Mumbai: Employees of Securities and Exchange Board of India (Sebi) represented by the Sebi Employee Association (SEA) has written to finance ministry opposing the transfer of surplus funds to the government, said two people aware of the matter.

Mint has seen a copy of the letter dated 9 February.

The government is expecting up to Rs4,000 crore from Sebi to help meet shortfalls in government revenue.

“They (Sebi) have run up into some surplus already. So, there is that should be kept in a public account rather than banks. That is being discussed. That amount is not very large, it’s around Rs3,000-4,000 crore," S.C. Garg, secretary in the department of economic affairs (DEA) was quoted as saying in a PTI report on 4 February.

In the letter, the SEA said this will impact the autonomy of the regulator.

“As an autonomous regulator, it is of utmost importance that the law is upheld on all the matters including those related to the functioning of Sebi," said the SEA in the letter. Financial autonomy is of crucial importance, the letter added.

The letter also quoted General Finance Rules 2017 which lays down that all autonomous organisations should be encouraged to maximise generation of internal resources and eventually attain self-sufficiency.

The SEA also recommended that the regulatory fees borne by the market intermediaries should be brought down as Sebi has enough surplus funds to meet the infrastructure and market expansion needs.

Sebi earns revenues from levying fees on stock exchanges and brokers, processing initial public offerings, debt issues, mutual funds and providing informal guidance to firms. Sebi has also adopted a principle of staggered prudential planning for major capital expenditure to ensure optimal corpus.

While the DEA has formed an opinion on surplus fund transfer, the matter is yet to be finalised, as Sebi has presented the issue before the Financial Stability And Development Council (FSDC).

Mint had first reported on 5 January that FSDC is yet to reach a decision and the matter is being discussed between the Sebi and the finance ministry.

The issue of how to deal with surplus funds of regulators has been an subject of debate since 2011. That year, the government opened a Sebi general fund as part of its public accounts, but no funds have been deposited in it so far. In January 2016, the DEA referred the matter to the law ministry. In October 2016, former Sebi chairman U.K. Sinha told the CAG that keeping Sebi funds in a government account would undermine the regulator’s autonomy. In July 2017, the DEA informed the CAG about the attorney general’s view that the Sebi Act does not permit the transfer of such funds to public accounts.

Close