Regulations
SEBI sets one year target for probes; warns manipulators

Sinha said SEBI will always keep an upper edge over market manipulators with a robust surveillance system and safeguard mechanism for the markets and the investors

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has set a one- year target to complete investigations, saying that the long- drawn probe processes are a thing of past and manipulators can't escape the...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MAS member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Some non-serious players present in mutual fund space: SEBI

SEBI is working on a Mutual Fund policy and once this policy is in place, the MF industry will have clarity about the future of the industry says UK Sinha


Mumbai: Market regulator Securities and Exchange Board of India (SEBI) has said there is a case for consolidation in asset management industry due to presence of some non-serious players, but clarity on this course will emerge only after the national mutual fund policy is put in place, reports PTI.

 

"My view on that is that asset management industry has also got some non-serious players, and one of the reasons for that is that there is a very easy entry situation here," SEBI Chairman UK Sinha told PTI in an interview.

 

Asked whether it is time for consolidation in the mutual fund industry as some of the funds were very small, Sinha said: "Right now, if you look at the scenario as a static situation, then perhaps there is a case for consolidation."

 

Currently, there are around 40 mutual fund companies and the numbers have risen sharply in the past couple of years.

 

SEBI regulates a host of the segments including mutual funds. SEBI recently announced a slew of reform measures for the mutual fund industry to expand their reach across the country and also to safeguard the interest of investors.

 

Detailing the reasons behind presence of non-serious players, Sinha said: "The entry barriers are not there and the capital requirement is very small. So, one of the things SEBI has decided is to develop a Mutual Fund Policy.

 

"Like the Insurance policy and the Pension policy, SEBI is working on a Mutual Fund policy and once this policy is in place, the mutual fund industry will have clarity about the future of the industry.

 

"At that stage, there may be some consolidation activities," Sinha said.

 

SEBI Chairman said that the asset management business would also be guided by what will happen in the pension area.

 

"If the pension area opens up, then we may require even more mutual funds. If the pension area does not open up and the issues related to capital requirements and tax requirements are clarified, even then there will be some changes," he said.

 

Sinha was, however, optimistic about some positive developments for the industry and said: "I believe the government is also looking at, after we gave them our report on this issue, on the tax treatment.

 

"I hope there will be some more clarity on the pension front as well. Once these two things happen, then it will be clearer whether we need more mutual funds or less," he said.

User

Thank you Nitin Gadkari for disclosing your friendly loans from IRB!

Business houses and politicians have always been bed fellows. They are two sides of corruption at the highest levels as all scams have proved

 
Politicians sometimes almost unwittingly, without realizing, seem to tell the truth! Of course it is in self-defence and certainly without realizing the consequences.
 
I heard Nitin Gadkari, president of Bharatiya Janata Party (BJP) telling Nikhil Wagale on IBN-Lokmat that since his companies’ balance sheets were not fit for any bank to lend him money; he requested his good friend DP Mhaiskar of infamous Ideal Road Builders (IRB) Group to help him out. The IRB Group then raised money on its balance sheet and lent it to Gadkari’s companies at a higher interest rate thus pocketing some profit in the bargain, provided these companies paid IRB or Mhaiskar the interest and the principal amount. This disclosure raises many questions.
 
Who are these banks which lent the money in complete violation of banking regulations? They obviously did no due diligence to find out the end use of loan. I wonder what security has been offered to them and what is its value? Now these banks must be investigated by the Reserve Bank of India (RBI) immediately and appropriate action must be initiated. The confession by Gadkari that such a transaction has taken place is sufficient to initiate action against these banks. 
 
This is a norm and many companies have been doing this. Loans are taken in one company’s name and then that amount is given as loan to a subsidiary with a weak balance sheet. This action of banks proves my belief once again that banks tend to create their own non-performing assets (NPAs).
 
I also wonder why the statutory auditors of IRB do not write any qualifications to their report. I am assuming here that they haven’t as I have not seen the financials. This again is violation of regulations. They also need to be pulled up.
 
This proves once again that Registrar of Companies (ROC) probably does nothing after regulatory filing. Does anyone there scrutinize financial statements at all? Same goes for the Department of Company Affairs (DCA) and Company Law Board (CLB) presumably.
 
And what about the shareholders of IRB? Did they know this at all? What was the “so-called” independent directors’ role in this? Corporate governance? 
 
And how come Kejariwal and his team, after detailed investigation could not find this out? They seem to get government documents at will but how come they missed this. His Indian Revenue Services (IRS) background means he is well-versed with all this.
 
Will RBI, CLB and Securities and Exchange Board of India (SEBI) wake up and take action? From their track record it is most unlikely. Would shareholders, at least the institutional kind and mutual funds (MFs) if they are invested, take this to its logical conclusion? Again not likely by the experience so far.
 
So it is not only that all political parties are hand-in-glove, we all are also responsible. Business houses and politicians have always been bed fellows. They are two sides of corruption at the highest levels as all scams have proved.
 
Any kind of Lokpal will also not be effective in such matters. The regulators have long abandoned their responsibility of regulation and they are responsible the most.
 
We owe a big thank you to Mr Gadkari for this disclosure which he subsequently repeated on NDTV!
 
(Prof Anil Agashe teaches at Symbiosis and other management schools in Pune.)
 

User

COMMENTS

ian

5 years ago

As per the above information which is really useful to us to know about corruption which goes raise day by day and politician increase corruption at the highest levels as all scams.
Business houses and politicians have always been bed fellows

Dayananda Kamath k

5 years ago

regarding minsitry of corporate affairs. it is less said better. a complaint with subject " a satyam in nationalised bank" was misinterpretated as claim from investor fund by the undersecretary in the department. a clarification was agains sent and he had the audacity to send the same reply with different reference no. which means whatever the complaint he will treat it as claim from investor education fund. this matter was informed to sri khurshid alam and agains to veerappa moily the minsiters of the dpartment but no action so far. if this is the attitude at the regulator and govt what you can expect.it is conspiracy to loot the public .

Krishnan B S

5 years ago

Coming back to this article, Lot of gaps are there in Nitin Gadkari's case. However when we see an amount of Rs. 60 / 68 crores involved for the same, it is to be fully investigated and the people concerned published.

However, what about Crores being diverted under the table, Gadkari can be asked to resign and his political career shunted like Bangaru Laxman.

I can only see the tail of the elephant being caught, when the full elephant is passing infront of you and nothing is being done.

M K TYAGI

5 years ago

There is all around chaos because whistleblowers are either eliminated or butcherd.

Dr Anantha K Ramdas

5 years ago

Thank you Mrs Shanti Patel for being frank in your comments.

I have a case in point. After getting "SEBI approval" a company goes about getting shares on a "buy-out" plan. Then, quietly, a few months later, has a private equity participation by a third party at a much higher than the buy-out plan. From the balance sheet, I believe a bonus issue follows. The shareholders who did not sell their shares to the company do get their dividends, and of course, the shares are not listed.

Can you comment on this sort of situation as what is to be done by the shareholders? My attempts have been in vain and I have means of knowing what is the current sharevalue, as there is "no market" to know. Yet, a broker keeps sending notices of his willingness to pay cash and buy the very shares!

What should shareholders do?

REPLY

R Balakrishnan

In Reply to Dr Anantha K Ramdas 5 years ago

The best solution a shareholder has is to vote with his feet. Sell the shares of such companies ( I will not go in to whether one should have invested at all).

shanti Patel

In Reply to Dr Anantha K Ramdas 5 years ago

Dear Dr. Ramdas,
Please give me the details about such company. I am a member of managing committee of Bombay Shareholders" Association.
We will look in to the matter and take appropriate action.
Give me your mobile no./Email Id.
If we follow the matter,we get success. It is a matter of time because we do not like CHANGE!
Mrs. Sucheta Dalal should form a committee of members consisting professionals such as Chartered Accountants, Lawyers and retired Honest Government Officers such as Ex.Commissioner of Police Mr. Ribero.
s.k.patel
Chartered Account
skpatel55555@gamil.com

Babubhai Vaghela

In Reply to Dr Anantha K Ramdas 5 years ago

While individual minority shareholders do try in AGMs and through SEBI or MCA but not succeed much as Brute Majority Overpowers the minority shareholder. However, CLASS ACTION is one way for minority shareholders to take decisive action but so far not in practice in India. That can help curb Corporate Frauds.

shanti Patel

5 years ago

Well done Mr.Aghashe,

The Auditors of Companies have to Annexure a statement on matters specified in paragraphs 4 and 5 of the Companies (Auditor"s Report) order 2003(CARO)issued by the Central Government in terms of Section 227(4A).
One of the matters is-Whether in the opinion of the Auditor and according to the information and explanations given, the terms loans have been applied for the purposes for which they were obtained?
If the statement of Mr.Gadkari is what is stated above, the Auditor has to QUALIFY his audit report and report the matter in his report.If not, the auditor has failed in his duty and may be held held guilty in disciplinary action.
In our country CHLTA HAY attitude is very common. No-body wants to come forward to take action!
I fought against a very well known audit firm, having audits of TATA GROUP companies for last three years.Pursued the matter very vigorously and ultimately they have to resigned from Tata Chemicals Ltd., Indian Hotels Ltd., Tata Global beverages Ltd., Nelco Ltd.Whipro Ltd.But you have to give time,energy and money for a long battle to fight.
I request Mrs.SUCHETA DALAL,who has expose large number of corporate frauds in the past,should also devote time and expose such Audit Firms and Directors and specially Independent Directors who do nothing except collect sitting fees and commission at the expense of shareholders.
Shanti Patel
Chartered Accountant
skpatel55555@gmail.com

REPLY

Anil Agashe

In Reply to shanti Patel 5 years ago

Thanks a lot.

Vaibhav Dhoka

5 years ago

All public figures as well as regulators behave as three monkeys of our Mahatma.
1-Bura Mat Dekho
2_Bura Mat Suno
3-Bura Mat Bolo.
Meaning all are mute spectactors.

Babubhai Vaghela

5 years ago

I appealed Prime Minister Dr Manmohan Singh for investigation into Loan of Rs 1100 Crores by RPL to Reema. https://t.co/86ovWugU
There has been no response.

NKPadhi

5 years ago

Who will protect the interest of the investors when everybody, who is in charge of protecting public interest, do not see the obvious ! One feels helpless

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine)