 "sebi")
The Ministry of Finance (MoF) is planning to place its representatives across all committees empanelled by capital market regulator Securities and Exchange Board of India (Sebi), it is learnt. The Department of Economic Affairs (DEA) has directed the market regulator to provide a list of all the committees constituted so far, according to sources.
The Sebi website shows a total of 33 committees. Of this, 21 are expert-panel committees related to fair market conduct, primary and secondary markets, mutual funds, cyber security, corporate governance, takeover panel, among others. At present, very few Sebi committees have finance ministry nominees. These are alternative investment policy advisory committee (looking at issues related to development of alternative investment and startup ecosystem), committee on corporate bond market, and panel on disclosure and accounting standard and corporate governance. Besides, the Sebi board has finance ministry and corporate affairs ministry nominees.
Sources in the know argued that by placing its nominees in all the crucial committees, the finance ministry wants to be a part of all key decisions which directly impact not just the equities market but the entire financial market ecosystem and the economy. The move may hit the autonomy of the regulator, one of the sources quoted earlier said.
An email sent to Sebi for comment did not elicit any response.
The proposal has been in the works after certain Sebi decisions were taken without consulting the government. “It was observed that policies were being announced without considering the other stakeholders’ opinions,’’ said a government official. According to the official, the move to have finance ministry nominees on all Sebi committees would improve the coordination and communication between the government and the regulator. Also, policy-making would be more effective and efficient by bringing all stakeholders on the same page, he added. The regulator is collating the details and will soon provide inputs to the DEA.
“When a finance ministry representative is already on the Sebi board, it is not necessary at all for the ministry to be a part of every expert panel,’’ a source who’s on one of the Sebi panels said.
“With such a move, there’s possibility of decisions taken by these panels getting influenced,” the source said.
On the positive side, a government nominee on these panels may help expedite matters to the board, he pointed out.
The issue of autonomy had surfaced recently in the context of the feud between the government and then Reserve Bank of India governor Urjit Patel, and his subsequent resignation.
Sources said among the major Sebi announcements which upset the government was the proposal of disclosing non-performing assets within 24 hours by creditors.
Sebi withdrew the proposal after the finance ministry and RBI opposed it, saying it would increase additional capital requirement.
The decision by Sebi to suspend trading in 331 shell companies without conducting an investigation had also faced government criticism. Also, stringent rules governing foreign portfolio investors and the adjudication order against the Gujarat chief minister also didn’t go down well with the government.
This is not the first time that the autonomy issue linked to the market regulator is coming up. Last year, the government expected Sebi to transfer surplus fund of Rs 4,000 crore to be kept in public account rather than in banks.
