Reported by Chinmaya Dehury/Edited by Swetaparna Mohany
After having failed resoundingly to prevent scores of companies from perpetrating fraud on the unsuspecting people of Odisha, Chief Minister Naveen Patnaik today urged financial experts to mull over preventive measures to protect small investors rather than deliberate on curative measures for protection of investors’ interest.
“I would rather advocate the experts to contemplate on preventive measures that can foreclose the mishap” Patnaik said while inaugurating a national seminar on “Investor Education and Protection” organized here by the Institute of Company Secretaries of India (ICSI).
Patnaik suggested adoption of a two-pronged strategy to safeguard the interests of the depositors and investors: adequate efforts to provide alternate mode of investment to small depositors in far flung areas of the state by opening branches of scheduled banks and spreading financial literacy. He was also for strengthening of the Savings Banks in post offices to reach out to investors in rural areas.
Stressing on financial literacy Patnaik said “In spite of all the legal and enforcement measures what matters most is financial literacy to make the public aware about safety, liquidity and reasonable return on their investments”. He was also for educating the public about various small savings instruments and government securities which offer avenues for reasonable return and safety for investment.
Taking off from where the Chief Minister left, Securities Exchange Board of India (SEBI) Chairman UK Sinha said financial illiteracy among people is leading to unauthorised money raising by various unregistered companies. He urged investors to cross-check the credentials of an organization before investing in it.
“Some of the companies have been registered for multiple purposes according to their statement of objects, reasons, articles and memorandum of associations (MoA). But it is not sufficient. In many cases, they are misleading the people. Some companies haven’t bothered to register them with SEBI or RBI or State Government’s cooperative societies under chit fund rules. People should be clear before investing in any company,” said Sinha addressing the seminar.
Stating that SEBI had opened an office here, he said the market watchdog and state government would work together to control the money raising in the state besides facilitating grievance redressal and spreading awareness about financial literacy in the state.
Sinha informed that the Central government had brought an ordinance empowering the market regulator to search and seize property of such companies.
With the amendments in force now, Sebi would have powers to regulate any pooling of funds under an investment contract involving a corpus of Rs 100 crore or more, attach assets in case of non-compliance and Chairman Sebi would have powers to authorise the carrying out of search and seizure operations, as part of efforts to crack down on ponzi schemes,” said the SEBI Chairman.
He informed that SEBI had registered cases against 552 companies while 138 had been convicted and 11 companies asked to refund the money of investors.
The seminar was attended among others by SN Anant Subramanyam, president ICSI and Aswin Kumar Chouhan, CEO, BSE.