Sebi mulls categorisation of plantation schemes
Neena Sreedharan
Mumbai, Jan 20: The panel appointed by the Securities and Exchange Board of India (Sebi) to frame regulations for plantation schemes is planning to segregate the schemes into deposit and collective investment schemes. According to sources, the first fact-finding round conducted by Sebi officials has revealed that these companies are not operating pure collective investment schemes.Some schemes turned out to be a regular deposit mobilisation exercise, promising monetary returns, while others were collective investment schemes which invested the entire sum, disbursing returns either in the form of plants or property to the investors. Once the schemes are segregated, the panel will have to consider further action since the finance ministry has put these schemes under Sebi's supervision. According to sources, these schemes may have to be put under the RBI regulations. Currently, the RBI regulates all non-banking finance companies (NBFCs) which collect deposits. In the case of deposit schemes, RBI keeps a
watch only on the amount invested and the interest paid without delving into the finer details of where the money is invested. However, in the case of collective investment schemes which are like mutual funds, Sebi regulates the investments made by the fund manager. Apart from segregating the schemes, the panel is also considering various models under which the market watchdog would be able to regulate the schemes. One idea proposed is to pattern the structure after the mutual fund model, i.e. in the form of a company. The panel may also consider putting up a networth criterion for companies launching any new issue or putting together a group of experts from the agricultural and forestry departments to look into the companies when they launch new schemes. The committee is also planning to ask these companies to obtain a credit rating. The track record of the company is also likely to form an integral part of the proposal. The fact-finding team also found irregularities in the functioning of some
companies which have launched such schemes. Golden Forests was one such company. The Chandigarh-based company was collecting funds without having a proper project and assets. In fact, the company was found to be paying returns for one schemes by launching another one. Currently, the assets of the company have been frozen by Sebi.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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