Highlights of the JPC report

The Joint Parliamentary Committee, probing the 2001 stock market scam and the UTI fiasco tabled its report in the Parliament on Thursday.

Following are the highlights of the report:

• Finance secretary Ajit Kumar dealt with the issues related to UTI in a routine and casual manner, which is not expected from an officer of his rank.
• Ministry of finance should have been more proactive and vigilant in recognising that liberalisation requires strong and affective regulation and greater autonomy for regulators must go hand in hand with the accountability of regulators.
• Sebi has been in place since 1988 and should have been able to regulate the liberalised market share more efficiently.
• Wrong doing by banks have also contributed significantly towards the scam. Private sctor banks need to be closely watched specially in area risk management and stricter regulation.
• Ketan Parekh as a key player in the scam received large sums of money from the banks and corporate bodies when Sensex was falling rapidly indicating a nexus which should be further investigated.
• This scam is the manipulation of capital market to benefit market operators, brokers, corporate entities with certain banks, stock exchanges, overseas corporate bodies and financial institutions, willing facilitators in this exercise.
• Ills such as unofficial badla in Calcutta Stock Exchange could have been recognised and corrected well in time.
• Expeditious action should be taken to find out facts regarding Ketan Parekh's Swiss bank account.
• Sponsors of UTI-II schemes should be those that have not sponsored their own mutual fund. Schemes in UTI-I should also be managed by independent fund manager preferably from UTI-II for a fee.
• Lack of progress in implementation of the recommendations of the last JPC set up in 1992 emboldened wrong-doers to indulge in financial misconduct.
• Parliamentary committees make their recommendations but at implementation stage, things are put under the carpet.
• Chairman and top executives of Madhavpura Mercantile Cooperative Bank indulged in a series of irregularities flouting all prudent banking norms and the guidelines laid down by RBI. The case deserves severest action.
• Global Trust Bank's exposure to the capital market by way of advances against shares and guarantees issued on behalf of brokers was relativel higher and the Bank had a very high exposure to a particular stock broker.
• The deficiences in the working of the Calcutta Stock Exchange were not of recent origin and appear to flow from a culture of non-compliance with rules.
• After determining the extent of their involvement, appropriate criminal penal action should be taken against the defaulting brokers in the CSE. SEBI's handling of the revised Automated Lending and Borrowing Mechanism of National Securities Clearing Corporation leaves much to be desired.