Concerned over several violations by overseas corporate bodies including misuse of Indo-Mauritius double taxation avoidance treaty, the Joint Parliamentary Committee, which probed the securities scam has highlighted the absence of regulatory framework to check their activities.
Noting that 80 per cent of the OCBs are registered in tax haven Mauritius, the JPC in its report said a large number of them operated from common addresses and some of the Indian promoters were suspected to be using it as a front.
The voluminous report tabled in Parliament said there was a need to have a fresh look in OCBs operations after in-depth study of inflows and outflows on a holistic basis.
The exercise should also include identification and plugging of loopholes and possible establishment of a proper regulatory set up with stringent penal provisions for violations.
The regulatory provisions should also include detection of cases where same set of individuals have formed more than one OCB and spread their investments to escape the provisions of Sebi's takeover code.
The Committee wanted Reserve Bank of India's suggestions for minimum paid-up capital stipulation for OCBs on the lines of foreign institutional investors should be considered by the government.
It also urged the government to review the ban on OCBs and clearly laid down the responsibility to a particular agency to oversee the OCB operations.