The Congress party has called for the Securities and Exchange Board of India (SEBI) to tighten Foreign Portfolio Investors (FPI) disclosure rules, claiming they were diluted in 2018 to benefit the Adani group.Â
The demand from Congress comes after SEBI recently proposed additional disclosures for high-risk FPIs.
According to Jairam Ramesh, the head of Congress communication, the rules regarding identifying ultimate beneficial owners of foreign funds in the share market were strict before being diluted on December 31, 2018, and subsequently deleted on August 21, 2019.
Read More: SEBI aims to curb regulatory evasion by high-risk FPIs
The relaxation of these rules allowed shell companies to invest freely, resulting in SEBI lacking information about the source of the Rs 20,000 crore invested in Adani-linked shell companies.
SEBI has now released a consultation paper seeking feedback to strengthen disclosure requirements.
A Supreme Court committee formed to investigate the Adani issue has also highlighted that the abolition of these rules hindered SEBI’s ability to investigate the allegations against Adani properly.
Read More: MSCI excludes Adani group firms from India gauge
Ramesh claimed that transparency was compromised by altering the rules in 2018 and 2019 to favor a few influential people.
He emphasized the crucial question is who owns the Rs 20,000 crore invested in the Adani group through shell companies.Â
He added only a Joint Parliamentary Committee (JPC) could uncover the truth behind the alleged Modani scam, and the Congress party would persist in demanding the formation of a JPC.
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Ramesh also raised concerns about the application of the proposed rule.
He questioned whether it would only be effective for future investments or if it would be retroactively applicable to investments made after 2018.
The Congress party’s stance is that the rule should be enforced retrospectively.
The demand from the Congress party puts pressure on SEBI to reassess and strengthen the disclosure norms for FPIs, ensuring transparency and accountability in investment activities.
