Sebi Faces Challenges in Recovering Dues Worth Rs 76,293 Crore
The regulator has formed an advisory committee to focus on capital formation through real estate investment trusts (Reits) and infrastructure investment trusts (Invits) along with municipal bonds.
SebiSecurities And Exchange Board Of IndiaMutual FundsReal Estate Investment TrustsInfrastructure Investment TrustsMunicipal BondsFinancial InclusionSystematic Investment PlansSipsData Benchmarking InstitutionDbiCorporate GovernanceReal EstateAug 15, 2024
According to Sebi's annual report for FY24, of the 3,871 recovery notices issued by it in various cases, as much as 807 are certified as difficult to recover. Of these, as much as 78 per cent are due to cases pending before court-appointed committees.
The number of pending appeals in the Securities Appellate Tribunal has also risen from 749 to 849 in FY24, with the amount to be recovered standing at a staggering Rs 76,293 crore. However, the report does not mention the amount it has recovered through the past fiscal year.
Even though the number of pending cases increased, the number of new appeals filed has fallen. In FY23, Sebi's recovery fell sharply to just Rs 6,031 crore, while it had pending demands worth Rs 1.02 trillion, according to the FY23 annual report.
Of the total dues pending, as much as Rs 70,482.62 crore or 68.7 per cent were under parallel proceedings before various courts and court-appointed committees. Of the total dues, as much as Rs 63,206 crore or 61.7 per cent pertained to CIS/DPI (collective investment scheme/deemed public issues) by PACL and Sahara India Commercial Corporation.
Sebi's default to recover (DTR) had shot up to Rs 73,287 crore in FY23 from Rs 67,228 crore in FY22. DTR dues are the dues that could not be recovered even after exhausting all the modes of recovery.
Meanwhile, the total pending cases in the Supreme Court related to Sebi or SAT (Securities Appellate Tribunal) have grown from 440 in FY23 to 519 in FY24, and stand at 1,162 cases in the high courts. Overall, over 4,000 cases are pending before various higher legal fora.
The annual report mentions the key areas of work for FY25, including further reducing the minimum investment for mutual funds, faster processing of rights issues, and fostering greater innovations.
'To promote low-ticket systematic investment plans (SIPs) and also to ensure its viability, Sebi and the mutual funds lobby Amfi are in consultation with the industry stakeholders to reduce the overall cost associated with the product to aid financial inclusion,' says the report.
Sebi has also formed an advisory committee to focus on capital formation through real estate investment trusts (Reits) and infrastructure investment trusts (Invits) along with municipal bonds.
The regulator will also review the existing rights issue framework to rationalise the disclosure requirements and reduce its timeline.
It is also working on a data benchmarking institution (DBI) to provide a central repository of standardised and comparable data related to various asset classes to help investors analyse.
Among other key areas of work are easing regulations and compliance burden, better corporate governance, steps to deepen the corporate bond market, and a framework to deal with malpractices by people using new-age technology to evade laws.
'We cannot predict how macro and micro variables will impact investment behaviour, investment avenues, or portfolio companies. However, what we can do, and we are committed to doing, is to help the securities market and its numerous engines to be future-ready, to help ensure the markets be agile and capable of dealing with changes in the future, whatever those changes may be,' said chairperson Madhabi Puri Buch was quoted as saying in the annual report.
Sebi said in FY23, it had initiated adjudication proceedings in 6,850 cases, while it disposed of 11,824 cases (which include the cases concerning the trading of illiquid stock options at BSE). At the end of March 31, 2023, as many as 1,950 cases were pending.
Information
The Securities and Exchange Board of India (Sebi) is the regulator of the securities market in India. It was established on April 12, 1992, and is headquartered in Mumbai, India. Sebi's primary objective is to protect the interests of investors in securities and to promote the development of the securities market.
The Association of Mutual Funds in India (Amfi) is the industry body for the mutual fund industry in India. It was established in 1995 and is headquartered in Mumbai, India. Amfi's primary objective is to promote the development of the mutual fund industry in India and to protect the interests of investors in mutual funds.
Frequently Asked Questions
What is the total amount of dues that Sebi is facing difficulties in recovering?
Rs 76,293 crore
What is the percentage of dues that are pending before court-appointed committees?
78 per cent
What is the number of pending appeals in the Securities Appellate Tribunal?
849
What is the primary objective of Sebi?
To protect the interests of investors in securities and to promote the development of the securities market.
What is the name of the industry body for the mutual fund industry in India?
The Association of Mutual Funds in India (Amfi)
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