The Hindu Business Line : Creditcapital's PMS proposal rejected

THE Securities and Exchange Board of India (SEBI) has rejected an application by Creditcapital Asset Management Company, which manages the schemes of Taurus Mutual Fund, for registration as a portfolio manager.

The order, passed by Mr A.K. Batra, Wholetime Member of SEBI, refers to the AMC's application sent in March this year, which, inter alia, named its directors. A number of entities, all of them members of various stock exchanges, were named as associates of the applicant company.

The regulator specifically referred to certain actions that were initiated or were pending against the applicant or these associates. For the record, the directors are: Mr Lalit Bhasin, Mr R.K. Gupta, Mr J.P. Kundra, Mr P. Murari, Mr M.G. Gupta and Mr Jai Singh. The associates companies are: HB Securities, RRB Master Securities, Bhasin Share & Stock Brokers, Raja Ram Bhasin Share & Stock Brokers, HB Prima Capital and RRB Master Holdings.

There were enquiry proceedings against entities such as HB Securities and RRB Master Holdings, while a warning was issued against HB Portfolio, promoter of the applicant company. Mr Lalit Bhasin, one of the directors of the latter, is also a director of HB Stockholdings, against whom enquiry proceedings were initiated.

The regulator further noted that the applicant company had failed to fulfil the networth criteria separately for mutual fund and portfolio management services. Incidentally, SEBI granted a personal hearing, which led to an appearance by Mr R.K. Gupta on August 26.

With respect to the networth, it was submitted that the company had already taken steps for redeeming the preferential share capital. The sponsor and its associates also agreed to induct fresh equity of Rs 2.5 crore, while the company would continue to maintain the networth of more than Rs 10.5 crore at all times, it was informed.

SEBI, "in view of the multiple legal proceedings against the company", took the view that a fresh registration (to act in a new capacity in the securities market) will not be desirable at the moment. Granting registration as a portfolio manager will not be in the interest of the securities market, it was pointed out.

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