The Securities and Exchange Board of India (Sebi) has not been able to recover penalties of nearly R150 crore due to the fact that the current regulations do not empower the capital market regulator to recover the monetary penalties imposed as part of its adjudication actions.

?We have not been able to recover more than R100-150 crore worth of penalties. This is a worrying thing,? chairman UK Sinha told FE. ?We have requested the government to empower us. When we pass an order imposing any penalty, the recovery process is very slow. We have not been empowered to recover. We have to go to some other agencies and file a case. It takes years to recover,? he explained.

This assumes significance as the capital market regulator has passed many orders in the past, imposing huge monetary penalties to act as a deterrent. The lack of recovery powers, however, has led to the regulator being helpless in forcing the offenders to pay the penalty.

Incidentally, in an order related to irregularities in initial public offer (IPO), Sebi had imposed a total penalty of nearly R70 crore on the Panchal group along with some other entities. It is believed that the regulator is yet to recover a significant amount of that penalty even though more than six years have passed since the order was issued.

According to the Sebi chairman, the regulatory body has sought the government’s help in empowering the regulator on the lines of the Competition Commission of India (CCI) or Income Tax (IT). In fact, recently, the Competition Appellate Tribunal directed cement companies to deposit 10% of the penalty amount imposed by CCI before hearing their appeal.

It is widely believed that the government will grant more power to the capital market regulator by strengthening the Sebi Act. Earlier, there were reports that the government might wait for a final view on the Financial Sector Law Reforms Commission (FSLRC) before giving more power to Sebi.

?I think the government is convinced that without waiting for a final view on Financial Sector Law Reforms Commission (FSLRC), the Sebi Act needs to be strengthened. There are 3-4 areas where he need a quick support from the government in the Parliament,? said Sinha.

Sebi is seeking government support for accessing call data records, which is useful for establishing certain offences. It also wants powers to freeze bank accounts and also calling for production of data, records, computer printouts and databases.