Debabrata Bandyopadhyay speaks on the Securities Laws (Amendment) Bill, 2014 | Transcript

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:


  1. 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.

Kalyan Banerjee speaks on the Securities Laws (Amendment) Bill, 2014 | Transcript

Today I am very candid; I have a very little knowledge to give advice to the finance minister on the aspect of a law, and I am not doing that. Take it that today I am trying to assist you, the opportunity I had got earlier, in earlier 90’s when working as a junior with you in few matters. Never think I am trying to give you any suggestion. I am too small for that.

Sir, the Securities and Exchange Board of India Act, 1992 was enacted for the purpose of increasing confidence of investors in investment. But passage of time has proved that neither authorities under the SEBI have acted in true spirit of the Act, nor the Act does have appropriate provisions to pin out the real culprits. Inaction on the part of the authorities under the SEBI Act, lackadaisical attitude of the authorities under the SEBI Act have reduced the entire spirit of the Act in our country. Sufficient provisions were not there; because of the inaction and the non-making of the provisions, steps were not taken against the erring stockbrokers, sub-brokers, share transfer agents, other intermediary and non-banking institutions who are associated with the securities market, and to refund money to the poor investor itself.

Sir, chit funds have grown up in the country like mushroom. In our State, from 1984, large number of chit funds have been started to function. But these chit funds have not been registered under the SEBI Act itself. And for long three decades (SEBI Act has come in 1992; before that the another Act was there), the chit funds which have not been registered have functioned according to their own whims and nobody has touched them. I am not blaming the current finance minister at all or the finance ministry. But I am just pointing out, Sir, since you are here, I can expect that under your supervision the provisions of the Act should be implemented throughout the country very expeditiously as soon as possible.

We are happy that, based on the experience gained over the years gone, this Amendment Bill 2014, provides for stringent provisions for adjudication and special court for dealing with the offences. Sir, in our country there is no dearth of law, sufficient laws are there; problem is their execution. Acts are not being executed in time by the authorities. The authorities under the SEBI are not executing the Acts at all. Possibly they have not understood what are the aims and objectives of the Act itself and what are the responsibilities given to them.

Sir, I will request in future the government, specially the hon. finance minister, to consider making a provision for taking steps for refunding the money of the poor investor. Sir, I want to just intimate you, you are aware about the facts that in our state. In Sanchayita’s matter Calcutta High Court has exercised the jurisdiction and appointed a committee, whose function is to return the money to the poor investors. And those orders have been upheld by the Supreme Court. For last 20 years the matter is still continuing for the purpose of returning the money to the investors. Because SEBI Act did not make such provisions earlier at all. Why no steps have been taken by the authority under the Act for decades together against the non-financial institutions dealing with the chit fund who have not registered under the Act at all?

Sir, I have a very humble view I am expressing to you. Why the title is chit fund? The reading of the title would say the country is encouraging chit fund. On the contrary I have a suggestion, in future try to amend the title, at least the Chit Fund Regulatory Act may come; this type of title is not at all encouraging one. The code under the act is an institution, I am not oblivious to the fact that the appointment of the Chairman of the Board was under challenge and the Supreme Court has upheld it. That is the question of legality. The person should be very clear man, clean man, nobody should speak against him.  This standard is needed for someone who would be the Chairman of SEBI.

Sir, it cannot afford for the sake of vibrant democracy, to be politically motivated, its functions should be transparent, and it should have complete autonomy. It should not have any political agenda. It should act only for the public interest. It should not act as another Central Bureau of Investigation in our country. For decades we are seeing CBI is only being used for the purpose of politics. It should not be used like that. CBI has not given anything Sir. I am telling you a fact, in 8 cases in our State, CBI has not yet completed the trial at all. Handing over cases to CBI is now a fashion today. Sir, I have a suggestion. Please tell the Income Tax Authorities Sir, I have a small suggestion, to investigate who are the big investors in chit funds, what is the source of their money for investing in chit fund etc.

Sir my experience of a body like tribunal is not good. I tell you two weeks back, I had to go to the Company Law Board at Calcutta; the matter was after recess, it was a first matter. The judge came at 3.45 PM. Almost all tribunals Sir are functioning like this. Mr Jaitley is here as finance minister and is a top legal luminary of our country; I have deepest respect for him. Since you are here kindly make them act, I mean all the tribunals so that they function properly and on time. They should act independently without having any political agenda, without having any motive. There should be a standard for the people in SEBI, Chairman or any other members of the Board. Their behavior, conduct, past records and everything should be above all boards.

Sir, in our State we have enacted an Act akin to the amendment but incidentally and unfortunately because of the communication during the tenure of last UPA, the act did not get the assent of the hon. President. Kindly do not behave like the last UPA II, kindly instill confidence under your leadership. The investors should get confidence, people should get confidence and believe that there is a person under whose supervision all the erring persons will be booked and trial would be made.

In the Clause 22 you have made a provision that a High Court Judge should be appointed, having background experience of such cases; he should be appointed in the Board itself as a Chairman, Similarly you have made a provision that with 7 years experience as an advocate, he can be appointed as a prosecutor. My humble suggestion to you Sir is that provision should be made for having experience of the criminal trial. This is my humble suggestion to you for future consideration. With this I thank you Sir, for giving me extra time. I am grateful to you.