Mis-selling: from impressions to evidence

by Renuka Sane.

Retail finance in India is once again in the news for reasons of fraud, this time in the form of the Saradha Group in West Bengal. There is a general sense that such schemes proliferate because of the failure of financial inclusion, and that better supervision by current regulators will bring . . . → Read More: Mis-selling: from impressions to evidence

Addressing ponzi schemes: the three parts of the solution strategy

Addressing ponzi schemes: the three parts of the solution strategy There is a great deal of moral outrage about ponzi schemes. Parliament is being asked to “do something!”. We have seen this movie in India before. Laws are enacted as a knee-jerk response to an event. Quick and dirty responses are poorly thought through, . . . → Read More: Addressing ponzi schemes: the three parts of the solution strategy

Regulatory strategy for savings/investment schemes, that would address ponzi schemes

by Suyash Rai and Smriti Parsheera

The first task in dealing with ponzi schemes is correctly defining the scope of financial regulation. Once a firm is classified as a financial service provider, the appropriate regulator must choose a regulatory strategy for it. Assuming SEBI had clear jurisdiction with Sahara or MMM, what would SEBI . . . → Read More: Regulatory strategy for savings/investment schemes, that would address ponzi schemes

Investigating ponzi schemes: A malady

by Shubho Roy.

What has happened?

SEBI was investigating Saradha for more than 3 years before the deposit schemes of the company collapsed (See here). Saradha seems to have used two methods to delay the investigation:

When SEBI asserted its authority to stop Saradha group from collecting money, Saradha challenged the jurisdiction of SEBI . . . → Read More: Investigating ponzi schemes: A malady

Correctly defining the scope of financial regulation so as to block ponzi schemes

by Smriti Parsheera and Suyash Rai.

Attack of the ponzi schemes

The Saradha Group has gained notoriety in recent weeks with outstanding public deposits reportedly exceeding Rs.200 billion. There was anger and panic. The state government has stepped in with partial redress.

As we watch this saga unfold, there may be another crisis waiting . . . → Read More: Correctly defining the scope of financial regulation so as to block ponzi schemes

Who is in charge of fiscal policy and tax policy?

In any country, various arms of government like to indulge in taxation of their own choice, and in setting up little treasuries that they control. However, it is quite clear that there must be only one treasury, and only one authority that determines taxation, through only one Finance Act.

In the Economic Times today, . . . → Read More: Who is in charge of fiscal policy and tax policy?

Sugar: Letting the invisible hand work

by Apoorva Gupta.

The recent announcement that dismantled the levy and monthly release mechanisms, in the sugar industry, will make the industry more efficient and competitive. But much remains to be done. This is a good time to look at the government interventions in this industry, the implications of recent decisions, and the way . . . → Read More: Sugar: Letting the invisible hand work

Obtaining liquidity for illiquid stocks

The problem While there are thousands of listed companies in India, for all practical purposes, stock market liquidity is the exclusive preserve of large companies. For small securities, the conventional continuous market presents daunting problems of liquidity. In conventional continuous trading, the price is made by the orders that come in from one . . . → Read More: Obtaining liquidity for illiquid stocks

Important work by cobrapost that illuminates high-powered incentives

The investigative journalism by cobrapost, their videos, and Monika Halan in Mint add up to an important story. Most of us have enormous respect for the achievements of Axis Bank, HDFC Bank and ICICI Bank. But as Monika emphasises, there are also genuine problems there. We saw it first with the hard-driving mis-selling . . . → Read More: Important work by cobrapost that illuminates high-powered incentives

Unanticipated consequences of Finance Bill provisions on securitisation

by Bindu Ananth and Kshama Fernandes

Over 2006-12, RBI and SEBI have created a strong and conducive regulatory environment for securitisation, listing of securitised debt instruments, and standards of transparency and reporting. Securitisation volumes have picked up and we recently witnessed the first listed transaction.

In October 2011, the income tax authorities issued a . . . → Read More: Unanticipated consequences of Finance Bill provisions on securitisation