oppn parties How To Use Public Money As Your Own

News Snippets

  • EMI's set to rise after the RBI hikes key policy rate
  • Calcutta HC says that the right to privacy does not end with the death of a person
  • Supreme Court says that a delayed order of preventive detention makes it invalid
  • Shashi Tharoor posts an erronous map of India in his manifesto, rectifies the error after criticism
  • Sonia Gandhi to take a call on who will be Rajasthan chief minister
  • Mallikarujun Kharge to be the new candidate to oppose Shashi Tharoor in the Congress presidential elections
  • RBI says that the September inflation rate may be higher than 7%
  • RBI hikes key rates by 50bps, downwardly revises FY23 growth rate to 7% from 7.2% earlier
  • Stocks recover well on Friday: Sensex gains 1016 points to0 57426 and Nifty 276 points to 17094
  • Mirabai Chanu wins gold easily at the National Games
  • In a first, the Supreme Court recognizes marital rape, although for the limited purpose of allowing married women the right of abortion up to 24 weeks if they conceived as a result of forced sex by their husbands
  • Air India cuts discounts on base fare to students and senior citizens from 50% to 25%
  • Mallikarjun Kharge and Digvijay Singh are being touted as frontrunners to take on Shashi Tharoor in the elections for the post of Congress president
  • Sonia Gandhi will decide who will be Rajasthan CM if she feels there is a need to change guard after the near-rebellion by MLAs in the state
  • Ashok Gehlot bowed out of the race for being Congress president after meeting Sonia Gandhi
RBI hikes key rates by 50bps, stocks jump and recover 50% of the losses incurred in the last few session
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How To Use Public Money As Your Own

By A Special Correspondent

Whom do you trust with your money nowadays? India is famous for over-regulating all its sectors and having a watchdog for each one of them. Yet scams after scams surface with unfailing regularity to bring down investor confidence to its lowest.

The latest to join the bandwagon of those who treat public money as their own is Karvy Stock Broking Limited. Market regulator Sebi has banned the company from doing fresh business for allegedly illegally using the money and securities belonging to its clients to fund its real estate arm, Karvy Realty India Limited. Karvy Stock Broking has over two lakh clients.

The matter came to light after the National Stock Exchange did a routine inspection of its books. It reported that Karvy Stock Broking had transferred a sum of Rs 1096cr to Karvy Realty by misusing the power of attorney given by its clients to make deals on their behalf.

This is a shocking matter. If the allegations are found to be true, Karvy not only violated provisions of the Companies Act, but it also cheated its clients and misused the trust they placed in it. It will therefore face punitive action under the criminal laws in addition to the other applicable laws.

Earlier, NBFCs came under the scanner when IL&FS went under. In that case, the role of the chartered accountancy firms and rating agencies was also found to be not above board. Then PMC Bank and DHFL went bust. Again, the role of those who are mandated to raise questions in the first instance was found to be suspicious. It seems that the Indian financial sector is under siege and no one knows how to set things right.

This brings us to the main question. Why do the plethora of rules and regulations fail to prevent these frauds? Why are they always discovered when the deed has been done? Why do we not have inbuilt checks to prevent them from taking place in the first case? If chartered accountants do not alert the regulators about divergences in company accounts, who will? If rating agencies do not provide the correct picture of a company's health to the investors, who will? It seems that despite all systems being in place, the Indian investor is being taken for a ride and is more likely to lose money by investing after getting incorrect or cooked-up information.