Members of the Parliamentary Standing Committee on Finance on Wednesday expressed serious concern over the current volatility in the country's stock markets and asked the Bombay Stock Exchange and National Stock Exchange to explain what steps they had taken to control the situation.
The committee members from the ruling and Opposition parties, in separate interactions with BSE and NSE, termed the volatility as 'clueless' and wanted both the exchanges to pull up their socks.
Senior members, on condition of anonymity, told Business Standard: "We want to know from BSE and NSE whether they have volatility indices.
"If yes, to what extent these have helped predict volatility in the market."
However, a senior member of the United Progressive Alliance said the committee chaired by former finance minister Yashwant Sinha was not satisfied with the replies from either stock exchanges. The members also insisted that both the exchanges need to do more to protect small investors.
Further, the members criticised the presence of entities or persons banned by the Securities Exchange Board of India in the stock markets.
A member from the Opposition bench said: "The committee wants to know how the banned entities or persons are still playing an active role in the stock markets.
"Despite a ban on him, it was found that Harshad Mehta, who is no more, was quite active. Similarly, the committee wanted to know how (fomer stock broker) Ketan Parekh, despite being banned by Sebi, was calling shots in the stock markets."
He added that the committee had sought a written explanation from both the exchanges on this issue.
On the entry of illegal money into exchanges through participatory notes, the members sought explanation from BSE and NSE on what precautionary measures they had taken.
"General experience is that some action is taken only when some accident takes place. The committee wanted stock exchanges to be vigilant so that illegal money does not enter into the stock markets and ultimately in India," a ruling UPA member said.
Meanwhile, the committee also held separate deliberations with the officials of the Bank of India and Bank of Maharashtra.
"The committee was quite disappointed over the rise in non-performing assets of these banks. The explanation that it was due to the global meltdown was not acceptable to the members.
However, the committee has asked these banks to play an active role in containing the NPAs," an Opposition member added.
