The probe into the ‘bribe-for-loan scam' may get delayed due to a lack of coordination between the regulators.
The SEBI is yet to approach the Ministry of Corporate Affairs for taking forward the investigation into the housing finance racket, according to sources in the Ministry.
The revelation of the multi-crore scam by the Central Bureau of Investigation last week — leading to the arrest of Secretary (Investments) Life Insurance Corporation of India and other top officials of LIC and its affiliates, including financial institutions for granting loans in lieu of grafts — adversely affected the stock markets.
There is a fear in the realty sector that there may be a reduction in loan disbursements from banks due to the bribery taint.
In the absence of a regulator for the real estate sector, there is a lack of clarity as to who should be looking into the affair. The National Housing Bank, considered as a quasi-regulator, is only an agency to promote housing finance institutions at local and regional levels according to the National Housing Bank Act, 1987, and does not have complete regulatory powers. According to the official, as and when the matter comes up before the Ministry, its role will be limited and SEBI and other sectoral regulators would have to play a larger role.
Bank as monitor
If a company invests the loan taken from a bank in the stock markets, it is the job of SEBI to look into it, said the official. The banks, on their part, can also take action against the companies for misuse of funds, the official said.
He said the problems are systemic and the entire mechanism needs to change in order to arrest this kind of corruption.
SEBI has been reportedly looking into possibilities of insider trading in companies that are beneficiaries in the racket.
Recently, the Corporate Affairs Minister, Mr Salman Khurshid, had said that the Government would look at strengthening the regulatory mechanism to avoid recurrence of this kind of racket.
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