Sebi Scripting Rule Book For Collective Plan Check

The Securities and Exchange Board of India has registered around 450 companies having various collective investment schemes such as plantation and various holiday schemes.

According to Sebi chairman D R Mehta, Sebi is working out a systematic rule book for carrying out the inspection which will be based on the lines of mutual funds. He spoke to Business Standard on issues concerning the regulation of such schemes to FII investment in India.

On Collective investment schemes: Sebi has received, till date, applications from around 450 companies that carry out such schemes.

The Dave panel is slated to meet on January 28 to discuss the issue of regulating such schemes. 36 companies out of the 50 shortlisted for inspection possess equity above Rs 5 crore and 14 companies will be chosen from the remaining 450. The whole idea is to gauge the nature of the business for facilitating the creation of an adequate set of regulations.

We are also in the process of working out a format for carrying out the inspection on the lines of the earlier mutual fund inspections.

We will hire chartered accountants from outside and our existing staff will also be deployed for carrying out these examinations in companies which are spread across the country.

On making trading in demat segment compulsory: There is no need to make it mandatory for all investors to trade in the demat segment. Stock exchanges, as self-regulators, can do that. However, they have to consult us before taking such a step. We are also witnessing smaller trades in the demat segment.

The group set up within the inter exchange co-ordination committee will meet on February 5 to take stock of the situation. We expect to move another 100 stocks to the demat segment for institutions which will account for 65-70 per cent of the market capitalisation.

The depository will move ahead according to our time table and we do not think that there is any need for further compulsion. The infrastructure will be found wanting if settlements have to be in demat segment for all trades. The number of depository participants is still not enough to take such a step. There is no system in place to tackle problems that will be faced by upcountry investors.

On his tenure as Sebi chairman: I would not like to comment on this issue.

On FII investment in India: We have talked to foreign institutional investors abroad and convinced them of the regulatory soundness of our capital markets. They have indicated that the overall weightage and allocation for India will go up in 1998. This assurance from them is despite the downtrend in investor interest for emerging markets.

On improving liquidity in small cap stocks: We have not received any proposal from the BSE on the issue of renewals. We are open to any suggestion that will improve the liquidity in these stocks. There is hardly any trading taking place. Let the exchanges come to us with proposals we will discuss this issue.