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SEBI Chairman U.K.Sinha has suggested having a single regulator for tackling the issue of illegitimate money raised in the country through the grey market route.
Expressing concern over the grey market spreading its tentacles throughout the country by taking ordinary investors for a ride, Sinha said:
“One area which concerns me as a regulator is the rapid development of the grey market investment in this country. The audacity and the frequency at which it is happening is something all of us must take note of. People who are investing in such products are simple ordinary workers. They are not putting their illegal money. They are putting their hard earned money into this. But the process through which it is channelised is unfortunately taking that money out of the legal framework of markets.”
“If you have to tackle illegitimate money raised in this country, you have to have support of the State Governments. This is a huge task. The Government should come out with one single regulator for this,” he added.
Limited capacity
Making a case for grant of more teeth to the market watchdog to deal with the issue, Sinha said SEBI has recommended that it be granted with similar powers as given to the Competition Commission or income-tax. “We have sent some of our recommendations for strengthening SEBI Act. Even 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,” he added.
According to Sinha, more than Rs 10,000 crore have been raised by so-called money circulation schemes or by people who in SEBI’s opinion are running collective investment schemes but they are refusing to be under any regulation.
Without naming the company, Sinha trained his gun at the Sahara Group with which the regulator is currently engaged in a legal battle for refund of about Rs 24,000 crore to investors.
“There is a famous instance where a company has claimed that it has refunded more than Rs 20,000 crore in the last 3 to 4 months to so-called investors out of which more than 90 per cent has been returned in cash. How credible can this story be?” he asked.
manisha.jha@thehindu.co.in
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