New Delhi: The government is "seriously considering" to strength laws to curb fraudulent money raising activities and the capital market regulator is "working extremely hard" to ensure that savings of small investors are not put to risk, SEBI chief U K Sinha said Wednesday.
Against the backdrop of Ponzi schemes defrauding lakhs of investors in West Bengal, Sinha also said that there should be one regulator for collective investment schemes.
"Within the powers given to us, SEBI is working extremely hard to ensure that savings of small investors are not put to risk," SEBI Chairman Sinha said.
However, he noted that the Securities and Exchange Board of India (SEBI) has some legal limitations. Sinha also said that he would not be able to comment on specific issues concerning specific companies as there have been some court and quasi-judicial orders as well in certain cases.
"I'll however like to assure you all that we are alive to the task given to us within our mandate," he added.
He was replying to queries about an alleged fraud by Kolkata-based Saradha group through its investment schemes.
Capital market regulator SEBI has the powers to regulate collective investment schemes but certain class of schemes such as chit funds are out of its purview.
According to Sinha, the government is seriously considering strengthening of laws to regulate all kinds of collective investment schemes.
He was speaking at a public seminar of Asia Pacific Region Committee of IOSCO, a global body of securities regulators, here. SEBI is a member of the grouping.
When asked about regulating collective investment schemes, Sinha said there should be a single regulator in this regard.
"But the type of instances that have come to our notice... There is a case for strengthening. Our position is that ideally there should be one single regulator for entire collective investment scheme and all the schemes such as nidhi funds or schemes like chit funds," Sinha said.
Collective investment scheme as a subject for monitoring came under the regulator's ambit after amendment to SEBI Act.
"Let there be one single regulator. This regulator will have a very serious task at hand," he noted.
In the interim the capital market regulator has suggested certain amendments to certain sections of the SEBI Act.
"For example whenever we impose penalties for some people those penalty, we find it extremely difficult to collect because the collection mechanism under SEBI Act is vastly different and inferior from the mechanism, for example, given under I-T Act of CCI Act," he added.
Sinha emphasised that his belief was that the government is seriously considering his suggestions.
"We should wait for the whole process to get completed," he said.
Meanwhile, SEBI has already passed an order against Saradha Realty India to close all its collective schemes and refund the money collected from investors.
Saradha Group is in the midst of a controversy over duping investors of thousands of crores.
The capital market regulator has also barred Saradha Realty India and its Managing Director Sudipta Sen from the securities markets till the time it winds up all its collective investment scheme and refunds the entire money to investors.
Regarding Financial Sector Legislative Reforms Commission's (FSLRC) recommendation of having a single regulator, Sinha said that it was given after a lot of consideration.
"So let the debate continue. The government has to finally take a call on that and not SEBI," he noted.
First Published: Wednesday, May 1, 2013, 10:38