Financial Daily from THE HINDU group of publications
Friday, Dec 20, 2002
Financial Daily from THE HINDU group of publications Friday, Dec 20, 2002 |
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Markets
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Stock Markets Proposal for relook into ban on OCBs Our Bureau
NEW DELHI, Dec. 19 THE Joint Parliamentary Committee (JPC) probing the securities scam has recommended that the Finance Ministry should lay down clear policy guidelines for overseas corporate bodies (OCBs) which are currently banned from making any fresh portfolio investment in the securities market. The JPC reckons that banning OCBs from making any fresh portfolio investment in the stock markets may not be a permanent solution. In its report tabled today, the committee expressed concern over several violations by OCBs including misuse of Indo-Mauritius double taxation avoidance treaty in the absence of a regulatory framework. OCBs are neither regulated nor registered with the Securities and Exchange Board of India and are also not under the regulatory framework of the RBI. Noting that 80 per cent of the OCBs are registered in tax haven Mauritius, the JPC report said a large number of them operated from common addresses and some of the Indian promoters were suspected to be using them as a front. There was a need to have a fresh look at operations of OCBs after an in-depth study of inflows and outflows. The exercise should also include identification and plugging of loopholes and possible establishment of a proper regulatory set-up with stringent penal provisions for violations. The regulatory provisions should also include detection of cases where the same set of individuals had formed more than one OCB and spread their investment across the OCBs to escape the provisions of SEBI's takeover code. The committee wanted the Government to consider the RBI suggestion for minimum paid-up capital stipulation for OCBs on the lines of FIIs.
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