Discussing changes in GDR rules to curb misuse: SEBI chief

October 15th, 2011 - 12:31 am ICT by IANS  

Kolkata, Oct 14 (IANS) India’s capital market regulator Friday said it has discovered the serious misuse of Global Depository Receipts (GDR) rules and is in touch with the central government to make the necessary changes.

“You might have seen that we have discovered the misuse of the GDR rules in a very serious manner and we have taken some very serious actions against certain group of people,” Securities and Exchange Board of India (SEBI) chairman U.K.Sinha told reporters on the sidelines of a programme organised by the Bharat Chamber of Commerce (BCC) here.

“We have now in the last six months implemented a very strong surveillance system…it is giving us a lot of data. In GDR, we have discovered that how people are trying to misuse rules,” he said.

GDRs are the bank certificates issues to Indian companies to give them access to foreign investors.

“GDR regulations are managed by the government of India. We have discovered a number of loopholes and irregularities. We are in touch with the government to make the necessary changes required in the GDR regulations,” Sinha said.

SEBI announced introduction of uniform forms and documents for the purpose of customer identification by different market intermediaries like stock exchanges and mutual funds October 5 to bring uniformity to the process.

To bring about uniformity in securities markets, SEBI has also decided that the same Know Your Customer (KYC) form and supporting documents shall also be used by all captioned SEBI registered intermediaries.

“We have issued our guidelines and some corporate have raised questions on the KYC norms. We are talking actively to the industry and they have raised some operational matters,” Sinha said.

“We will come out with clarification on the regulation very soon… may be by the end of this month,” he added.

The new rule will be effective from Jan 1, 2012.

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