The Hindu Business Line : No settlement issues at bourses: Bhave

New Delhi, Sept. 30 Amid global financial meltdown, the SEBIChairman, Mr C.B. Bhave, on Tuesday sought to comfort investors by stating that there were no settlement issues at the country’s stock exchanges and promised to take stringent action against those violating short-sale regulations.

“There is no need to panic. We are closely monitoring the markets. If SEBI finds that any institution has violated the short-selling rule, SEBI will take the most stringent action against such entity, if any. At present, there are no indications that such a violation has occurred,” Mr Bhave told reporters at a hurriedly convened briefing at North Block on Tuesday, soon after the Sensex dropped about 442 points in early trade.

Mr Bhave indicated that the regulatory framework on short sales was adequate and that the capital market regulator may not tamper with it. “The rules regarding short sale are that institutions are allowed to short-sell only if they have borrowed the stock on the stock exchanges. At present, there are no volumes in the borrowing/lending market. Therefore, there is no concern that institutions may be short selling,” he noted.

On the clearing and settlement, Mr Bhave noted that the mechanism was time tested, including in times of great volatility. “Yesterday’s settlement went through smoothly and it is expected that the settlement tomorrow also will be smooth,” he added.

On Tuesday, the Sensex closed at 12,860.43, up 264.68 points over the previous day’s close. Mr Bhave’s assurances came a day after the US House of Representatives rejected the $700-billion bailout package for battered American financial institutions, sending markets around the globe on a tailspin.

‘Sound, attractive’

Later in the afternoon, the Finance Minister, Mr Chidambaram, said that the Indian market was “sound, attractive and well regulated”.

He said that the regulations were adequate and promised to tweak them if required. The Government is monitoring the situation round the clock, Mr Chidambaram said.

He said that FIIs are selling as they have payment obligations. “FIIs are selling but I do not think all FIIs are selling nor do I think they are selling all the time. Some FIIs are buying and perhaps more FIIs will buy having regard to the fact that India is still a very attractive market to invest and Indian market is a well regulated market,” he said.

On the rumours about the financial health of ICICI Bank, Mr Chidambaram said that people should not give in to unfounded apprehensions as Indian banks are well capitalised and regulated.

“I think that some people are giving credence to rumours and unfounded apprehensions. I maintain and I repeat all our banks are well capitalised and well regulated. No Indian depositor need be apprehensive,” he told reporters here.

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