Music and Urdu couplets help Upendra Kumar Sinha, Chairman, SEBI, beat stress.
Nearly four years into the role, he has had many reasons to be under stress. After all, regulating the Indian capital market is not an easy job. From the fight against collective investment schemes to finding solutions for algo trading and creating a new platform for start-ups, Sinha has had his hands full. BusinessLine spoke to Sinha about some of these challenges faced by SEBI.
Over the last four years, SEBI has brought in a number of changes in the regulation and in the practices so as to get the details of KYC of the end investor. Earlier, people could take money out of the country and bring it back through the market route. Now, that has all been banned. While we have this data, the question is whether we use this data, and the answer is a big yes. We had passed an order when we found that in the case of a GDR issue, a company had tried to hide its position behind a P-Note and we found that it was manipulating the market.
Based on the data that we have in our system now, we tracked the company and passed an order against it. So, we have the data and the means to use it. Now, since this is a direction, an observation from the SIT, we have started the consultation process again to see if any further change is required. But, I would hasten to add that we will not do anything in a hurry; we will do it only after detailed discussions.
What is the status of the single demat account proposal?
As far as the SEBI regulated area is concerned, we didn’t wait for others; we have gone ahead and implemented it. The larger question is why can’t this be done with banking, insurance, pension transactions. There have been some committees (in this regard). My feeling is that other regulators will take more time to put this in place. SEBI is ready. We have done our bit.
What about the merger between SEBI and FMC?
The Bill has been passed by Parliament and this is now the law of the land. All that the government has to do is to notify the date on which it will come into force. SEBI has assured the government that it will be ready by September-end. Taking over this additional responsibility involves a lot of planning, risk management, changes in regulations , and registration of brokers and other intermediaries also has to be done. All that planning is going on smoothly and we are on track.
We have noticed that SEBI circulars of late are very detailed in nature, very systematic. Does this border on micro management? Do you see this as a trust deficit with the market you regulate?
I don’t think it borders on micro management. We have learnt from experience that if we leave something to interpretation and chance, people will use that as an opportunity and as a defence. If you believe in regulating the market with trust, it is not going to work. As an observer of the market, you will blame the regulator. On the other hand, trust is important when we want small investors to get into the market. We want people to trust the market. The person investing money trusts the market or the intermediary to whom he is giving the money… but the regulator cannot be trusting. The Union Labour Minister launched investment by EPFO recently and I take that as a huge expression of trust in the way the Indian market is regulated.
Would SEBI like to take on regulation of chit funds as well?
Deposit-taking in various forms has multiple agencies looking at it. What I have been telling the government is that the first level of check on this unauthorised money collection should be with the state government. And the government agrees with my position.
Also, for SEBI, RBI or MCA, it is not possible to look into all the districts of the country. So, the responsibility has to be primarily with the state government. There must also be a huge investment in investor education. We, at SEBI, feel that we have done a very good job because in the last three years, we have conducted more than 25,000 investor awareness programmes through our resource persons. In the last two years, SEBI has passed orders in 224 cases. Now, once we take cognisance of something, we act fast.