Pranab asks Sebi to ensure investors’ protection

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New Delhi: While his Budget alluded to the need to prevent stock market punters from manipulating share prices, finance minister Pranab Mukherjee on Friday asked the Securities Exchange Board of India (Sebi) to ensure that it lives up to its mandate of protecting investors. Mukherjee was attending a board meeting of the market regulator in the capital.

“We have discussed problem areas such as the protection of investors in the time of financial turmoil. The basic objective of SEBI is to protect investors at this present financial crisis in the way they are handling the current situation,” Mukherjee said, referring to the volatility on Dalal Street in recent months.

The finance minister promised all support to Sebi in order to help it fulfill its primary mandate of protecting investor interests. “We internally discussed some of the problems Sebi has… (and) will take appropriate steps which are to be taken,” Mukherjee said.

Meanwhile, Sebi chairman CB Bhave said the finance minister’s Budget commitment to increase the minimum public shareholding in listed firms to 25% was ‘still under discussion.’

While presenting the 2009-10 Budget on Monday, Mukherjee had lamented the fact that the average public float in Indian listed companies is less than 15%. “Deep non-manipulative markets require larger and diversified public shareholdings,” the FM had stressed, hinting at the recent instances of rampant manipulation in share prices in firms like Pyramid Saimira. Mukherjee had also used this argument to bolster the case for disinvestment in already listed public sector units, albeit in a tangential manner. “I propose to raise, in a phased manner, the threshold for non-promoter public shareholding for all listed companies.” he had said.

While Mukherjee later said that the Centre will come out with a blueprint for disinvestment in its second innings, finance secretary Ashok Chawla had said that the PSU selloff process would begin by focusing on follow-on public offerings by listed PSUs.

Several listed PSUs have very low floating stock and could be up for a stake sale soon. For instance, the Centre still holds 85.82% shares in SAIL and 98.39% stake in NMDC, both Navratna firms. NHPC and Oil India Limited are expected to kick off their initial public offers in the next two months, but these fund raising exercises have been in the works with all necessary clearances for over a year.