SEBI should retrospectively tighten FPI disclosure norms, Congress; seeks JPC probe

The Congress on Thursday demanded that SEBI should ensure complete disclosure of ownership of Foreign Portfolio Investors from retrospective effect and said that only a JPC can investigate to ascertain who diluted and then removed the very rule in this regard to benefit the Adani group.

The demands came a day after capital markets regulator Securities and Exchange Board of India (SEBI) proposed mandating additional disclosure around ownership of high-risk Foreign Portfolio Investors (FPIs), to enhance trust in the Indian securities markets.

Congress general secretary communications Jairam Ramesh also alleged that the market regulator was now looking to tighten the very rule it was "forced to dilute" in December 2018 and its removal in August 2019 to benefit the Adani Group.

He said only a joint parliamentary committee probe can investigate the the entire scam and bring out the truth and all opposition parties will raise this demand in the upcoming Monsoon session of Parliament in the new Parliament building.

"The purpose is to hold a proper investigation in the Modani scam. A JPC can only bring out the truth in this regard. When we sit in the new Parliament building, we will raise this demand again. All parties will raise this issue and demand once again a JPC probe into the Adani issue during the Monsoon session of Parliament," he told reporters.

He said all parties are together on the matter of demanding a JPC probe into the Adani issue and will unitedly raise it in the Monsoon session of Parliament. He said the issue will not die and remains alive.

The Congress also launched a booklet related to the 100 questions which the party asked Prime Minister Narendra Modi since February on the Adani issue.

SEBI on Wednesday came out with a proposal mandating enhanced disclosures from high-risk FPIs to guard against possible circumvention of the Minimum Public Shareholding (MPS) requirement.

This came after the SEBI observed that some FPIs have concentrated a substantial portion of their equity portfolio in a single investee company. In some cases, these concentrated holdings have also been near static and maintained for a long time, it said.

"Why did the SEBI come out with a consultation paper? The important recommendation by the Supreme Court committee said that India has suffered because of the removal of this rule," Ramesh said.

He said this is a beginning towards transparency which ended in 2018 to help some select businessmen.

"The question is whether the rule will be applicable in future or this rule will be applicable on those investing in the country in the last 5-6 years," he asked.

On whether the party wants a probe into who were the beneficiaries of investments into shell companies coming into the country after the rule was diluted and removed, Ramesh said, "That will be one of the terms of reference of the JPC that on whose pressure on December 31, 2018 this regulation was diluted and on August 21 2019, the regulation was deleted."

On whether the party wants the rule to be applicable restrospectively, he said, "This is the question that I have raised. The big question is that will it apply restrospectively. Whatever will happen in future everyone knows, but what about the investment that has happened after 2018, will the rule apply to them."

"If you are asking our position, yes it should apply. Our position from day 1 has been that any probe by any organisation other than a JPC will have a limited value because of the nature of the probe. Only a JPC can investigate the types of issues that we have highlighted in this booklet and the media. These are issues that cannot be dealt with by any one company, it has to be by a JPC probe," the Congress leader said.

In a tweet, Ramesh earlier said, "The SEBI Consultation Paper put out yesterday proposes to tighten the very rules it was forced to dilute in 2018 to allow foreign portfolio investors to invest in Indian companies without having to reveal their FULL ownership details. This was done to benefit Modani." "We hope the Consultation paper is not an eyewash exercise and will cover investments made earlier," he said.

Ramesh claimed this seems to be a response to the findings of the Supreme Court Expert Committee.  "It also vindicates the Hum Adanike Hain Kaun-HAHK series of 100 questions that we asked of the PM - which he remains totally silent on," the Congress leader said.

On Wednesday, the SEBI said, "Such concentrated investments raise concern and possibility that promoters of such corporate groups, or other investors acting in concert, could be using the FPI route for circumventing regulatory requirements such as that of maintaining Minimum Public Shareholding "  In its consultation paper, the regulator has proposed obtaining granular information from high-risk FPIs that have concentrated equity holdings in single companies or business groups.

The Congress has been seeking a joint parliamentary committee probe into the the Adani matter after Hindenburg Research in its January 24 report levelled allegations of fraud, stock manipulation, and money laundering against the Adani group.

While the group has denied all allegations, the Supreme Court constituted an expert committee for assessment of the extant regulatory framework and asked stock market regulator SEBI to complete its probe into allegations.