The government is considering a major overhaul of regulations governing to check money-pooling frauds by various entities across the country. Thus are considering to empower market regulator Sebi.
As a result, Sebi could be given powers for overall regulation and oversight of all kinds of money-pooling activities and the definition of Collective Investment Schemes would be expanded to include all kinds of activities involving collection of Rs 100 crore or more public money, he added. The amendments could be made to a host of regulations, including the Sebi Act, the Securities Contracts (Regulation) Act and the Depositories Act, a senior official said.
While CIS operations already come under Sebi’s jurisdiction, many companies try to challenge the regulator’s actions taking advantage of loopholes in the existing norms and on the grounds of multiplicity of regulators.
The official said that Sebi has been given assurance by the government that the regulations would be amended soon. While proposals to these effects are being pursued by Sebi for almost four years now, a strong need to push with these changes has been felt in the recent months in the wake of a long-running tussle between Sebi and Sahara group.
The recent developments involving an alleged defrauding of lakhs of investors by West Bengal-based Saradha group and other entities in the state have further underscored the need to change the regulations to give greater powers to Sebi.
Sebi was earlier of the view that a separate regulator should be considered for all kinds of public money-pooling activities by non-listed entities under a separate act.
Source – PTI