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Govt to strengthen investor-protection laws: Sinha

Tara Shankar Sahay in New Delhi

Union Finance Minister Yashwant Sinha on Tuesday underscored that the government intends to propose legislative changes to strengthen the provisions of the Sebi Act 1992 further with a view to ensuring investor protection.

Making a statement in the Rajya Sabha in response to Dr Manmohan Singh's contention over the extreme volatility in the stock markets recently, Sinha said, "The government is also contemplating the corporatisation of stock exchanges by which ownership, management, and trading membership would be segregated from each other and administrative steps would also be taken if required to ensure this."

He also said that the extension of rolling settlement to the 200 category-'A' stocks in the automated lending borrowing mechanism (ALBM), the borrowing and lending of securities system (BLESS) and the modified carry forward scheme by July this year would be introduced, he said.

According to Sinha, stock markets all over the world had been on a downtrend for the last one year. Particularly hit have been the technology stocks.

"This had also affected the Indian markets. For instance, the Nasdaq which consists mainly of new economy stocks had declined by about 59 per cent from March 2000 to March 2001," he said.

"As far as bank advances against shares and guarantees to stock brokers by banks are concerned, the Reserve Bank of India has intimated that this figure is less than 2 per cent of the total advances as of December 31, 2000," Sinha informed the House.

"In this regard, according to the information available with the RBI, there has been no violation of its prudential norms," he further assured.

Sinha said that fluctuations are normal in stock markets and it should not be matter of undue concern.

However, he hastened to add: "We should be vigilant with regard to any systemic risk or movement driven by any form of manipulation. I have been assured by the Securities and Exchange Board of India (Sebi) that there is no systemic risk to the market and there is no danger of payment crisis." Sinha claimed.

He reiterated that the government and the Sebi will not leave any stone unturned to ensure that the capital markets operate in an orderly, transparent, safe and fair manner for all investors.

He assured the House that the guilty would be brought to book without fear or favour and no culprit would be spared.

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