SEBI measures to help shareholders
From SHIRISH NADKARNI in Bombay
CONCERNED by the 1,000-point drop in the Bombay Stock Exchange (BSE) in the four months since the index touched its highest point on September 12, 1994, the Securities and Exchange Board of India (SEBI) is finalising measures to help shareholders and brokers overcome their problems and enlarge share operations. The measures relate to stock-lending and bank loan facilities against shares.
A SEBI source said that SEBI is in the midst of consultations with the Reserve Bank of India (RBI) so that bank loan facilities against shares can be freed from curbs and restrictions.
At another level, SEBI is also discussing the format of the stock-lending scheme with the Central Board of Direct Taxes (CBDT). As a result, a format of a separate agreement specifying and separating the 'lending' and sale of shares is likely to be approved.
Once such a specific agreement has been reached, there will be no difficulty in approving the stock-lending scheme.
The real difficulty lies in the fact that it may be misused for the purpose of evading taxes.
To prevent this, the CBDT is of the view that it must be made explicit that stocks have been given only for the purpose of lending; and that the stock would be returned after a specified period of time.
If this is not specified, then the income tax department would be free to levy capital gains tax on such dealings or lendings.
Meanwhile, the presidents of 21 stock exchanges in the country are to meet in Bombay today to discuss the issue of integration of stock exchanges through a National Stock Market System (NSMS).
This would be the second meeting of the exchange chiefs.
They had earlier met in mid-December 1994 for preliminary discussions on the same subject, and decided to iron out the modalities in Bombay today.