Panel submits report on badla system

The G.S. Patel committee, constituted by SEBI, has submitted its report calling for the introduction of a modified form of forward trading with prudential checks and balances. The committee recommended a daily margin of 15 per cent on gross outstandings of a broker and doubling the present capital adequacy norms. It noted that depressed market conditions, which saw a decline in prices of more than 1,00,000 crores, adversely affected public sector divestment. Resumption of forward trading would have to be preceded by screen-based trading to ensure transparency and prevent misuse.

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Development finance institutions have played a constructive role in establishing India's industrial base. However, these institutions seem to have moved away from their developmental role and are getting entangled deeper in management and control of private sector industries. Corporate circles have been pleading for a re-examination of the role and appointment of nominee directors to avoid day-to-day interference in company operations. Furthermore, some argue that financial institutions should keep their funds rolling by disposing of shares with a ready market. The concept of growth or mutual funds has yet to take root in the country, but such funds could prove successful in mobilising and canalising community savings for industrial development.

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