The Samajwadi Party on Monday opposed the UPA government’s plan to amend the Securities and Exchange Board of India (SEBI) Act to provide more teeth to the market regulator to crack down on ponzi schemes.
“We are opposed to the SEBI amendment Bill because it envisages turning SEBI into a daroga, which will deter investors. It is not in the interest of the country,” SP’s Rajya Sabha member Naresh Agrawal told The Indian Express .
“As far as I understand it, the amendment envisages granting powers to SEBI to arrest anybody at will. It amounts to vesting it with powers of a daroga... SEBI has so far not been able to unearth ponzi schemes. This does not appear to be the best way to crack down on ponzi schemes,” he said.
“Why is the government in a hurry to rush (the Bill) through parliament? It appears to be motivated with vindictiveness,”
he said, but declined to elaborate on his statement. Asked if the party’s opposition to the Bill was linked to its ties with the Sahara Group, Agrawal replied, “Absolutely not”.
The Bill holds significance as it may provide SEBI powers to proceed more stringently against Sahara Group firms which are currently embroiled in a tussle with the market regulator over the latter’s jurisdiction.
Without the Bill, SEBI can regulate only listed companies as per section 11A of the SEBI Act. Sahara Real Estate Corporation and Sahara Home Finance Corporation had issued two optionally fully convertible debentures, but since both were unlisted, the group claimed there was no basis for SEBI to prosecute them as it was a private placement. The amendment would grant SEBI explicit powers to monitor fund-raising by any entity, listed or unlisted, for sums beyond Rs 100 crore, enabling it to prosecute the companies.
“The Bill should first be referred to the standing committee on finance. This has been the convention. This procedure should be followed,” said Agrawal. He said he had raised this demand during the Rajya Sabha’s business advisory committee meeting also. “The government has not moved the bill in the Rajya Sabha,” he said.