REPORT - watchoutinvestors.com

1 REPORTJOINT COMMITTEEONSTOCK MARKET SCAMANDMATTERS RELATING THERETO(THIRTEENTH LOK SABHA)(VOLUME I REPORT )Presented to Lok Sabha on 19 December, 2002 Laid on the Table of Rajya Sabha on 19 December, 2002 LOK SABHA SECRETARIATNEW DELHID ecember 2002/Agrahayana 1924 (Saka) No. 462 Price of Volume I : Rs. of Volume II : Rs. 2002 BY LOK SABHA SECRETARIATP ublished under Rule 382 of the Rules of Procedure and Conduct of Business in Lok Sabha (Tenth Edition)and printed by Jainco Art India, 13/10, , Kargol Bagh, New OF THE JOINT COMMITTEE.

2 (iii)LIST OF ABBREVIATIONS USED IN THE REPORT ..(v)INTRODUCTION ..(xi)PART I Constitution of JPC ..1 ..6 ..12 by Brokers including SHCIL..191. Ketan Parekh Entities ..202. Defaulted Brokers of Calcutta Stock Exchange ..293. Other Brokers ..354. Stock Holding Corporation of India Ltd..45 ..501. Overview ..502. Cooperative Banks ..543. Commercial Banks ..80 Exchanges..1141. Calcutta Stock Exchange ..1142. Matters regarding other Stock Exchanges.

3 Of Promoters and Corporate Entities.. and Sub-Accounts of FIIs..165 and Exchange Board of India..1871. Regulation of business in Stock Exchanges ..1892. Surveillance and Investigation ..1943. Powers of SEBI ..203 Page4. Demutualisation ..2105. Systemic reforms ..215 Bank of India..222 of Company Affairs..252 by Investigative Agencies ..2641. Central Bureau of Investigation..2642. Directorate of Enforcement ..2803. Central Board of Direct Taxes.

4 291 of Finance..309 XIV. Investors Protection..323 PART IIUNIT TRUST OF INDIA .. Policy and Decisions.. Scheme-64 .. in the Calcutta Stock Exchange Payout Crisis..389 of Trustees..403 of Finance and UTI ..410 Role ..427 Observations/Conclusions/Recommendations ..437 PART IIIA ppendices*Minutes of Sittings of the Committee**Evidence before the Committee**Printed separately-Volume II.**Not printed. Five copies placed in Parliamentary Library.

5 (ii)COMPOSITION OF THE JOINT COMMITTEE ON STOCK MARKET SCAMAND MATTERS RELATING THERETOShri Prakash Mani Tripathi ChairmanMEMBERSLok Sabha2. Shri Mani Shankar Aiyar3. Smt. Margaret Alva4. Shri Vijayendra Pal Singh Badnore*5. Shri Raashid Alvi6. Shri C. Kuppusami7. Shri Jagannath Mallik8. Shri Rupchand Pal9. Shri Pandian10. Shri Pravin Rashtrapal11. Shri S. Jaipal Reddy12. Kunwar Akhilesh Singh13. Shri Maheshwar Singh14. Shri Prabhunath Singh15.

6 Shri Kirit Somaiya16. Shri Kharabela Swain17. Shri K. Yerrannaidu**18. Shri Radhakrishnan**19. Shri Srichand Kriplani**20. Shri Anant GudheRajya Sabha21. Shri Ahluwalia22. Shri Nilotpal Basu23. Shri K. Rahman Khan24. Shri Praful Patel25. Shri Kapil Sibal26. Shri C. Ramachandraiah27. Shri Thirunavukkarasu28. Shri Prem Chand Gupta29. Shri Amar Shri Lalitbhai MehtaSECRETARIAT1. Shri John Joseph Additional Secretary2. Smt. Paramjit Kaur Sandhu Joint Secretary3.

7 Shri A. Louis Martin Deputy Secretary*Nominated vice Dr. Baliram resigned.**Nominated vice S/Shri Vijay Goel and Harin Pathak resigned.**Nominated vice Shri Anandrao Vithoba Adsul resigned. Shri Anandrao Vithoba Adsul had been vice Shri Anant Gangaram Geete resigned.@Nominated vice Shri Vikram Verma resigned. Shri Vikram Verma had been nominated Shri Ramdas Aggarwal retired from Rajya Sabha.(iii)LIST OF ABBREVIATION USED IN THE REPORTAACSAs Applicable to Cooperative SocietiesACBA udit Committee of BoardALMA ssets Liability ManagementACMMA dditional Chief Metropolitan MagistrateADsAuthorised DealersADBA sian Development BankADRsAmerican Depository ReceiptsAFIA nnual Financial InspectionAGMA nnual General Body MeetingAIFIAll India Financial InstitutionsAILA nnual Investment Lending and Borrowing MechanismAMCsAsset Management CommitteesAMCA sset

8 Management CompanyAOPsAssociation of PersonsARSsAssured Return SchemesATLAsia Today Taken ReportBFSB oard of Financial SupervisionBHLB rentfield Holdings and Lending of Securities SchemeBOIBank of IndiaBoTBoard of TrustiesBRBank ReceiptBR Regulation ActBSEThe Stock Exchange, MumbaiBSPLB iyani Securities Private Adequacy, Asset Quality, Management Earnings Liquidity System& ControlsCBIC entral Bureau of InvestigationCBDTC entral Board of Direct TaxesCCBLCity Cooperative Bank Consultants of Deposit(v)

9 CDSLC entral Depository Securities Executive OfficerCISC ollective Investment SchemeCLBC ompany Law BoardCMDC hairman and Managing DirectorCMCapital MarketCMMC hief Metropolitan MagistrateCOBC ommittee of BoardCOPCash on PayoutCRCC redit Rating CellCRCSC entral Registrar of Cooperative SocietiesCRARC apital to Risk Assets RatioCRRCash Reserve RatioCRSC ompulsory Rolling SettlementCSEC alcutta Stock Exchange Association Suisse First BostonCSLC onsortium Securities Funds Management SystemCSPLC onsortium Securities Private Share & Stock BrokingCVCC entral Vigilance CommissionCVOC hief Vigilance OfficerDBODD epartment of Banking Operations & DevelopmentDCAD epartment of Company Affairs DFIsDevelopment Financial InstitutionsDGITD irector General of Income TaxDGMD eputy General ManagerDHSD elloittee Haskins & SellsDICGCD eposit Insurance and Credit Guarantee CorporationDKBD resdner Kleinwort BensonDNBSD

10 Epartment of Non-Banking SupervisionDRFD evelopment Reserve Fund DRSD epartment of Banking SupervisionDSPED elhi Special Police Establishment DTAAD ouble Taxation Avoidance AgreementDTACD ouble Taxation Avoidance Convention DVPD elivery Versus PaymentECExecutive CommitteeECSE lectronic Clearing ServicesEDExecutive Director(vi)EDEnforcement DirectorateEFTE lectronic Funds TransferEGME xtraordinary General Body MeetingEILE uropean Investments Offences WingEPNE ntry Point NormERCE quity Research CellETExecutive TrusteeFCCBF oreign Currency Convertible BondFCNRF oreign Currency Non-residentFDIF oreign Direct InvestmentFEICLFar-East Investment Corporation Exchange Management ActFERAF oreign Exchange Regulation ActFGSBF irst Global Stock BrokingFIsFinancial InstitutionsFIIsForeign