Mehta Gets Another Two Years As Sebi Chief

Securities and Exchange Board of India chairman D R Mehta has been told to stay on for another two years. A formal letter is expected shortly.

Mehta's five-year term was to expire on Monday.

Speaking to Business Standard on his plans for the next two years even as congratulatory calls began coming in, Mehta said that apart from the unfinished agenda on corporate governance, rolling settlements and derivatives, he would focus on the development of a vibrant secondary debt market_ an area largely ignored in the first stint _ and a strong venture capital industry.

"The focus will be on development of a vibrant secondary debt market. The issue of stamp duty should be soon sorted out once the government clarifies that debt instruments in demat mode will be exempt from stamp duty. The issue of jurisdiction of the two regulators has also been sorted out and the government should notify the roles shortly. Thirdly, we have said that negotiated deals will not be allowed and this will push the secondary debt market to the screen. The first five years was spent more on the equity side as the markets were still not mature but now that they are, a key focus area will be the debt markets," said Mehta, who was deputy governor at the Reserve Bank of India (RBI) before he moved to Sebi in 1995. "We also want to concentrate on securitisation of debt. Just today we have had talks with the National Housing Bank officials to see how a product can be developed where mutual funds pick up securitised paper from NHB," said Mehta. "A vibrant securitisation industry would ensure that a lot of non-performing assets (NPAs) could be removed from the books of banks and financial institutions," he added. "The unfinished agenda would also be taken through now. On corporate governance, the board has cleared the report and now the implementation will be done. We are also going to bring in more disclosures on the financial reporting front," said Mehta. "Venture capital will be a major thrust area for us over the next two years. The government is considering the recommendations of the Sebi committee. If we can develop the venture capital industry it would lead to improvement in the scientific and economic progress of the country," he added.

Extending rolling settlement to all scrips, introduction of derivatives trading and spread of Internet trading would be the other measures which would be taken to their logical conclusion, said Mehta. With Mehta at the helm for another two years, a major push in trading in demat shares is also expected considering that he has been pushing for this over the past couple of years. Observers said that several key issues especially action against top entities involved in the price rigging scandal of June, 1998 are also expected to be taken, now that Mehta's extension is clear.