The Securities and Exchange Board of India will investigate Ponzi scheme frauds if the money involved was more than Rs. 100 crore, said U.K. Sinha, Chairman, SEBI, in Coimbatore on Friday.
Addressing journalists on the sidelines of a programme organised by the SEBI, SIDBI, the Bombay Stock Exchange and National Stock Exchange to draw small and medium enterprises to the stock market, he said that SEBI was empowered to investigate the fraud if the schemes did not come under the purview of other regulators. As for small Ponzi schemes, the State Governments were empowered to act under the law that took care of the investors’ interests.
In response to a question on laws to regulate venture capitalists since the Central Government under the Union Budget had announced allocation of Rs. 10,000 crore, he said that the modalities were being worked out.
Mr. Sinha also said that on the question of taxing pension-linked mutual fund schemes, no amendment to the Income Tax Act was required but a Central Board of Direct Taxes notification would do.
Earlier, addressing the representatives of various trade bodies and small and medium entrepreneurs, Mr. Sinha said that a study commissioned by the SEBI and carried out by CRISIL had clearly established that small and medium entrepreneurs were not getting adequate funding for their expansion from banks. They had to make use of their own resources. If the entrepreneurs were ready to get listed in the markets for SMEs they could raise capital for their business expansion plans. They need not depend on banks.
In doing so, the entrepreneurs need not have apprehensions that they would lose control of their business. In fact, if they did so, they could attract private equity and venture capital funds.
He sought to reassure the entrepreneurs saying that the market regulator and the two stock exchanges were keen to address all the entrepreneurs’ apprehensions and would like to hear from them. In the past 10 years of efforts to have the SMEs listed, there had been moderate success in that 68 companies had come on board.
Chitra Ramkrishna, CEO and MD, National Stock Exchange, spoke about the efforts taken in the past to have the SMEs listed.
Ashish Chouhan, head of the Bombay Stock Exchange, urged the entrepreneurs to have their companies listed on the markets saying it was the right way to grow.
N.K. Maini, Deputy Managing Director, SIDBI, spoke about the organisation’s efforts in helping SMEs.
