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Business News/ Market / Stock-market-news/  UK Sinha gets two-year extension as Sebi chief
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UK Sinha gets two-year extension as Sebi chief

Sinha becomes the first person to serve as head of the market regulator for over 3 years since D.R. Mehta in 2002

A file photo of U.K. Sinha. Photo: MintPremium
A file photo of U.K. Sinha. Photo: Mint

Mumbai: U.K. Sinha, chairman of the Securities and Exchange Board of India, or Sebi, on Thursday was given an extension for two years by the finance ministry. The move makes Sinha the first person to serve as head of the market regulator for more than three years since D.R. Mehta in 2002.

Two persons familiar with extension confirmed the development.

Sinha, 61, took over as Sebi chief in February 2011, succeeding C.B. Bhave. Before Sinha joined, the government had changed the laws allowing Sebi chairmen and whole-time members to hold their posts for five years, raising the earlier limit of three years. Sinha’s predecessor Bhave was denied an extension. Sinha, who is the eighth Sebi chief, becomes the first to get an extension under the changed rules.

Before Sinha, D.R. Mehta had served as Sebi chairman from 1995 to 2002, but his tenure was extended under special circumstances, primarily with the aim of stabilizing the equity markets.

The government’s latest move gives Sinha more time to take forward reforms in the capital market and allow the markets to get used to the changes introduced by Sebi during his tenure.

Over the past three years, major reforms introduced by Sinha include a change in policies for mutual funds and foreign investors; arming the market regulator with special powers to recover money from capital market defaulters; and bringing deposit-taking firms under Sebi’s collective investment scheme, or CIS, regulations to curb illegal pooling of public funds.

Sebi, during Sinha’s tenure, has allowed mutual funds to charge additional fees from existing investors in order to secure adequate funds to invest in the distribution side of the mutual fund business. According to the industry, this helped revive the domestic asset management sector which had been undergoing a slump since 2009 when Sebi scrapped entry loads during former chairman Bhave’s reign. Entry load is a commission charged by distributors from customers investing in mutual funds.

In an effort to liberalize rules and attract more overseas money, Sinha’s regime has seen Sebi unify the investment route for all categories of foreign investors such as foreign institutional investors and qualified foreign investors.

In June 2013, the market regulator introduced uniform entry norms for existing FIIs (foreign institutional investors), sub-accounts and qualified foreign investors (QFIs) and combined these entities under a category known as foreign portfolio investors (FPIs).

Sebi also secured special “search and seizure" powers from the government under Sinha. These additional powers authorize Sebi to tap phone records, directly probe market defaulters through searches and recover money from the guilty by attaching their assets and properties.

In 2013, Sebi was also given the authority to regulate all CIS-related activities. The move will help Sebi act against thousands of entities in the country who have been illegally taking deposits from the public, in lieu of attractive returns, without being regulated or being answerable to any authority.

In fact, soon after Sebi got powers to regulate all deposit taking firms, the market regulator took action against several ponzi schemes and chit funds. The process of recovering money to refund investors affected by these illegal entities is still on.

While the extension will help Sinha take forward Sebi’s reform agenda, he will also have to see through some high-profile cases against large corporations which are currently pending.

At present, Sebi is fighting legal cases against Subrata Roy-promoted Sahara Group companies and Mukesh Ambani-owned Reliance Industries Ltd. The regulator is also dealing with matters related to the Jignesh Shah-owned MCX-SX and Financial Technologies (India) Ltd.

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ABOUT THE AUTHOR
Anirudh Laskar
Anirudh reports on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the corporate and financial services industry. Over the past 17 years, he has covered many beats including banking, NBFCs, aviation, automobile, insurance, markets, SEBI, IRDAI, mutual funds, investment banking, private equity, deals, and conglomerates.
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Published: 06 Feb 2014, 06:47 PM IST
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