Financial Daily from THE HINDU group of publications
Sunday, Oct 27, 2002
Markets - Regulatory Bodies & Rulings
Cabinet to take up SEBI, UTI Ordinances tomorrow
MUMBAI, Oct. 26
THE Union Cabinet will on Monday take up two Ordinances - one to repeal the UTI Act to split Unit Trust of India into two entities and another to amend the SEBI Act to give more power to the regulator - the Union Minister of Finance, Mr Jaswant Singh, said here today.
As part of its package to bail out the troubled mutual fund, the Government had decided to bifurcate UTI into UTI-I and UTI-II. While UTI-I, which covers the assured return schemes, will continue to be managed by the Government, UTI-II, with NAV-based schemes, will be sold to private parties.
Amendment to the SEBI Act is based on recommendations of the Justice Dhanuka Committee, which suggested, among other things, expansion of SEBI board with more full-time directors and power to the regulator to impose penalty of up to Rs 25 crore from the current Rs 5 lakh.
Mr Singh was addressing a function organised jointly by the Bombay Stock Exchange and the Securities Industry Association of India - his first visit to Mumbai after taking over as Finance Minister.
Mr Singh also announced the timetable for implementing some of the decisions announced earlier by the Government. These include setting up of a Central Listing Authority, expansion of the Securities Appellate Tribunal and de-mutualisation of stock exchanges.
Mr Singh said the Government would take a decision on the Kania Committee report on de-mutualisation of stock exchanges within four weeks.
Earlier, the SEBI Chairman, Mr G.N. Bajpai, who was also present at the function, said that the SEBI board would consider the Kania Committee recommendations in its next meeting.
The Minister also announced that a decision on setting up the Central Listing Authority would be taken within 30 days and the authority would be set up in the current financial year itself.
Mr Singh highlighted the need for a strong regulation in a free market environment. He said the Government proposes to convert the Securities Appellate Tribunal (SAT) from a single-member to a multi-member body, which would be headed by a retired High Court Chief Justice.
Mr Singh asked the SEBI and RBI to work together for implementing the T+1 settlement cycle in the stock market. "As per plans, T+1 settlement cycle should be in place by 2004. But we should try to complete it before that," he said.
He said the Government is planning to start screen-based trading in Government securities market in the current fiscal.
Highlighting the role of capital market in wealth creation, Mr Singh said he believed that economic security is not possible without economic growth and economic growth is not possible without creation of wealth.
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