Govt & RBI to announce GDR guidelines: UK Sinha
Capital market regulator Sebi, is conscious of its responsibility in driving reforms and ensuring a strong financial market system.
In an exclusive interview with CNBC-TV18's Menaka Doshi, Chairman UK Sinha said that at no given point of time, politics has played a role in determining Sebi's course of action and that the market regulator's track record proves it.
On one of the most important issue of misusing global depository receipts (GDR), UK Sinha informed that the government and RBI are likely to announce GDR guidelines soon. Sebi has already submitted recommendations on GDR guidelines to govt.
According to Sinha, several firms have been misusing GDR proceeds for trading purposes. In the recent past, Sebi has banned many firms found manipulating share prices after issuing GDRs.
Talking about issue of vacancies of whole-time members in the Sebi board Sinha said that the government would appoint members by the book.
Here is an edited transcript.
Q: How the current political and economic environment has impacted your thought process and by extension securities, market regulation in India?
A: Let us understand that the political leadership through the political executive in power and through the Parliament articulates the policies, which government or country has to follow. Having the idea of an independent regulator passed by an act of Parliament basically pre-supposed that most of the implementation part has been given to the regulator.
Broadly, I would say they can be broken into three parts one is the policymakining, which in my humble judgment remains the prerogative of the government and the Parliament. They do consult the regulators like they consult other experts, but the final decision is to be taken by those who have been running the Parliament, who have the voice in the Parliament. Once that part is done the second question is to draw out various regulations and implementation part of that. Drawing the regulation my position and the understanding is that this is a job of a professional organisation, which is doing a technical job and in our case for example SEBI.
So, when we are drawing a regulation based on a policy given by the Parliament or by the government that should remain entirely the domain of the regulator. Nobody outside the system, once the policy has been enunciated, should interfere in this area.
The third area is the implementation, the enforcement of the actions, those enforcement actions would depend entirely or remain entirely with the regulator. So if you break it into three parts the first part of policymaking, in my view, is within the purview of the government and the Parliament, but the other two activities should remain and must remain with the regulator.
Q: Has there has been political interference in the formulation of polices and in daily operations?
A: So far as Sebi is concerned, it will be right for me to talk only about Sebi.
Q: What about during the last one-and-a-half years as head of Sebi?
A: In the absence of any major legislation during the period, most of the policies formulated before my appointment are in practice. The economy has undergone certain major changes in the last one-and-a-half year.
So, as a regulator, we also have to start looking at activities keeping in mind broader objectives such as ensuring that the corporate sector is able to raise money efficiently and increasing retail participation in the fund-raising process.
Q: How would you characterise the political dispensation towards Sebi during your tenure?
A: In my tenure, Sebi took decisions whose nature and number are unprecedented. And none of them were taken under any influence.
Q: Do you believe that your independence has been hampered by the political intentions of the party or the government or individuals in power?
A: Not at all. And this needs to be judged by looking at our track record for the last one-and-a-half years.
Q: What is your opinion about doubts questioning the Sebi's autonomy regarding certain decisions that were reversed?
A: You are raising questions referring to matters on which are not to be discussed. I would like you to get into the merits, facts and judicial pronouncements of each of those decisions.