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SEBI calls for single regulator to check grey market investments

04 Apr 2013 Evaluate

Raising concerns over an alarming rise in grey market investments with thousands of crores being raised through illegal means, the capital market regulator - Securities and Exchange Board of India (SEBI) called for a single watchdog to regulate all entities collecting public money under various illegal means and also pointed out that these deposit-taking firms were taking advantage of the loopholes in existing laws.

Currently, cooperative banks and deposit-taking NBFCs are regulated by the Reserve Bank of India (RBI), while chit-funds are under the purview of the state governments. While addressing a seminar on investment outlook for 2013, capital market regulator Chief, U K Sinha, making a strong case for providing more power, said, the SEBI has recommended that it be granted with similar powers as given to the Competition Commission or income-tax.

By adding further, Sinha said when we pass an order and impose monetary penalty, the capacity to recover the penalty is limited as we have to follow a long process. Pursuant to which, the SEBI has also sent some recommendations for strengthening SEBI Act.

SEBI’s comments come at a time when it is fighting a long-drawn case against Sahara Group, which has been asked by the Supreme Court to refund over Rs 24,000 crore raised from over three crore investors through issuance of certain bonds without SEBI's approval. SEBI has been to facilitate the refund after ascertaining the genuineness of investors.

The market regulator, SEBI will also start investor awareness campaigns from next week on the consent mechanism. On opening more SEBI offices, Sinha said the regulator has already opened offices in 10 cities and plans are going on to open 6 more offices in smaller cities.

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