I rise to support the Bill. This is a three in one law. It simultaneously amends the Securities and Exchange Board of India Act, 1992, the Securities Contract (Regulation) Act, 1956 and the Depositories Act 1996. This is a fairly complicated piece of legislation, which requires a thorough knowledge not only of the laws it seeks to amend but the complex functioning of financial market.
The Securities & Exchange Board of India Act, 1992 was enacted for the purpose of increasing the confidence of investors. But unfortunately, the act was not implemented in the true spirit. Inaction on the part of the authorities under the SEBI Act and lackadaisical attitude of the authorities under the SEBI Act have resulted in the act not being properly implemented. Steps were not taken against erring stock brokers, sub-stock brokers, share transfer agents, other intermediary and non-banking institutions who are actively associated with security market and to refund money to the poor investors. In the interplay of sharks of the money market they lost out totally.
Chit funds have grown in the country like mushrooms in the last three / four decades. They have history beginning in southern Indian States and then spreading across the country. 3 or 4 decades ago, the Sanchayita scam came to light. Thousands of families were ruined and the culprits got away. This chit fund menace continues to grow, unchecked through the 80s and 90s in different names – cheating unwary investors. Most of these chit funds were not registered under the SEBI Act for long three decades. These unregistered chit funds functioned to maximise profits for themselves, caring nothing for the investors. Investors were left in the lurch. There is no point in blaming anyone for what had happened. But my fervently appeal to the Finance Minister to prevent any further mischief and to protect the general investors who had been the unfortunate victims of the foul game of the financial operators in the market. We are happy that the Government has come forward to protect the unwary investors from falling victims to the sharks who operate in the money market to maximise their own or corporate gain at the cost of investors. Once the Bill becomes an Act, SEBI would have powers to call for information not only from the people or entities associated with the securities market but also from persons who are apparently not directly associated with securities market.
Besides the capital watchdog would get increased powers to crack whip on illegal investment schemes. The Bill aims at protecting investors as well as to curb for fraudulent investment schemes thriving at the expense of innocent investors.
We are happy to note that to deal with huge pendency of cases, special courts would be established for the prosecution of offences under the securities law to provide speedy trial. This is a welcome feature.
To keep the credibility of SEBI we would caution the Government not to use its powers to settle any political score.
While appointing Chairman, the Government has to ensure that candidate has the highest credibility to have investors’ confidence.
In West Bengal we have a bad and long history of the activities of such chit funds last 40 years. This is not phenomenon. The case of Sanchayita is well known. SEBI should proactively try to control such mushroom growth of chit funds in whichever name they operate. The Trinamool Congress would always support any pro-people such activity. But SEBI should not convert itself into another CBI.
May the FM consider two observations:
- The opponents of this Bill may say that giving such powers to one body may lead to misuse and make this legislation draconian. There is a clause to summon anyone not even directly connected with the matter. However, the pluses in this Bill far outweigh the negatives.
2. Consider an orderly exist to such schemes so that small investors are not inconvenienced. We must do all at it takes to standby the smallest investor who looks to us to look after his interest.