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Govt to crack down on market crooks, says FM

Aditi Phadnis in New Delhi

Finance minister Yashwant Sinha went on the warpath on Monday, warning manipulators of the stock markets that harsh punishment will be meted out to those who play with the money of ordinary people, especially small investors.

He also defended the Reserve Bank of India against the charge that the apex bank had failed to exercise its authority in preventing frauds in cooperative banks.

Sinha denied that there was a systemic failure or dereliction of responsibility on the part of the RBI in the recent bank-broker nexus which has led to the collapse of two cooperative banks.

In an interview with Business Standard, he said that he was determined to act to protect Indian investors from "crooks and frauds" who "cheated the markets and respected no rules".

He said a bouquet of rules to streamline the functioning of Sebi had already been unveiled by him. More steps would be taken to make sure the stock market did not fall a prey to unscrupulous players.

When asked if he was worried about the level to which the Sensex had fallen, he said: "I have faith in the Indian economy, as should the people of India. I have seen the time when the sensex went down to 2800 points and then rose again to 6000 points. These things don't worry me. They should not worry anyone."

On the market regulator's role, the finance minister said ideally he wants a body like the Securities and Exchanges Commission (SEC) which people fear.

In the US. "People are mortally afraid of a SEC investigation", he said. On why he defended the Sebi chairman in Rajya Sabha, Sinha said, "I have had no reason to doubt Mr Mehta's personal integrity.The responsibility was primarily that of Sebi as a market regulator, and the fact that it must watch the market on a daily basis. We are awaiting the result of the Sebi and income tax department enquiry. I'm absolutely determined to clean up the market".

Sinha also said that the remarks of the Central Vigilance Commissioner, N Vittal, about the chairman of the Central Board of Customs and Excise (CBCE), BP Verma, indicated that "Mr Vittal has not read his own files".

Sinha said that in every complaint against Verma, action was taken by the CEGAT along the lines advised by the CVC and referred back to the CVC which later closed all cases against Verma.

Central Vigilance Commissioner had said that he had, time and again, warned the finance ministry that Verma should not be upgraded to his present post because he was not a "clean" officer.

However, Vittal had said last week that the finance ministry repeatedly disregarded his advice. When asked if more raids would follow, Sinha said that raids, except in "sensitive" cases, were not referred to him.

"I do not believe in interfering with the work of the departments in my ministry. I neither ask my department to raid anyone nor prevent a raid from taking place."

My officers only inform me that they are going to raid someone, that too, if it is a sensitive case."

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