Make one regulation for merchant bankers: Sebi panel

MUMBAI: A Sebi-appointed panel has suggested that the Merchant Bankers (MB) Rules, 1992, and Merchant Bankers Regulations, 1992, should be revised to have a single regulation and MBs should be permitted to conduct fund and non-fund based activities.
Underwriting activity should also be permitted under the respective regulations for MBs, brokers and banks, the panel headed by Shitin Desai, vice-chairman & managing director of DSP Merrill Lynch, said in its report.
The regulatory framework for MBs has been in operation for 10 years and Sebi had formed the panel following representations to review these regulations, Sebi said in a release here on Tuesday.
The merchant bankers should be allowed to conduct fund based and non-fund based activities in line with the changing market conditions, the panel said, adding this would enable them to take up activities such as margin lending, insurance broking.
"For merchant bankers to take up fund based activities, the net worth requirements should be defined and minimum capital base be pegged at Rs 10 crore on continuous basis,� the panel said.
These regulations should have the provisions enabling merchant bankers to seek advance ruling in various matters, it said, adding that liabilities should be brought in line with the latest regulations for imposing monetary penalties.
The panel said processing fees should be levied and adjusted against the registration fee, whose renewal should be automatic on payment of the stipulated fee to avoid duplication of work.
The merchant banking regulations should provide for definition of an associate, it said.
The provisions concerning appointment of lead merchant bankers and restriction on appointment of lead mangers should be deleted as they are very operative provisions and were covered under the respective regulations, the panel added.