SEBI for legal aid on Bhave issue
The Securities and Exchange Board of India (SEBI) decided at a board meeting to take legal recourse on a conflict of interest issue concerning its chairman, CB Bhave. HT Correspondent reports.Updated: Apr 13, 2009 23:14 IST
The Securities and Exchange Board of India (SEBI) decided at a board meeting on Monday to take legal recourse on a conflict of interest issue concerning its chairman, CB Bhave.
It also moved to limit mutual funds’ exposure to money market instruments by a single issuer.
The board decided to seek opinion from a legal counsel whether it has the legal authority to examine whether a committee appointed by the Board to probe a conflict of interest claim involving NSDL had acted within its established terms and framework.
The board decided to withhold the orders of the committee until a clarification is obtained. As per past practice, Bhave recused himself from these discussions and decisions. The issue of conflict of interest arose as Bhave was heading NSDL when bogus trading was done in NSDL while a SEBI panel is currently hearing the case.
To limit market risk, the Board decided to amend the SEBI (MF) Regulations in such a way that mutual fund schemes will be not be allowed to invest above 30 per cent of its net assets in money market instruments of a single issuer.
The schemes can continue to invest up to 15 or 20 per cent in other investment grade debt instruments of an issuer. The limits will not be applicable to government securities, T-bills and collateralised borrowing and lending obligations (CBLO).
The Board decided to enable mutual funds and FIIs (foreign institutional investors) to invest in IDRs (Indian depositary receipts), demateralised holdings of IDRs, and issue of depositary receipts by custodians on behalf of issuers.
First Published: Apr 13, 2009 23:12 IST