The finance ministry has asked the Reserve Bank of India to issue a red alert as soon as it detects any attempt of deliberate market manipulation and unreasonable inflow or outflow of foreign exchange.

The ministry indicated this in its action taken report on the findings of the joint parliamentary committee on the stock market scam of 2001 tabled in Parliament on Friday. It said the red alert would help the Securities and Exchange Board of India to monitor the transactions of foreign institutional investors under their portfolio investment schemes.

According to the action taken report, the finance ministry, in a meeting held in January this year, had stressed purposeful exchange of raw data among the regulators for evolving an effective monitoring system to generate adequate warnings in case of any sign of irregularities in the stock market.

Finance Minister Jaswant Singh assured Parliament that "wrong doers" in the multi-crore stocks scam would be "identified and punished".

Tabling the 170-page action taken report a month ahead of the June 19 deadline set by the JPC, Singh said pending action based on the JPC's report, which had made 276 separate recommendations, would be completed soon.

To check the misuse of participatory notes by sub-accounts of FIIs and overseas corporate bodies, the report said the market regulator planned to make it mandatory for FIIs to include information about the parties involved in any participatory note, besides the terms and nature of the note.

The government is also beefing up the Enforcement Directorate to handle emerging areas of the new economy such as e-commerce and transfer pricing. The report says intelligence gathering is being strengthened in transnational joint ventures, mergers and acquisitions, equity swaps and derivative products in securities and forex markets.

The report also pointed out that Global Trust Bank's exposure to the capital market continued to be high despite directions by the RBI to lower it to 5 per cent. The bank's exposure to the capital market on January 3 and February 28 stood at 9.4 per cent and 9.08 per cent, respectively.

As far as investigation against Zee Telefilms was concerned, the report noted that the Enforcement Directorate had informed that it would be completed by May 31. The JPC had said investigations should be pursued to ascertain if any violation was committed by the company.

Reacting to the JPC's comments that the finance ministry should have been more proactive and vigilant when the stock market was rising unusually, the report said the minister and the ministry accepted their constitutional responsibility. It, however, said a distinction should be made between the acts of omission and commission of those institutions for which specific regulatory jurisdiction was provided under Acts of Parliament.

The report also said the RBI was examining the JPC's recommendation that companies investing in India through Mauritius should be required to file details of ownership with the central bank and declare that all their directors and effective management was in Mauritius.