Search the Internet          Tips  Sites: Finance, Investment

Sebi board to be overhauled by April-end

Aditi Phadnis & Ashwin J Punnen

The government has decided at the highest level to overhaul the board of the Securities and Exchange Board of India (Sebi) for its failure to act as an efficient market regulator. The decision will be implemented by the end of April.

The Sebi board, including chairman DR Mehta whose term expires in February next year, will be replaced with a new-look team, highly placed government sources said. The new team will be given more powers for which necessary amendments in the Sebi Act will be made, the sources said.

Sources said the plan is to have a five-member board, all of whom will be full-time directors. The six-member present board has four outsiders who cannot be expected to devote their full time to the job.

The Sebi board consists of chairman DR Mehta, full-time member JR Verma, economic advisor to the finance minister Rakesh Mohan, DCA secretary V Govindarajan, RBI deputy governor SP Talwar and industrialist Kumaramangalam Birla.

Sebi, which is enquiring into the reasons for the stock market crisis, is expected to submit its report to the finance ministry by the middle of next month. The decision to overhaul the Sebi board will be announced as soon as Sebi and the income tax department submit their respective reports. "It's good that the I-T department is conducting a parallel investigation which will help us in fixing responsibility," the sources said.

The government feels enough damage has already been done by Sebi's inaction. The impunity with which both bull operators and the cabal of bear operators went about rigging the market is a shocking reflection on the watchdog's ineffectiveness in implementing an efficient monitoring mechanism, the sources said.

"If everyone in the market talked of the bull cartel and its method of operation for almost an year now, it's quite surprising that Sebi didn't care to check what was happening," the sources said. They also cited instances of the Reserve Bank of India having to ask Sebi to speed up its investigations into the share price of Global Trust Bank.

Asked as to how the Sebi board can be overhauled given the fact that the finance minister himself has given a clean chit to the market regulator in the Rajya Sabha, the sources said the minister only defended the Sebi chairman on the limited issue of his personal integrity. But accountability has to be fixed and the market regulator has been found wanting in this aspect, they said.

Powered by

ALSO READ:
The Rediff-Business Standard Special
The Budget 2001-2002 Special
Money
Business News

Tell us what you think of this report