicant.

(4) My suggestion to Mr. Yogesh Mehta is that he should file (1) appeal before the CIC (i) for not giving information by CPIO of SEBI, to Mr. Mehta, (ii) but he should make further appeal to impose the Penalty on CPIO-SEBI, as the 1st Appellate Authority have asked CPIO to provide the information FREE of cost, as there is delay in giving information to him. (2) Mr. Mehta should file complaint to CIC for metal torture and unnecessary delaying tactise of giving the information for last 3 years.

7% of account holders use Net for banking: McKinsey report

The survey is the result of one-on-ones with nearly 20,000 Asians covering the mass, mass-affluent and the affluent consumers across 13 markets, of which the largest survey pool was from India at 5,000 because of the sheer diversity of this market, McKinsey & Company India partner and head of its retail banking services Renny Thomas said

Mumbai: As many as 7% of account holders in the country are using the Internet for banking transactions, while branch banking has fallen by a full 15 percentage points, reports PTI quoting a report by global management consultancy McKinsey & Company.

“Use of the Internet for banking has seen a massive rise in the 2010-11 survey, taking the overall number of bank consumers who use the Net to close 7% of the total bank account holders—a seven-fold jump since 2007—even as for the first time in the past 13 years, branch banking has come down by a full 15 percentage points during the same period,” McKinsey & Company India partner and head of its retail banking services Renny Thomas said.

Mr Thomas was talking to reporters after releasing a McKinsey India personal financial services survey 2011 here today. The percentage of online users of banking transactions was just about 1% in the agency’s 2007 survey, Mr Thomas added.

The survey is the result of one-on-ones with nearly 20,000 Asians covering the mass, mass-affluent and the affluent consumers across 13 markets, of which the largest survey pool was from India at 5,000 because of the sheer diversity of this market, Mr Thomas said.

The survey is based on the number of times in a week respondents visited bank branches or used Internet for carrying out transactions.

In 2007, the number of times Indian respondents visited bank branch for doing transactions was 0.58 while the same in 2011 was 0.49, showing a fall of 15 percentage points.

Branch usage has dropped by 27% on an average across Asia between 2007 and 2011, while usage of the Internet and mobile banking have increased by 28% and 83%, respectively, says the survey, which was also conducted across the Asia-Pacific region.

When it comes to digital banking, the survey says, “India leads growth in Asia in mobile and Internet usage for banking.

While there was a 15% decline in branch usage here, the growth in usage of the Internet and mobile banking has almost tripled.”

“For the first time since we started this survey in 1998, we see a marked shift away from using branches as a main channel for interaction in many markets. This is a fundamental shift in consumer behaviour, and has significant implications for banks. The scale of branch network is a less decisive factor for capturing customers now,” Mr Thomas pointed out.

The survey also highlights a number of changes in consumer mindset when it comes to accessing financial services after the global financial crisis.

The worst casualty is loyalty as there is a full 40 percentage point drop in loyalty since 2007, though 95% are seemingly satisfied with their main banks, says associate partner Jatin Pant.

The average number of banking relationships across the country rose 19% from 1.4% in 2007 to 1.7 in 2011, while the average percentage of people willing to shop around rose 15, marking a greater willingness of consumers to vote with their feet and engage with a broader variety of financial institutions, says the McKinsey survey.

“While the consumers say they want to consolidate their banking relationships, they continue to shop around because banks are not delivering the products and services, such as frontline services, that can lock them in,” it says.

When it comes to financial planning too, there is a marked progress with the percentage of consumers using financial planners soaring from 14% in 2007 to 43% in 2011, while the percentage of consumers willing to take risks on capital growth rose by 20% to 44%, up from 24%. At the same time, the survey says, dissatisfaction too rose with their financial planners.

“On an average, only 51% are satisfied with their financial planners in 2011, as compared to 73% in 2007," says Mr Thomas.

There are striking changes in the profile of financial planners too with more and more consumers moving away from traditional insurance channel planners to bank channel planners, although the country still lags behind other developed Asia markets in its usage of bank planners—16% here compared to 28% in Hong Kong, 71% in Korea, and 52% in Taiwan.

A unique finding in the survey is the rising demand for localised banking, thanks to the financial crisis with the number of respondents who “prefer to deal with a local institution” rising in the country India by 20% (from 75 in 2007 to 95% in 2011), says the survey.

This is the case in rest of Asia too, says the survey as “there is a consistent theme across Asia of the desire for the localisation of banks. Post-crisis, having a global brand may be less of a competitive advantage than before, and domestic players have just as good a chance to compete for customers as the global giants,” says Mr Thomas.


The US cannot afford to just wait and watch as Pakistan slips into a ‘failed state’

Pakistan cannot survive without economic and military assistance from the US. Likewise, terrorists cannot operate without support in Pakistan. The US must use its enormous resources and its influence with Pakistan to deal with the war on terror and bring the perpetrators to book

The visit to India by US Secretary of State Hillary Clinton is much appreciated, particularly because it comes so close after the triple bombings in Mumbai last week. And the solidarity expressed by the US administration with India at this time is reassuring. However, I am not fully convinced by the (official) statement that "the influence of the United States on Pakistan is limited" and the implication that there is only so much that the US can do to influence Pakistan, which is one of its most important allies in the war on terror.

Given this, I would like to urge the Government of India to keep using its good offices and close relationship with the US to focus on five important aspects with regard to terrorism, as part of its bi-lateral relationship. We need to be clear in our thinking, and achieving gains in these critical areas is an imperative if innocent lives are to be protected in the long run.

First, every non-American life lost is as valuable as an American life lost. As the natural leader of the war on terror, the US must make this absolutely clear to all its allies, including Pakistan, that there can be no compromise on this, and this message must be repeated time and again. This is the first point of pressure that the US can exercise towards safeguarding innocent lives as the leader of the war on terror, something it has an obligation to do!

Second, in countries such as Pakistan, there are large numbers of moderate people who do not subscribe to terrorist ideologies. The US must use its special leverage to ensure that the influence of such moderate common people is truly reflected in Pakistan's foreign policy, as well as the anti-terror activities.

More importantly, the US must focus its technical and financial assistance to help facilitate the participation of these people as in the larger national effort in Pakistan. The Pakistan army needs sensitisation in this regard and the US would do well to open regular channels of communication and dialogue with the Pakistan army as its influence appears to be greater than that of the civilian government.

Third, the perpetrators of the coordinated terror attack in Mumbai in November 2008-many of them said to be in Pakistan—must be brought to justice and swiftly. There can be no compromise on that and the US must make that absolutely clear to the authorities in Pakistan, including the army. The US must also provide complete and full access to all resources that it has (with regard to the Mumbai attacks) and also ensure that Pakistan does the same, to enable India to bring the perpetrators of the dastardly crime to justice.

Fourth, any terror camps in Pakistan Occupied Kashmir (POK) must be disbanded immediately and the US must convince Pakistan to follow a time-bound schedule to eliminate all these breeding grounds for jihad. Make no mistake, these POK camps are not hotbeds of terrorism for targeting India alone; many of the jihadis from these camps operate worldwide through the Al-Qaeda network, spreading terror. Therefore, it is in everyone's interest, including that of the US, to have these camps destroyed, and as quickly as possible. Further, the US must also support Pakistan in starting 'reverse sensitisation programmes' that can perhaps undo the indoctrination done by the terrorists and this calls for a serious and innovative approach to rehabilitation of potential jihadi recruits.

Last, but not the least, the nuclear arsenal and related facilities in Pakistan are not at all secure. The US must engage Pakistan consistently on this aspect so that these weapons of mass destruction do not fall into the hands of jihadis. Not focussing on this aspect is surely a recipe for long-term disaster.

Without question, Pakistan cannot survive without financial, economic and other assistance from the US; likewise, terrorism cannot survive without support in Pakistan. Therefore, it is well within the reach of the US to try and influence Pakistan so that it becomes a complete and full ally in the global war on terror. Day after day, we see that Pakistan is (slowly, but surely) moving towards being a failed state and we simply cannot allow that. To save innocent lives worldwide and usher in long-lasting peace, we need to engage with Pakistan's majority who desire a fair chance to live a normal life. Who better than the US to create conditions for this?



Shadi Katyal

5 years ago

One is surprised that the writer has not even understood what Pakistan stands for. USA wanted it to be a show case and thus willing to invest Billions in Industry and wanted it to be on par with India because of Cold War and Nehru's anti west speeches. USA even told Pakistan that you ar on par with India and this is the reason that she overlooked along with Europe all the abuses in the system. Pakistan took a wrong turn and since it was a Islamic state, it tried to teach and join Arab league which she was denied and thus teaching of Arabic was abolished.
Her biggest problem was India being the enemy and tried to wrench Kashmir by force by sending army units dressed in mufti like Pathan.The world and history has its record.
Pakistan took a wrong turn toward religious issues and decided to help the Muslim by becoming more theocratic and thus we have the present situation.
After the episode of Osman Bin Laden and all went on opened the eyes of USA. USA poured Billions in cash without any accountability and tons of arms. Pakistan took advantage of this and ISI opened training centers for terrorism not only for India but mainly for USA.Does the writer of the article remember last incident on Times square?
Paksitan took every advantage of US friendship and even blocked supply6 lines so food and fuel can be looted.
How could anyone even think of helping such selfish deceiving nation.;
It was failure from its inception and it was the joining with USA in 50's that it opened the door for such cooperation.
There are 3 kinds of Taliban, namely an auxiliary force of Pakistan which is running a proxy war against USA?NATO another of Afghan locals and third of Huqqanit group along with Al.Quida.
Which Taliban the writer is talking. Is there any difference in their policies.
Pakistan ISI created terrorist groups like LeT and many more and now the chickens are coming home to roost and red the daily killings in Karachi etc.
Why is it USA responsibility to tame Pakistan. Let Suadi and others with Trillions come and help to stablise the nation.
True a peaceful Pakistan will be a good neighbor but India has treid everything and failed to make peace.The American idea of being on par has brought atomic race.
Let us see if china will help ???

Shadi Katyal

5 years ago

This is my third attmpt and I have stopped writing as long as the systm is not changed. If you make a mistake on security code, the whole letter disapear insted of coming back with mistake.

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