A little over two years ago, the Securities and Exchange Board of India (Sebi) sent notices to private sector insurance companies, asking them to show cause how they were running investment schemes in the form of unit-linked insurance plans (Ulips) without Sebi approval. The move followed grumbling by mutual fund agents on the lack of a level playing field, where insurance agents continued to enjoy commissions of up to 40 per cent, whereas even an entry load of 2.25 per cent was banned for agents peddling mutual funds.
A public showdown followed and it eventually took a presidential ordinance to strike down Sebi’s move. But the move led to a complete overhaul of the insurance sector wherein commissions went down, the terms of Ulips became more rational and the segment itself became a little more consumer-friendly.
Sebi was able to achieve this in an area, which was ostensibly the turf of a different regulator.
Daredevilry such as this that made a leading lawyer remark that the Sebi Act empowers the regulator to “even send a man to the moon” if it was to protect the interest of investors.
Unfortunately, an impression is being created that the regulator does not have enough powers to take action even in areas clearly under its jurisdiction by law. Be it collective investment schemes, insider trading or takeover law.
It is a given in a democracy like ours that nobody’s power is absolute. Everything comes with checks and balances. Therefore, even Sebi’s astronomical powers have to be accessed through a complex web of central Acts, and have to be applied through the pipelines of rules and regulations to maintain order in the securities market. This becomes even more difficult as scamsters get smart and place themselves in the dark crevices of these web of laws and regulations.
My point is not that it's an easy job, though some officials have made it look a cakewalk in the past. Asking for new powers for each and every peculiar case is neither sustainable nor viable for a time-strapped Parliament, in my humble opinion.
Sebi can do with some inspiration from Lord Vishnu. It is common knowledge in India how the demons do their lobbying with the powers that be, such as Lord Shiva and other kind-hearted gods and goddesses, to get boons of all kinds. They then misuse these privileges to hurt the common folk. Each time Lord Vishnu gets over them, not by asking for changing the rules. Changing rules will only create new crevices. Vishnu gets them with the same rules, often, interpreting these in their spirit and creatively.
Hiranyakashipu’s boon was such that he could not be killed by man, demon, god or an animal or any other imaginable being. He also wanted not to be killed in day or night. Then Vishnu took the Narasimhavatar, which was neither animal nor man and finished off Hiranya at a time when day was over and it was not yet night. For more details, read our epics.