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Govt not averse to JPC probe into stocks crash

The government was not averse to setting up of a Joint Parliamentary Committee to probe into the stock market crash and that it would not hesitate to take action against those who had manipulated the stock market, Lok Sabha was informed on Friday.

Replying to a spate of supplementaries during 'question hour', Union Finance Minister Yashwant Sinha told an agitated Opposition that the government was not against JPC, but its setting up required a certain procedure and he was not aware of any occasion when a JPC was formed during question hour.

He said small investors should remain in the market even though there are fluctuations on a day to day basis because of operations by big brokers.

"Small investors are not brokers and they should remain in market otherwise they would lose and currently the market is improving," Sinha said.

To a question whether the government would take action against UTI which had lost Rs 60 billion due to the 'K-10' shares, he said that the UTI's annual report would be coming out on June 30 when the financial year ends and on that basis action would be taken against those found guilty.

Meanwhile, the government was awaiting Sebi report on the stock market crash before taking any action though former president of Bombay Stock Exchange Anand Rathi has been removed for allegedly indulging in insider trading and his entities have been barred from the stock exchange, Sinha said.

Sinha said the Reserve Bank of India has come out with strict guidelines for cooperative banks with regard to giving credit on collateral.

This is wake of the run on the Madhavpura bank which had given credit to Big Bull Ketan Parekh .

However, he said the issuance of these guidelines did not mean that government would not encourage co-operative banks as he remarked: "We cannot throw the baby out with the bath water."

On insider trading, Sinha said: "It is an offence and government does not have any interest in protecting anyone indulging in these kind of activities."

On the Ketan Parekh issue, Sinha said the CBI has intimated that on the basis of a specific complaint from the chief vigilance officer, Bank of India, Bombay, a case was registered against Parekh and 10 others for defrauding Bank of India, Stock Exchange branch, Bombay to the tune of Rs 1.37 billion by using the pay orders of Madhavpura Mercantile Co-operative Bank.

Searches were conducted at the official and residential premises of Parekh and associate firms in Bombay and several incriminating documents pertaining to the case were seized, he said.

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