Markets regulator Sebi which turned 25 on Friday, sought greater powers from Government to rein in market manipulators and said that dealing with errant entities which are financially strong and those collecting money illegally is one of the major challenges before it.
Noting that the last major amendment to Sebi Act took place way back in 2002, Sebi Chairman U K Sinha said, “perhaps there are realisations now that Sebi Act has to be further strengthened. I am sure Government would consider that and will take a favourable decision. One area I would like to underline here is the development of illegal money, unauthorised money collection by various entities.”
He expressed hope that giving regulatory clarity in this area would give lot of impetus to savings of the households in the country. Sinha termed unauthorised raising of funds by various entities from the public as a critical area of concern and promised strict action against such schemes and sought continuing support from the Government for the benefit of markets and investors.
He said the Government has been supportive to the regulator throughout its 25-year journey and he expects the same to continue. Among other challenges before Sebi, Sinha listed out issues like steps required to ensure that FIIs continue to invest in India and channelising the household savings into the capital market.
The Sebi Chairman further said that as the regulator looks ahead, the challenges “going forward will continue to be how to deal with technologically advanced entities, entities which are financially very strong”.
“Sebi will have to continuously upgrade its manpower, its capacities both in technology and manpower so that we can deal with situations which can arise,” he said.
Take steps to eliminate insider trading: PM to Sebi
Committing to strengthen Sebi, Prime Minister Manamohan Singh, who was the chief guest in the function to mark the silver jubilee of the markets regulator, asked it to eliminate insider trading and take steps to encourage small investors to invest in equities.
“... Regulation should be guided by the need to increase transparency and lead to higher investments being channelised into productive endeavours, which strengthen our economy,” he said.
“Our Government remains committed to doing everything that is needed to strengthen Sebi so that it can deliver even more effective enforcement,” the PM added.
Calling upon Sebi to upgrade and improve itself, Singh said, “a key indicator of Sebi's future effectiveness will be its ability to root out the hard-to-define but extremely pernicious disease of insider trading.”
The Prime Minister further called for “mobilisation of household savings into productive investment in the capital market must be a key goal for everyone in the financial sector”.
Concerned over poor participation of households in financial market, Singh said that the retail investors must be provided incentives to invest in financial assets such as securities, insurance products, banking and pension products.
The initiatives like Rajiv Gandhi equity savings scheme, inflation indexed bonds and various steps announced by SEBI, he hoped “will enthuse retail investors to access capital markets, increase financial intermediation, widen and deepen our financial system and positively influence the distribution of savings in favour of financial assets.”
Chidambaram asks investors to tap opportunities at home
Finance Minister P Chidambaram, who was also present on the occasion, said that India Inc should stop looking abroad and focus on tapping huge investment opportunities within the country, especially in the infrastructure sector, which offers long-term benefits.
“Many of you think that the risks of investing abroad are less than the risk of investing in India. That is another short-sighted view. The long term benefits of investing in India outweigh the benefits of investing abroad,” he said.
Most important challenge before the country is to revive the investment cycle, the Finance Minister added.
“I would urge investors to rebalance the portfolio and invest more in India. This is where the market is, this is where the market will shift, this is where the demand is, this is where demand will continue to be robust over the next 20-30 years. Indian investors must invest more in India rather than invest abroad,” Chidambaram said.
The Government had set up a Cabinet Committee on Investment, under Prime Minister Manmohan Singh, to accord fast track clearances to large infrastructure projects.