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October 28, 2002
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The Rediff Interview/ G N Bajpai, Chairman, SEBI

'Markets should move up in the next two months'

Eight months after assuming office, G N Bajpai, chairman of the Securities and Exchange Board of India, is cruising along with his agenda firmly in place.

SEBI Chairman G N BajpaiThough the markets have plunged to a new 52-week low, Bajpai is focused on restoring investor confidence and educating investors.

Prime Minister Atal Bihari Vajpayee will inaugurate Sebi's nationwide investor education campaign on November 23 in New Delhi. This will later be taken to the taluka level. Meanwhile, Bajpai is hearing and disposing of disputed cases at a breakneck speed.

He has passed 330 orders thus far, roughly two orders a day. Ten committee reports have been put on the Sebi Web site. Bajpai spoke to Business Standard on steps taken by the regulator to ensure corporate governance. Excerpts:

Your predecessor gave the impression that some corporates influence decision- making. Do you perceive any change in their attitude?

Since I was not around I would not know what happened in the past and whether there has been any change. But I have not faced any problems with corporates. I have no favorites; nor am I against anyone. Misconduct will be punished. We are very clear - we are honest and polite and want to clean up the markets.

What have you done in eight months in office?

We are reviewing all old regulations and introducing modifications, wherever necessary. We have already done work on the delisting regulations.

Then, there is the report on the expansion of the derivatives segment, the corporatisation and demutualisation of the bourses, the central listing authority, straight through processing, sweat equity.

We have already amended the takeover code and modified the portfolio management services guidelines. Disclosure standards have been improved, initial public offer documents are becoming more streamlined with more information on business and revenue models.

As far as corporates are concerned, we have streamlined accounting standard requirements. For mutual funds we have laid down comprehensive risk management guidelines, which is unprecedented even on a global basis.

Previously, when Sebi committees made recommendations there were allegations that the views of certain people with vested interests were incorporated. By putting up committee reports on the website and inviting comments from the public, we are making the whole process transparent.

These are small changes but they are profound. Anyone with valid comments are welcome with suggestions. The same goes for Sebi's orders. These are put on the website so that all categories of investors know the reasoning behind the orders issued. The intention is to make regulatory decision-making totally transparent.

Investor confidence is low. The markets have not picked up and, barring those of a few banks, there have been no IPOs...

You must admit that there is nothing Sebi can really do here, since there are external factors over which we have no control. My gut feel is that the markets should move up in the next two months, barring any unforeseen circumstances.

IPOs are related to the state of markets. I had said sometimes back that a whole host of IPOs are ready to hit the market, because that time the Sensex had gone up to 3,400 levels and issuers had announced their plans.

But who could have foreseen the social events and the geo-political events that were about to take place? Issuers put their plans on hold and nothing happened. But I am optimistic: the fundamentals of the economy and of the companies are strong.

Some amount of buying is coming from mutual funds. I agree that buying is happening in spurts. But globally also buying is stock specific. This situation will continue until the markets exhibit the same kind of exuberance that they exhibited before.

You were planning to re-open old pending cases and complete them, among them the Hindustan Lever case?

We are trying to clear the backlog of cases. Since I joined I have passed 330 orders and obtained convictions in at least two them.

Let me make something clear. Too much is being made out of the HLL case. It just happened to be one of the pending cases and it was in court.

We just thought we should bring it to a conclusion. I do not have anything specific against HLL. We are not pursuing only this case. We are following all past cases. We will not tolerate any misconduct by any corporate.

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