The Cabinet Committee on Economic Affairs has approved of new powers for the SEBI to crack down on Ponzi schemes and illegal deposit schemes such as chit funds. The government will now introduce in Parliament the Securities Laws (Amendment) Bill to empower SEBI to attach properties, launch recovery proceedings and seek call-data records in its investigations of securities-related offences. The Bill will propose search and seizure powers for SEBI. The previous government had granted these powers for the market watchdog through an ordinance, which was promulgated thrice.
SEBI Chairman U.K. Sinha said in June that many illegal deposit-taking schemes were still defrauding investors even after the regulator used the powers granted by the ordinance. Twenty-five entities engaged in such activities had been brought to book.
“In spite of all measures we have taken in this country, there is still a large number of unregulated fund-raising activities, unregulated deposit-taking activities under various names like chit funds, Nidhi schemes and housing schemes and those coming under collective investment schemes (CIS). The government has come out with an ordinance to provide that if no other regulator is looking into a particular deposit-taking activity and if the size of the corpus is Rs. 100 crore or more, then there would be a legal presumption that this is a CIS, and SEBI would have regulatory jurisdiction in that matter,” Mr. Sinha said at a conference in Delhi.
