In its report on the efficacy of reform process in reference to the recent IPO-demat scam, the panel said there was enough scope for further investigation. The Securities and Exchange Board of India (Sebi) observed irregularities only in 21 IPOs between 2003 and 2005. The panel, chaired by BJPs BC Khanduri, however said, irregularities may be continuing in a clandestine manner for a long time.
Between 1999-2000 and 2002-03, there have been as many as 182 IPOs. In 1999-2000, there were 51 IPOs for Rs 2,587 crore and in 2000-01, 109 IPOs for Rs 2,375 crore. In the following two years, there were just a dozen listings. In 2003-04 there were 19 IPOs while 2004-05 saw 23 and 2005-06, 76.
The committee also said that the finance ministry has failed to furnish information about IPOs where irregularities were noticed.
Though Sebi and the finance ministry have taken actions to detect fraud in the system, the committee has urged the regulator to be play a more proactive and vigilant role in the future in monitoring the functioning of the depositories. Guidelines and standing operating procedure should be prepared and codified by Sebi to minimise the grey areas in the process of monitoring, the committee said, adding these should be codified in three months.
According to the report, the government should review the system of an integrated intermediary. The role of the intermediaries should be examined with a view to see that those operating in multiple capacities like Karvy were not able to manipulate the system.