Ajay Tyagi, Chairman, SEBI, has appealed to the Prime Minister’s Office (PMO) and Finance Minister Nirmala Sitharaman to reconsider the Budget 2019 proposal to transfer 75 per cent of the regulator’s surplus funds to government coffers. Tyagi’s letter comes after SEBI employees last week wrote to Sitharaman to reconsider her proposal.

The Budget has proposed that SEBI should constitute a reserve fund, and 25 per cent of the annual surplus of the general fund should be credited to this reserve fund. Moreover, the transfer to the reserve fund every year should not exceed the total annual expenditure of the preceding two years.

After meeting all expenditure, SEBI should transfer 75 per cent of the surplus amount to the Consolidated Fund of India, according to the Budget proposal. A Gazette notification to this effect will be issued after the Finance Bill is passed in Parliament. The Budget also proposed that SEBI should take government approval for its annual expenditure.

“SEBI’s standing as an autonomous regulatory body will be compromised due to the proposed requirement of government approval for part of its expenses,” the letter from SEBI employees had said.

The CAG had earlier recommended the transfer of surplus funds from regulators such as SEBI and IRDAI to the Consolidated Fund of India.

SEBI employees had expressed a view that the involvement of the government in capital expenditure approval will not add any benefit to the institutional efficiency but rather slow down decision-making, and would be contrary to the principal of minimum government and maximum governance.

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