SEBI initiates rule-making for new Securities Laws Ordinance

The market regulator is also framing a new set of norms to enable it to conduct search and seizure operations and recover unlawful gains through disgorgement orders

Market regulator Securities and Exchange Board of India (SEBI) has started the process of framing new regulations and putting in place infrastructure to exercise newly granted powers through the Securities Laws Ordinance, including those related to information collection, search and seizure operations and disgorgement orders.


Besides, the SEBI is preparing internal guidelines to exercise the powers given to it through the Securities Laws (Amendment) Ordinance.


The proposed actions, approved by SEBI's board, include entering into agreements with foreign and domestic regulators to seek information from them about ongoing probes, sources said. In the case of foreign regulators, prior approval of the central government would be taken on a case-to-case basis.


SEBI will also frame a new set of norms to enable it to conduct search and seizure operations and recover unlawful gains through disgorgement orders.


The new powers are aimed at making SEBI more effective in protecting investors' interests and helping it to better regulate the market, including enforcement of securities laws.


SEBI is also preparing guidelines for its officers for search and seizure operations and recovering amounts through attachment and sale of assets. Greater manpower with legal background will be deployed and they will be provided training and other infrastructure.


The regulator is also framing regulations for utilisation of disgorged amounts credited to the Investor Education and Protection Fund.


SEBI is amending the Collective Investment Schemes (CIS) Regulations, 1999, to bring any scheme or arrangement involving unauthorised pooling of money within the ambit of CIS to protect the interests of investors and the securities market. This proposal has been separately approved by the SEBI board and a notification in this regard would be issued soon.


The market watchdog will put in place specific regulations for the procedure of settlement proceedings.


For speedy trial of offences under SEBI regulations, the regulator is taking up the issue with the central government to establish or designate special courts.


Lok Sabha members want stern action against Asaram Bapu

Angry MPs demanded stern action against self-styled godman Asaram Bapu, against whom a 15-year girl has slapped rape charges

Several members from the Lok Sabha on Monday demanded stern action against self-styled godman Asaram Bapu, against whom a teenaged girl has slapped rape charges. The government however tried to pacify members by saying that the probe against Asaram is underway.


The issue came up during Zero Hour when the House was discussing the progress in the probe against the recent gang rape of a Mumbai-based photojournalist.


Janata Dal-United (JD-U) leader Sharad Yadav said, "There is one sadhu who is taking the country for a ride. What have you done in the case? A young girl has slapped rape charges against him. Government should say something and do something on this. Why don’t you speak on this.”


“Punishing this sadhu will send a strong message across the country,” Yadav asserted, with several members including Gurudas Dasgupta (CPI) demanding stringent action against the controversial godman. The members wanted to speak on the subject but were not allowed by Speaker Meira Kumar.


“Asaram should be hanged,” shouted Dasgupta. He also said that there have been growing incidents of rape across the country including gang-rape of a lady constable in Jharkhand. “These incidents bring shame to us and also to government agencies,” he said.

In the melee, Harsimrat Kaur (SAD) also demanded death sentence for all such culprits.


Responding to the members, home minister Sushil Kumar Shinde said cases like those of Asaram Bapu and the Jharkhand constable were 'primarily the concern of states. They are in preliminary stages of investigation’.


A 15-year-old girl has lodged a written complaint with the police charging Asaram Bapu with sexually assaulting her in his Jodhpur ashram. Asaram has denied the charge.


Exploring new avenues for revenues: Some suggestions

The Indian government may consider setting up National Savings and Investments Authority -NS&I like the UK to issue premium bonds and also use lottery system to generate more revenues for the exchequer

Both finance minister P Chidambaram and Reserve Bank of India (RBI) governor D Subbarao, in separate talks to the media tried to calm down the public through their statements. The Finance Minister assured that there is no intention to introduce capital controls, including on repatriation.


It may be remembered that only last week RBI had announced that resident Indians could not remit more than $75,000 a year, as compared to $200,000 earlier; likewise, the non-government companies’ overseas investment has been limited to 100% of their net worth, down from 400% earlier, through the automatic route.


Investor fear continues that the US Federal Reserve may soon end its economic stimulus programme next month. And the Indian finance minister assured investors that the ‘rupee’ at its current level is undervalued.


The RBI warned the government that they should explore new avenues to increase revenues to take care of its fiscal deficit target due to poorer tax collection and rupee depreciation.


To take care of these, the government plans to seriously raise Rs40,000 crore through disinvestment in government owned companies and by disposing residual share-holding in non-government companies, they may realise Rs14,000 crore.


At the same time, attempts are already being made to increase exports, reduce imports where possible and increase indigenous production of oil, gas and coal.  These are steps in the right direction.


But, what are the new measures for revenue that we can suggest, which have a proven track record elsewhere?


The first and foremost that comes to the writer's mind is for the government to consider, seriously, establishment of a National Savings and Investments Authority (NS&I), identical to what UK set up way back in 1970s. It refers to the premium bonds.


How do UK’s premium bonds operate? NS&I issues them in denomination of one British pound (£), with a minimum initial investment of £100 and up to a maximum of £30,000. However, each £1 will have a separate number (and certificate) and will be included in the monthly draw every month - 30 days after the purchase. All the premium bond prizes are free from British Income Tax and Capital Gains Tax.


These Bonds do not give any interest on your investment, and your interest, in fact, lies in being a lucky winner, from a low of £50 to a maximum of £1,000,000 month after month, all tax free, until you decide to redeem the bond!


In this lottery, the winning ticket is picked automatically by a machine, popularly known as ERNIE - Electronic Random Number Indicator Equipment. The present machine is the 4th generation advanced unit, which is also subject to an independent check on the randomness of ERNIE.


In effect, every holder, irrespective of whether he/she holds £100 worth of bonds or £30,000 have fair chance to win, except the holder of a larger number of bonds has a better chance!


What the Finance Ministry can do? It may authorize a joint venture between states of the Indian Union with the NS&I in the UK.  Because of the size and population of the country, the premium bonds may be introduced in a systematic way, state by state. The benefit of funds available under the scheme may be restricted to use for the development of the State running it.


Why not consider these premium bonds as an additional revenue generator? It must be recalled that India did have prize bond system in place some 50 years or so ago, but it did not work out well, presumably due to our inadequate system in place, at that time. With our advanced knowledge and computer superiority, this may work out fine this time!


The second proposal covers the introduction of lottery schemes, like the schemes in operation, successfully, in the US, run by various federal states.  Only a few weeks ago, for instance, a single lucky lottery winner was able to get the mega prize of some $450 million, almost Rs3,000 crore!


Here, unlike its British cousin, the lottery tickets are one time investment; either you win or lose!  The winner has the option of lump sum payment (tax about 30%) or spread over a number of years, with instalment being paid every year.  In this way, the income from the lottery is added to the annual earnings and the total is taxed.  In addition, there are multiple forms of lottery conducted, almost on a daily basis, and some lotteries are interconnected nationally, where several states participate.  Tickets are sold via thousands of shops, all connected through a national or state grid via the computer service!


The profits generated are substantial for the state, most of which is directed towards the promotion of education in the country.


This could be one another untapped avenue for generating huge amount of funds.


If professional help is taken from outside organizations mentioned above, there is no reason, why we cannot introduce these in India and benefit from them.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



jeyachandran s

4 years ago

i happened to read the article which has suggested the government to think of increasing its revenue. The idea of floating premium bonds is very good . But his second idea on lottery will lead millions of people to poverty. The lottery system which was very popular in states like tamilnadu a decade back had made poor and middle class people spending their entire earnings on gambling forgetting their families. The rich class can withstand the loss but not the poor. To become milliners overnight without hardwork will lead them only to misery . Years after banning the lottery it is not wise to think of going back to that evil.

Vinay Joshi

4 years ago

Dear Mr.A. K Ramdas,

Aug 26, the ‘Vote Security Bill’, sorry ‘FOOD SECURITY BILL’ passed by all the political parties in Lok Sabha, in the intervening period the ‘propagator’, of the said FSB was required to be hospitalised by 20:30 hrs. THE WORLDS LARGEST FSB WITH BIGGEST FISCAL.

[of course I wish her early recovery from her viral fever bout, supposedly will be discharged early Aug 27. The mute point, de facto PM in sanitized environment can be affected by viral aspects then what about others prone & suffering from pollution, having dirty water in BMC supply et al. OR was it her asthma, something else serious which is not out, though thro’ midnight stable. -- I’ve put up –its - no ref your write up.]

To answer your prologue of this article, YOU ARE RESORTING to 19th century measures then taken by Britain. Sir, we are in 21st century , FYI NS&I covers nothing in UK. 15% covering borrowing?! WHAT ARE THE RESULTS ? ANSWER NOW!
To replicate NSI from where monies to be raised & why? Answer.

Can the Govt. with its profligacy, inflationary interest rate borrow? To ease long term bond yields RBI is buying bonds, shifted M2M to H2M avoiding booking loses & got cash management bills else crashing of banks was imminent. Which resident Indian every year invests $200K overseas & that got to 75K who is affected? THIS STEP SHOULD HAVE BEEN INITIATED IN APRIL/MAY ‘13.
Even for corporate’s no freeze only on scrutiny basis. Apollo Tyres will now get clearance.

Disinvestment of 40KCR was stated in FY13 budget, not now! It seems impossible to be on target. Today SBI is seeking 4KCR capital infusion! From where it can come? Forget other PSU banks. Basel III norms are to be met in coming year.

Estimated private holdings of gold is to the tune of 7/10K mt, in view of revived GDS [gold deposit scheme] RBI can encourage banks even substituting CRR with such GDS. Hence investments out of economy can get into the domain. [Turkey implemented it.]

We require to generate revenues by increasing manufacturing, creating jobs, spending 1.25trn of FSB on infrastructure, avoiding wasteful expenditure & populist schemes [be of center/states], competitive exports with EPC’s heralding, port operational efficiency, skill improving programmes instead NREGA without any divisive politics.

To sum it, your NS&I & lottery is not viable.


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