MUMBAI, May 14: The Securities and Exchange Board of India (Sebi) in its bid to prevent harassment of brokers by police, has on Wednesday issued a clarification on badla financing.

The order states that the regulator has examined the applicability of Rule 8 (1)(f) and 8(3)(f) of the Securities Contract (Regulation) rules, 1957, relating to fund-based activities. Borrowing and lending of funds by a trading member in connection with or incidental to or consequential upon the securities business would not be disqualified under the rules.

The watchdog took the decision following representations from bourses that police were seeking explanations from brokers for resorting to badla financing. The case was particularly worse in Mumbai where many brokers had to face the wrath of the police.

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