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Ponzi plans: Sebi gets more power

NEW DELHI: President Pranab Mukherjee has cleared the re-promulgation of an ordinance that gave more powers to the Securities and Exchange Board of India (Sebi) to crack down on unauthorized fund mop-up and ponzi schemes, besides allowing search and seizure operations. 

It also provides the capital markets regulator with powers to scan call records, attach bank accounts and property and arrest a person, who does not comply with Sebi orders. 

The ordinance, which was first promulgated last year, could not be cleared by Parliament as the standing committee on finance did not submit its report. While the finance ministry was keen that it should be given a fresh lease of life, the Cabinet could not approve it before the Election Commission announced the general elections amid controversy over the UPA coalition pushing through some other legislations through the backdoor, something that the President was unwilling to back. 

But, given the sensitivity of the Sebi Ordinance, the government managed to first impress upon the Election Commission, which approved the proposal on Wednesday. Moving in quickly, the Cabinet okayed it on Thursday and the decision was endorsed by Mukherjee earlier on Friday. 

Sources familiar with the development said the ordinance is going to be formally notified later in the evening and will allow the market regulator to perform its duties till it is ratified by Parliament. A ratification is now only possible once the Lok Sabha is sworn in and if the proposal continues to enjoys the new government's support. 

In the wake of the Saradha scam, Sebi was given powers last year through an ordinance, which was first promulgated in July and again in September, but it lapsed as a bill in this regard could not be passed in Parliament. Sources said that it was after much convincing that the President agreed to the proposal. "Unlike the other ordinances related to anti-corruption, this one is meant to protect investors," said a source.


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