Speaking to The Financial Express, a top finance ministry official said, "There is no requirement to repeal the SCRA and the SEBI Act. The markets are working fine within the existing institutional framework. But this is not to say that we have rejected the committee's report. Some of the suggestions put forward by the committee are under active consideration".

The committee, had, in fact, painfully put together the draft of a new securities legislation to replace the two acts. The ministry was of the view that some of the important suggestions of the committee could be incorporated in the existing legislations, pending a full and final understanding of allaspects of the report.

These conclusions emerged from an hour-long meeting last week on the Dhanuka Committee report in North Block, attended by finance secretary Vijay Kelkar and chief economic advisor Shankar Acharya and officials of the capital markets division.

There was a consensus to go along with the committee's more comprehensive definition of "securities" which should come under the control of SEBI. According to the new definition, "securities" should include derivatives, plantation companies, time shares and securitised instruments.

The crux of the problem here was whether RBI should continue to control trading operations in government securities and public sector debt or should this control now vest with SEBI. The ministry was of the view that RBI should stick to policy functions and operational aspects of the securities market should be dealt with by SEBI.

The ministry had planned on persuading a reluctant RBI to fall in line.The ministry also held an inter-departmental discussion onanother crucial recommendation of the committee -- that SEBI and its officials be empowered for investigation and enforcement on lines of other economic legislation, including powers of examination of persons and search and seizures.

The various economic investigative arms of the finance ministry had raised objections to this recommendation, claiming that existing legislation was comprehensive enough to take care of offenders of various kind. It was suggested that SEBI should interact with these investigative arms if the need arose by passing on information, on which action could be taken.

Clearly, there seemed to be roadblocks in implementing the suggestion to equip SEBI with policing powers, despite the fact that a section of the ministry is clearly in support of empowering the regulatory body with sufficient teeth.

Another suggestion of the committee that was found unacceptable was that all provisions relating to the subject of capital markets and securities found in the Companies Act be administeredby SEBI and it should be the sole authority to formulation regulations. The department of company affairs reportedly rejected the offer in categoric terms.

The ministry apparently had little or no objection to some of the other suggestions of the committee. Among them are the committee's views on derivatives trading, bringing UTI under the ambit of SEBI, regulation of the private placement market, views on insider trading, delisting, dematerialisation, etc.

The ministry had decided to seek information on the institutional framework that is in vogue in other countries of the world. The idea here is to see if any lessons can be drawn which will come in handly while taking decisions on some of the other sweeping changes suggested by the Dhanuka Committee.