Annual report sebi

This Report is in conformity with the format as per the Securities
and Exchange Board of India (Annual Report) Rules, 1994,
notiﬁed in Oﬃcial GazeĴe on April 7, 1994

MEMBERS OF THE BOARD
(As on March 31, 2014)
Appointed under Section 4(1) (a) of the SEBI Act, 1992 (15 of 1992)
U. K. SINHA
CHAIRMAN
Appointed under Section 4(1) (d) of the SEBI Act, 1992 (15 of 1992)
PRASHANT SARAN
WHOLE TIME MEMBER
RAJEEV K. AGARWAL
WHOLE TIME MEMBER
S. RAMAN
WHOLE TIME MEMBER
P. C. CHHOTARAY
PART TIME MEMBER
Nominated under Section 4(1) (b) of the SEBI Act, 1992 (15 of 1992)
DR. ARVIND MAYARAM
Finance Secretary
Ministry of Finance
Government of India
NAVED MASOOD
Secretary
Ministry of Corporate Aﬀairs
Government of India

MEMBERS OF THE SEBI BOARD
(As on March 31, 2014)
U. K. SINHA
Chairman
PRASHANT SARAN
Whole Time Member
RAJEEV K. AGARWAL
Whole Time Member
S. RAMAN
Whole Time Member
P. C. CHHOTARAY
Part Time Member
DR. ARVIND MAYARAM
Finance Secretary
Ministry of Finance
Government of India
NAVED MASOOD
Secretary
Ministry of Corporate Aﬀairs
Government of India

CHAIRMAN, WHOLE TIME MEMBERS AND
EXECUTIVE DIRECTORS
Left to Right :
Sitting : Shri S. Raman, Whole Time Member; Shri Prashant Saran, Whole Time Member;
Shri U K Sinha, Chairman; Shri Rajeev K Agarwal, Whole Time Member.
Standing : Shri Ananta Barua, Executive Director; Shri R K Padmanabhan, Executive Director;
Shri J Ranganayakulu, Executive Director; Shri SVMD Rao, Executive Director;
Shri S. Ravindran, Executive Director; Shri Gyan Bhushan, Executive Director;
Shri P K Nagpal, Executive Director;

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CONTENTS
List of Boxes...............................................................................................................................................vi
List of Tables ............................................................................................................................................ vii
List of Charts..............................................................................................................................................xi
Abbreviations ...........................................................................................................................................xii
PART ONE: POLICIES AND PROGRAMMES
1. REVIEW OF THE GENERAL MACRO-ECONOMIC ENVIRONMENT AND THE
INVESTMENT CLIMATE ..............................................................................................................1
2. REVIEW OF POLICIES AND PROGRAMMES
I. Primary Securities Market...................................................................................................13
II. Secondary Securities Market...............................................................................................20
III. Mutual Funds........................................................................................................................36
IV. Intermediaries Associated with Securities Market..........................................................38
V. Foreign Institutional Investment........................................................................................43
VI. Other Policies and Programmes having a bearing on the working of
Securities Market..................................................................................................................46
VII. Assessment and Prospects ..................................................................................................51
PART TWO: REVIEW OF WORKING AND OPERATIONS OF THE SECURITIES AND
EXCHANGE BOARD OF INDIA IN THE SECURITIES MARKET
1. PRIMARY SECURITIES MARKET
I. Resource Mobilisation through Public and Rights Issues..............................................56
II. Resource Mobilisation through QIP and IPP ...................................................................61
III. Resource Mobilisation through Preferential Allotment..................................................63
IV. Resource Mobilisation through Private Placement in Corporate Debt ........................64
2. SECONDARY SECURITIES MARKET
I. Equity Market .......................................................................................................................65
II. Performance of Major Stock Indices and Sectoral Indices..............................................69
III. Turnover in Indian Stock Market.......................................................................................71
IV. Market Capitalisation ..........................................................................................................75
V. Stock Market Indicators.......................................................................................................76
VI. Volatility in Stock Markets..................................................................................................79
VII. Trading Frequency ...............................................................................................................82
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VIII. Activities of Stock Exchanges .............................................................................................83
IX. Dematerialisation .................................................................................................................86
X. Derivatives Segment ............................................................................................................88
3. MUTUAL FUNDS..........................................................................................................................98
4. INTERMEDIARIES ASSOCIATED WITH SECURITIES MARKET.................................104
I. Portfolio Managers.............................................................................................................104
II. Alternative Investment Funds..........................................................................................105
5. FOREIGN INSTITUTIONAL INVESTMENT.......................................................................106
6. OTHER ACTIVITIES HAVING A BEARING ON THE WORKING OF SECURITIES
MARKET........................................................................................................................................112
I. Corporate Bond Market.....................................................................................................112
II. Wholesale Debt Market .....................................................................................................115
PART THREE: FUNCTIONS OF SEBI IN RESPECT OF MATTERS SPECIFIED IN SECTION
11 OF SEBI ACT, 1992
1. REGULATION OF BUSINESS IN STOCK EXCHANGES..................................................118
I. Recognition of Stock Exchanges.......................................................................................118
II. Trading and Settlement Practices at Stock Exchanges ..................................................119
III. Memorandum of Understanding (MoU) between Stock Exchanges..........................120
IV. Steps taken by SEBI to ring-fence MCX-SX ....................................................................120
V. Exit of Stock Exchange.......................................................................................................121
VI. Measures adopted for Regulation of Stock Exchanges.................................................122
2. REGISTRATION AND REGULATION OF WORKING OF INTERMEDIARIES
ASSOCIATED WITH THE SECURITIES MARKET ............................................................122
I. Streamlining the Process of Initial / Permanent Registration of Intermediaries.......123
II. Measures for Regulation of Intermediaries....................................................................124
III. Registration of Stock Brokers............................................................................................124
IV. Registration of Sub-brokers ..............................................................................................127
V. Registration of Other Intermediaries...............................................................................128
VI. Registration of Foreign Institutional Investors, Sub-Accounts and Custodians.......129
VII. Registration of Venture Capital Funds and Alternative Investment Funds ..............130
VIII. Registration of Portfolio Managers and Investment Advisers.....................................133
CONTENTS
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3. REGISTRATION AND REGULATION OF WORKING OF COLLECTIVE
INVESTMENT SCHEMES INCLUDING MUTUAL FUNDS ............................................134
I. Registration of Collective Investment Schemes.............................................................134
II. Inspection of Collective Investment Schemes ................................................................134
III. Regulatory actions against Collective Investment Schemes ........................................134
IV. Registration and Regulation of Mutual Funds...............................................................139
4. PROMOTION AND REGULATION OF SELF REGULATORY ORGANISATIONS....140
5. FRAUDULENT AND UNFAIR TRADE PRACTICES..........................................................140
I. Types of fraudulent and unfair trade practices..............................................................140
II. Fraudulent and unfair trade practices cases during 2013-14.......................................141
III. Steps taken to prevent the occurrence of fraudulent and unfair trade practices......150
6. INVESTOR EDUCATION AND TRAINING OF INTERMEDIARIES............................151
I. Investor Education .............................................................................................................151
II. Training of Intermediaries.................................................................................................152
III. Financial Education............................................................................................................154
IV. Investor Grievance Redressal ...........................................................................................156
V. Regulatory action against companies and their directors for non-redressal of
investor grievances.............................................................................................................157
VI. Issuance of No-objection Certificate................................................................................157
7. PROHIBITION OF INSIDER TRADING...............................................................................158
I. Types of Insider trading practices....................................................................................158
II. Insider trading cases during 2013-14...............................................................................158
III. Steps initiated to curb Insider Trading practices ...........................................................164
8. SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS ..................................164
I. Open Offer...........................................................................................................................164
II. Buyback................................................................................................................................166
9. INFORMATION CALLED FROM, INSPECTION UNDERTAKEN, INQUIRIES
AND AUDIT OF STOCK EXCHANGES AND INTERMEDIARIES AND SELF
REGULATING ORGANISATIONS CONDUCTED BY SEBI ............................................167
I. Inspection of Stock Exchanges, Depositories and Clearing Corporations.................167
II. Inspection of Market Intermediaries……..………..………..………..………..… .........168
III. Prevention of Money Laundering....................................................................................170
CONTENTS
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10. DELEGATED POWERS AND FUNCTIONS..........................................................................172
11. FEES AND OTHER CHARGES.................................................................................................173
12. RESEARCH AND STUDIES......................................................................................................175
I. Research Activities .............................................................................................................175
II. Systemic Stability Unit ......................................................................................................175
III. Academic Interactions .......................................................................................................176
IV. International Research Conference..................................................................................176
V. New Research Initiatives...................................................................................................176
13. OTHER FUNCTIONS .................................................................................................................177
I. Surveillance .........................................................................................................................177
II. Investigation........................................................................................................................179
III. Enforcement of Regulations..............................................................................................184
IV. Prosecution..........................................................................................................................191
V. Litigations, Appeals and Court Pronouncements .........................................................194
VI. Consent and Compounding .............................................................................................211
VII. The Recovery Proceedings................................................................................................212
VIII. Regulatory Changes...........................................................................................................213
IX. Right To Information Act, 2005.........................................................................................221
X. Parliament Questions.........................................................................................................223
XI International Co-operation ...............................................................................................224
XII. National Institute of Securities Markets..........................................................................237
PART FOUR: ORGANISATIONAL MATTERS OF SEBI
1. SEBI BOARD.................................................................................................................................241
2. AUDIT COMMITTEE.................................................................................................................241
3. ORGANISATION RESTRUCTURING CELL AND PROJECT MANAGEMENT
OFFICE ...........................................................................................................................................242
4. HUMAN RESOURCES ...............................................................................................................242
I. Staff Strength, Recruitment, Resignation........................................................................243
II. Benefits.................................................................................................................................243
III. Promotions ..........................................................................................................................243
IV. Strengthening of Regional/Local Offices ........................................................................243
CONTENTS
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V. Job Rotation.........................................................................................................................243
VI. Disciplinary Matters...........................................................................................................243
VII. Training and Development ...............................................................................................244
VIII. Internship.............................................................................................................................244
IX. Extracurricular activities within SEBI .............................................................................245
X. Initiatives in the realm of corporate social responsibility ............................................245
XI. Scheme for recognizing and rewarding academic excellence of children of
employees............................................................................................................................245
5. PROMOTION OF OFFICIAL LANGUAGE...........................................................................245
I. Bilingualisation...................................................................................................................245
II. Rajbhasha Competitions....................................................................................................245
III. Aaj Ka Shabd ......................................................................................................................245
IV. Hindi Noting and Hindi Quotes .....................................................................................246
V. Incentive Schemes ..............................................................................................................246
VI. Hindi Workshops ...............................................................................................................246
VII. Rajbhasha Meetings and Seminars ..................................................................................246
VIII. Investor Website and SCORES ........................................................................................246
IX. Regional Offices..................................................................................................................246
6. LOCAL OFFICES…….…….…….…….…….…….…….…….…….…….…….…...................246
7. FACILITIES MANAGEMENT…….…….…….…….…….…….…….…….……...................247
8. VIGILANCE CELL…….…….…….…….…….…….…….…….…….…….…….....................247
9. INFORMATION TECHNOLOGY ............................................................................................247
I. Implementation of unified communication and up-gradation of SEBI Network.....247
II. Disaster Recovery Drill......................................................................................................248
III. Software for Investigation Department...........................................................................248
IV. Connectivity to local offices..............................................................................................248
V. CIS Complaint System.......................................................................................................248
VI. System for managing Resource Persons .........................................................................248
VII. Software development for Recovery Division ...............................................................248
VIII. Implementation of Centralised Biometric Attendance System ...................................248
CHRONOLOGY OF MAJOR POLICY INITIATIVES BY SEBI .................................................249
CONTENTS
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LIST OF BOXES
Box No. Name Page No.
1.1 Compliance with Minimum Public Shareholding Requirement ...........................................16
1.2 Powers conferred on SEBI vide the Securities Laws (Amendment) Ordinance, 2014 ........19
1.3 Institutional Trading Platform.....................................................................................................21
1.4 Exchange Traded Cash Settled Interest Rate Futures (IRF) on 10 year Government of India
Security ...........................................................................................................................................22
1.5 Monetary relief from Investor Protection Fund (IPF) for investors.......................................24
1.6 International Research Conference on HFT, Algo and Co-location.......................................25
1.7 Principles of Financial Market Infrastructures (PFMIs) ..........................................................27
1.8 Third Meeting of the International Advisory Board of SEBI..................................................35
1.9 Standardization and Simplification of Procedures for Transmission of Securities.............39
1.10 Foreign Portfolio Investor (FPI) Regime....................................................................................43
2.1 Testing of software used in or related to trading and risk management..............................86
3.1 Standard Operating Procedure (SOP) for stock exchanges for suspension and revocation
of trading of shares of listed entities for non-compliance of certain listing conditions....122
3.2 Simplification of Registration Requirements for Stock Brokers...........................................123
3.3 SEBI (Alternative Investment Funds) Regulations, 2012.......................................................130
3.4 SEBI (Investment Advisers) Regulations, 2013.......................................................................133
3.5 IOSCO’s Asia-Pacific Regional Committee Meeting, New Delhi.........................................226
3.6 Conference on Investor Protection in Capital Markets .........................................................231
3.7 Asian Roundtable and SEBI-OECD Conference on Corporate Governance in
Mumbai - February, 2014 ...........................................................................................................234

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LIST OF TABLES
Table No. Name Page No.
1.1 National Income (at 2004-05 prices) ...................................................................................3
1.2 GDP (at Factor Cost) by Economic Activity (at 2004-05 prices) .....................................4
1.3 Index of Industrial Production (Base: 2004-05=100).........................................................4
1.4 Gross Domestic Savings and Investment ..........................................................................7
1.5a Demat Statistics ...................................................................................................................12
1.5b Number of Listed Companies...........................................................................................12
1.6 Growth of Turnover in Various Segments in Indian Stock Market .............................12
1.7 Value of Assets of Foreign Investors reported by custodians.......................................12
2.1 Resource Mobilisation through Public and Rights Issues.............................................57
2.2 SME Platform.......................................................................................................................58
2.3 Sector-wise Resource Mobilisation...................................................................................58
2.4 Size-wise Resource Mobilisation ......................................................................................59
2.5 Mega Issues in 2013-14.......................................................................................................60
2.6 Industry-wise Resource Mobilisation ..............................................................................61
2.7 Resource Mobilisation through QIP and Conforming to MPS through IPP..............62
2.8 Offer for Sale through Stock Exchange Mechanism to conform to MPS ....................63
2.9 Resource Mobilisation through Preferential Allotment ................................................63
2.10 Private Placement of Corporate Bonds Reported to BSE and NSE..............................64
2.11 Major Indicators of Indian Stock Markets.......................................................................67
2.12 Major Stock Indices and their Percentage Variation ......................................................69
2.13 Sectoral Stock Indices and their Returns .........................................................................70
2.14 Exchange-wise Cash Segment Turnover .........................................................................72
2.15 Turnover at BSE ,NSE and MCX-SX: Cash Segment......................................................73
2.16 City-wise Turnover of Top 20 Cities in Cash Segment during 2013-14.......................74
2.17 Market Capitalisation at BSE.............................................................................................75
2.18 Market Capitalisation at NSE............................................................................................76
2.19 Select Ratios Relating to Stock Market.............................................................................77
2.20 Price to Earnings Ratio.......................................................................................................77
2.21 Price to Book-Value Ratio...................................................................................................78
2.22 Average Daily Volatility of Benchmark Indices..............................................................80
2.23 Trends in Daily Volatility of International Stock Market Indices during 2013-14.....81
2.24 Trading Frequency of Listed Stocks .................................................................................82
2.25 Share of Brokers, Securities and Participants in Cash Market Turnover ....................83
2.26 Trading Statistics of Stock Exchanges in the Cash Segment.........................................84
2.27 Turnover of Subsidiaries of Stock Exchanges .................................................................85
2.28 Depository Statistics ...........................................................................................................87

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2.29 Depository Statistics: Debenture/Bonds and Commercial Paper.................................87
2.30 Cities According to Number of DP Locations: Geographical Spread .........................88
2.31 Trends in Turnover and Open Interest in Equity Derivatives Segment......................89
2.32 Product-wise Derivatives Turnover at NSE, BSE and MCX-SX...................................90
2.33 Trends in Index Futures at NSE, BSE and MCX-SX.......................................................91
2.34 Trends in Single Stock Futures at NSE, BSE and MCX-SX............................................92
2.35 Trends in Index Options at NSE, BSE and MCX-SX ......................................................93
2.36 Trends in Stock Options at NSE and BSE ........................................................................93
2.37 Shares of Various Classes of Members in Derivatives Turnover at NSE, BSE
and MCX-SX ........................................................................................................................94
2.38 Trends in the Currency Derivatives Segment .................................................................96
2.39 Product-wise Market Share in Currency Derivatives Volume.....................................97
2.40 Trends in Interest Rate Derivatives at NSE and BSE......................................................98
2.41 Mobilisation of Resources by Mutual Funds ..................................................................99
2.42 Sector-wise Resource Mobilisation by Mutual Funds during 2013-14......................100
2.43 Scheme-wise Resource Mobilisation and Assets under Management by Mutual
Funds as on March 31, 2014.............................................................................................101
2.44 Number of Schemes by Investment Objective as on March 31, 2014 ........................102
2.45 Trends in Transactions on Stock Exchanges by Mutual Funds ..................................102
2.46 Unit holding pattern of all mutual funds as on March 31, 2014 ................................103
2.47 Unit holding pattern of private and public sector mutual funds as on
March 31, 2014...................................................................................................................104
2.48 Assets Managed by Portfolio Managers........................................................................105
2.49 Cumulative amount mobilised by AIFs (as at the end of 31st March 2014).............105
2.50 Cumulative Net Investments by VCFs and FVCIs.......................................................106
2.51 Category-wise Investors in VCFs ...................................................................................106
2.52 Investment by Foreign Institutional lnvestors..............................................................107
2.53 Investments by Foreign Institutional lnvestors (Equity & Debt)...............................108
2.54 QFI Investments during 2013-14.....................................................................................109
2.55 Allocation of Debt Investment limits to FIIs and Sub-accounts during 2013-14 .....109
2.56 Debt Utilisation Status as on March 31, 2014................................................................110
2.57 Notional Value of Open Interest of Foreign Institutional investors in
Derivatives during 2013-14..............................................................................................111
2.58 Notional Value of Participatory Notes (PNs) Vs Assets Under Management
of FIIs ..................................................................................................................................112
2.59 Secondary Market: Corporate Bond Trades..................................................................113
LIST OF TABLES

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2.60 Settlement of Corporate Bonds .......................................................................................114
2.61 Business Growth on the Wholesale Debt Market Segment of NSE and BSE ...........115
2.62 Instrument-wise Share of Securities Traded in Wholesale Debt Market
Segment of NSE and BSE.................................................................................................116
2.63 Share of Participants in Turnover of Wholesale Debt Market Segment of NSE ......117
3.1 Stock Exchanges with Permanent Recognition.............................................................118
3.2 Renewal of Recognition Granted to Stock Exchanges during 2013-14......................119
3.3 Registered Stock Brokers .................................................................................................124
3.4 Applications under the Process of Registration in Cash Segment.............................125
3.5 Classification of Stock Brokers in Cash Segment on the Basis of Ownership..........125
3.6 Number of Registered Members in Equity Derivatives Segment..............................126
3.7 Number of Registered Members in Currency Derivatives Segment.........................126
3.8 Applications under the Process of Registration in Derivative Segment...................127
3.9 Registered Sub-Brokers....................................................................................................127
3.10 Registered Intermediaries other than Stock Brokers and Sub-Brokers.....................128
3.11 Process of Registration of other Intermediaries............................................................129
3.12 Number of Registered FIIs, Sub-accounts and Custodians ........................................129
3.13 Status of Registration of FII, Sub-accounts and Custodians during 2013-14 ...........130
3.14 Registered Venture Capital Funds and Alternative Investment Funds....................130
3.15 Registered Portfolio Managers and Investment Advisers ..........................................133
3.16 Mutual Funds Registered with SEBI..............................................................................139
3.17 Trends in Awareness Programs/ Workshops Conducted by SEBI.............................151
3.18 Regional Seminars Conducted by SEBI .........................................................................152
3.19 Status of Investor Grievances Received and Redressed..............................................156
3.20 Failure to Redress Investor Grievances: Adjudication Proceedings..........................157
3.21 Status of Draft Letter of Offers for Open Offers during 2013-14................................165
3.22 Trends of Open Offers......................................................................................................165
3.23 Buyback cases during 2013-14.........................................................................................167
3.24 Inspection of Stock Brokers/Sub-brokers.......................................................................169
3.25 Inspections by Stock Exchanges......................................................................................169
3.26 Inspection of other Market Intermediaries....................................................................170
3.27 Actions by stock exchanges and depositories for AML/ CFT related deficiencies..171
3.28 Fees and other Charges....................................................................................................174
3.29 Major Market Movement during 2013-14......................................................................178
3.30 Surveillance Actions during 2013-14..............................................................................179
3.31 Trends of Investigations...................................................................................................180
LIST OF TABLES

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3.32 Category-wise Nature of Investigation..........................................................................181
3.33 Type of Regulatory actions taken during 2013-14........................................................183
3.34 Age-wise Analysis of Enforcement Actions - u/s 11, 11B and 11D of
SEBI Act, 1992 ....................................................................................................................185
3.35 Age-wise Analysis of Enforcement Actions - Enquiry Proceedings..........................186
3.36 Age-wise Analysis of Enforcement Actions - Adjudication Proceedings.................186
3.37 Age-wise Analysis of Enforcement Actions - Prosecution Proceedings...................187
3.38 Age-wise Analysis of Enforcement Actions Summary Proceedings.........................188
3.39 Enquiry and Adjudication Proceedings Initiated during 2013-14 .............................188
3.40 Enquiry and Adjudication during 2013-14....................................................................188
3.41 Pending Enforcement Actions as on March 31, 2014...................................................189
3.42 Enquiry and Adjudication Proceedings against other Intermediaries during
2013-14 ................................................................................................................................189
3.43 Prosecutions Launched ....................................................................................................191
3.44 Region-wise Data on Prosecution Cases as on March 31, 2014..................................191
3.45 Nature of Prosecutions Launched as on March 31, 2014.............................................191
3.46 Number of Prosecution Cases decided by the Courts as on March 31, 2014 ...........192
3.47 Status of Court Cases where SEBI was a Party (Subject Matter)................................194
3.48 Status of Court Cases where SEBI was a Party (Judicial Forum)...............................195
3.49 Status of Appeals before the Securities Appellate Tribunal........................................195
3.50 Disposals of Appeals by Securities Appellate Tribunal...............................................195
3.51 Status of Appeals before the Hon’ble Supreme Court.................................................196
3.52 Status of Appeals before the Hon’ble High Court .......................................................196
3.53 Receipt and Disposal of applications under Consent and Compounding Process.......211
3.54 Consent Applications filed with SEBI during 2013-14 ................................................212
3.55 Compounding Applications filed by the accused in criminal courts during
2013-14 ................................................................................................................................212
3.56 Details of Recovery Proceedings.....................................................................................213
3.57 Trends in RTI applications and First Appeal to SEBI ..................................................223
3.58 Trends in Appeals before Central Information Commission .....................................223
3.59 Parliament Queries Received and replied by SEBI during 2013-14...........................223
3.60 Data on Various References Received and Responded to during 2013-14 ...............224
3.61 Trends in Regulatory Assistance made and received by SEBI ...................................235
4.1 Board Meetings during 2013-14......................................................................................241
4.2 Promotions of Officers during the year .........................................................................243
4.3 Training Programmes during 2013-14 ...........................................................................244
LIST OF TABLES

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LIST OF CHARTS
Chart No. Name Page No.
1.1 Share of Components of GDP (at Factor Cost) .................................................................. 5
2.1 Share of Broad Category of Issues in Resource Mobilisation........................................ 57
2.2 Sector-wise Resource Mobilisation.................................................................................... 59
2.3 Movement of Benchmark Stock Market Indices.............................................................. 65
2.4 Value traded in Secondary Market (percent)................................................................... 66
2.5 Year-on-Year Returns of International Indices................................................................. 68
2.6 Movement of Sectoral Indices of BSE................................................................................ 70
2.7 Movement of Sectoral Indices of NSE............................................................................... 71
2.8 P/E Ratio of International Stock Market Indices.............................................................. 79
2.9 Annualised Volatility of International Stock Market Indices in 2013-14 ..................... 80
2.10 Derivatives Turnover vis-à-vis Cash Market Turnover.................................................. 89
2.11 Product-wise Share in Equity Derivatives Turnover at NSE and BSE ......................... 91
2.12 Participant-wise average share in F&O equity turnover in 2013-14............................. 95
2.13 Participant-wise share in equity derivative open interest at NSE at end of
the period .............................................................................................................................. 95
3.1 Trends in Financial Education Programs through Resource Persons ........................ 155
3.2 Trends of feedback for calls received in SEBI Helpline................................................ 157
3.3 Category-wise Nature of Investigation Taken up ......................................................... 181
3.4 Category-wise Nature of Investigation Cases Completed........................................... 182
3.5 Percentage share of type of Regulatory actions taken during 2013-14 ...................... 183
This Report can also be accessed on internet – http://www.sebi.gov.in
Conventions used in this Report
` : Rupees
Lakh : Hundred thousand
Crore : Ten million
Million : Ten lakh
Billion : Thousand million/hundred crore
NA : Not Available
Na : Not Applicable
p.a. : Per annum
Differences in total are due to rounding off and sometimes they may not exactly add up to
hundred per cent.
Source of Charts and Boxes where not mentioned, is SEBI.

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AAUM Average Assets Under Management
ADR American Depository Receipt
AGM Assistant General Manager
AIBI Association of Investment Bankers of India
AIF(s) Alternative Investment Fund(s)
AMC(s) Asset Management Company/Companies
AMFI Association of Mutual Funds in India
AML Anti-Money Laundering
APs Authorised Persons
ASCI Administrative Staff College of India
ASJ Additional Sessions Judge
ATR(s) Action Taken Report(s)
AUC Assets Under Custody
AUM Assets Under Management
BO Beneficial Owner
BSE Bombay Stock Exchange
CAD Current Account Deficit
CBDT Central Board of Direct Taxes
CBI Central Bureau of Investigation
CBLO Collateralized Borrowing and Lending Obligation
CBOE Chicago Board Options Exchange
CBSE Central Board of Secondary Education
CC Clearing Corporation
CCI Competition Commission of India
CCP Central Counter Party
CD(s) Certificate of Deposit(s)
CDS Credit Default Swaps
CDSL Central Depository Services (India) Limited
CFA Charted Financial Analyst
CFERM Certificate in Financial Engineering and Risk Management
CFT Countering Financing of Terrorism
CGM Chief General Manager
CIC Central Information Commission
CIIA Certificate in International Investment Analyst
CIS Collective Investment Schemes
CISA Certified Information Systems Auditor
CISM Certified Information Security Manager
CISO Chief Information Security Officer
CISSP Certified Information Systems Security Professional
ABBREVIATIONS

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CM Clearing Member
CMB Cash Management Bills
CoBoSAC Corporate Bonds and Securitization Advisory Committee
CP(s) Commercial Paper(s)
CPE Continuing Professional Education
CPI Consumer Price Index
CPSS Committee on Payments and Settlement Systems
CRA(s) Credit Rating Agency/Agencies
CRFR Committee on Rationalisation of Financial Resources
CRR Cash Reserve Ratio
CSE Calcutta Stock Exchange
CSL Certificate in Securities Law
CSO Central Statistical Office
DC(s) Division Chief(s)
DDPs Designated Depository Participants
DFIs Development Finance Institutions
DGM Deputy General Manager
DIP Disclosure and Investor Protection
DIS Delivery Instruction Slips
DISA Post Qualification Certification in Information Systems Audit
DJIA Dow Jones Industrial Average
DLP Data Leakage Protection
DMA Direct Market Access
DMS Document Management System
DP(s) Depository Participant(s)
DR Disaster Recovery
DRG Development Research Group
DRS Disaster Recovery Site
DSRC Depository System Review Committee
DT(s) Debenture Trustee(s)
DVP Delivery vs. Payment
DWBIS Data Warehousing and Business Intelligence System
ECL Eastern Coalfields Limited
ECR Export Credit Refinance
ED Executive Director/Enforcement Directorate
EDCE Equity Derivative Certification Examination
EFD Enforcement Department
EGM Extraordinary General Meeting
EOB Electronic Order Book
ABBREVIATIONS

xiv
EPFO Employee Provident Fund Organisation
ETF Enforcement Task Force
ETF(s) Exchange Traded Fund(s)
F&O Futures and Options
FAQ(s) Frequently Asked Question(s)
FATF Financial Action Task Force
FCCB(s) Foreign Currency Convertible Bond(s)
FCD Fully Convertible Debentures
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FEW Financial Education Website
FI(s) Financial Institution(s)
FIA Futures Industry Association
FII(s) Foreign Institutional Investor(s)
FIMMDA Fixed Income Money Market and Derivatives Association of India
FINRA Financial Industry Regulatory Authority
FLIS Financial Literacy and Inclusion Survey
FMC Forward Markets Commission
FMI Financial Market Infrastructure
FMP(s) Fixed Maturity Plan(s)
FPI Foreign Portfolio Investor
FPO(s) Further Public Offering(s)/Follow-on Public Offer
FRRB Financial Reporting Review Board
FRTI Financial Regulators Training Initiative
FSAP Financial Sector Assessment Programme
FSB Financial Stability Board
FSDC Financial Stability and Development Council
FSR Financial Stability Report
FSRB FATF-Style Regional Body
FSS Financial Supervisory Service, South Korea
FTIL Financial Technologies (India) Ltd
FUTP Fraudulent and Unfair Trade Practices
FVCI(s) Foreign Venture Capital Investor(s)
FY Financial Year
GAAP(s) Generally Accepted Accounting Principle(s)
GDCF Gross Domestic Capital Formation
GDP Gross Domestic Product
GDR(s) Global Depository Receipt(s)
GDS Gross Domestic Savings/Gold Deposit Scheme
ABBREVIATIONS

xv
GETF(s) Gold Exchange Traded Fund(s)
GID General Information Document
GM General Manager
GNI Gross National Income
GoI Government of India
GSE Gauhati Stock Exchange
G-Sec Government Securities
HFC(s) Housing Finance Company/Companies
HFT High Frequency Trading
HNIs High Net Worth Individuals
HRD Human Resource Development
HSD High Speed Diesel
HUF Hindu Undivided Family
IA Investment Advisers
IAD Investor Awareness Division
IAFE International Association of Financial Engineers
IAIS International Association of Insurance Supervisors
IASB International Accounting Standards Board
IBC India Business Centre
IBT Internet Based Trading
ICAI Institute of Chartered Accountants of India
ICAI-FRRB Financial Reporting Review Board of the Institute of Chartered Accountants
of India
ICCL Indian Clearing Corporation Limited
ICDR Issue of Capital and Disclosure Requirements
ICLS Indian Corporate Law Sevice
ICSI The Institute of Company Secretaries of India
ICWAI The Institute of Cost and Work Accountants of India
IDF Infrastructure Debt Fund
IDR(s) Indian Depository Receipt(s)
IEFJ International Economics and Finance Journal
IFC Infrastructure Finance Companies
IFRSs International Financial Reporting Standards
IGRC Investor Grievance Redressal Committee
IIP Index of Industrial Production
IMD Investment Management Department
IMF International Monetary Fund
IMSS Integrated Market Surveillance System
INR Indian Rupee
IOSCO International Organisation of Securities Commissions
ABBREVIATIONS

xvi
IPC Indian Penal Code
IPEF Investor Protection and Education Fund
IPF Investor Protection Fund
IPO Initial Public Offer
IPP Institutional Placement Programme
IPS Intrusion Detection and Prevention System
IPV In-Person Verification
IRAS Indian Railway Accounts Service
IRDA Insurance Regulatory and Development Authority
IRF Interest Rate Futures
IRM Information Rights Management
IRS Indian Revenue Service
ISD Integrated Surveillance Department
ISE Inter-Connected Stock Exchange
ISIN International Securities Identification Number
IT Information Technology
ITD Information Technology Department
ITeS Information Technology Enabled Services
ITF Implementation Task Force
ITP Institutional Trading Platform
JF Joint Forum
JPY Japanese Yen
JSE Jaipur Stock Exchange
KIM Key Information Memorandum
KRA KYC Registration Agency
KYC Know Your Client
L&T Larsen & Toubro
LAF Liquidity Adjustment Facility
LES(s) Liquidity Enhancement Scheme(s)
LLP Limited Liability Partnership
LSE Ludhiana Stock Exchange
LTP Last Traded Price
MB(s) Merchant Banker(s)
MCA Ministry of Corporate Affairs
MCR Monthly Cumulative Report
MCV Multi-class share Vehicles
MCX Multi-Commodity Exchange of India Ltd
MCX-SX MCX Stock Exchange
MCX-SX CCL MCX-SX Clearing Corporation Limited
ABBREVIATIONS

xvii
ABBREVIATIONS
MD Managing Director
MF(s) Mutual Fund(s)
MFAC Advisory Committee on Mutual Funds
MII(s) Market Infrastructure Institution(s)
MMoU Multilateral Memorandum of Understanding
MMTC Minerals and Metals Trading Corporation of India
MoF Ministry of Finance
MoU Memorandum of Understanding
MPS Minimum Public Shareholding
MPSE Madhya Pradesh Stock Exchange Limited
MSE Madras Stock Exchange
MSF Marginal Standing Facility
MWPL Market Wide Position Limit
NAV Net Asset Value
NBFCs Non-Banking Financial Companies
NCAER National Council of Applied Economic Research
NCD Non Convertible Debenture
NCFE National Centre for Financial Education
NDP Net Domestic Product
NDUs Non Disposal Undertakings
NFLAT National Financial Literacy Assessment Test
NFLIS National Financial Inclusion Survey
NGO Non-Government Organisation
NHB National Housing Bank
NHPC National Hydroelectric Power Corporation
NIFM National Institute of Financial Management
NII(s) Non-Institutional Investor(s)
NISM National Institute of Securities Markets
NNI Net National Income
NoC No Objection Certificate
NRI Non-Resident Indian
NRO Northern Regional Office
NSCCL National Securities Clearing Corporation Limited
NSDL National Securities Depository Limited
NSE National Stock Exchange
NSEL National Spot Exchange Ltd
NSFE National Strategy for Financial Education
NSMD Network for Securities Markets Data
NTPC National Thermal Power Corporation

xviii
ABBREVIATIONS
OCB Overseas Corporate Body
OCRES Online CPE Registration and Enrolment System
ODI(s) Offshore Derivative Instrument(s)
OECD Organisation for Economic Co-operation and Development
OFCD(s) Optionally Fully Convertible Debenture(s)
OFS Offer for Sale
OIAE Office of Investor Assistance and Education
OMOs Open Market Operations
OTC Over the Counter
OTCEI Over the Counter Exchange of India
P.A. Per Annum
P/B Ratio Price to Book-Value Ratio
P/E Ratio Price to Earnings Ratio
PAN Permanent Account Number
PCC Protected Cell Companies
PCD Partly Convertible Debenture
PCI Press Council of India
PE Private Equity
PF(s) Provident Fund(s)
PFI Public Financial Institution
PFMIs Principles of Financial Market Infrastructures
PFRDA Pension Fund Regulatory and Development Authority
PFUTP Prohibition of Fraudulent and Unfair Trade Practices
PGCSM Post Graduate Certificate in Securities Markets
PGPSM Post Graduate Programme in Securities Markets
PID Public Interest Directors
PIS Portfolio Investment Scheme
PIT Prohibition of Insider Trading
PMAC Primary Market Advisory Committee
PMLA Prevention of Money Laundering Act
PN Participatory Notes
PSE Pune Stock Exchange
PSUs Public Sector Undertaking(s)
PTM Proprietary Trading Member
QARC Qualified Audit Review Committee
QDP Qualified Depository Participant
QE Quantitative Easing
QFI(s) Qualified Foreign Investor(s)
QIB(s) Qualified Institutional Buyer(s)

xix
QIP(s) Qualified Institutions’ Placement(s)
RAIN Registrars Association of India
RBI Reserve Bank of India
RCG Regional Committee Group
RDDBFI Recovery of Debts due to Banks and Financial Institutions
RE Revised Estimate
REER Real Effective Exchange Rate
REIT Real Estate Investment Trust
RFQ Request for Quote
RGESS Rajiv Gandhi Equity Savings Scheme
RHP Red Herring Prospectus
RII Retail Individual Investors
RMRC Risk Management Review Committee
RP(s) Resource Person(s)
RRD Regulatory Research Division
RSE(s) Regional Stock Exchange(s)
RTI Right to Information
RTI/STA(s) Registrar to an Issue and Share Transfer Agent(s)
SA(s) Sub Account(s)
SAARC South Asian Association for Regional Co-operation
SARFAESI Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act
SAST Substantial Acquisition of Shares and Takeovers
SAT Securities Appellate Tribunal
SC(R)A Securities Contracts (Regulation) Act
SCG School for Corporate Governance
SCI School for Certification of Intermediaries
SCM Self Clearing Member
SCN Show Cause Notice
SCODA SEBI Committee on Disclosures and Accounting Standards
SCORES SEBI Complaints Redress System
SCRR Securities Contracts (Regulation) Rules
SCSB(s) Self Certified Syndicate Bank(s)
SDIs Securitised Debt Instruments
SEBI Securities and Exchange Board of India
SEC Securities and Exchange Commission
SECC Stock Exchanges and Clearing Corporations
SGF Settlement Guarantee Fund
SHA Shareholders’ Agreement
ABBREVIATIONS

xx
SICCE Securities Intermediaries Compliance (Non-Fund) Certification Examination
SID Scheme Information Document
SIDD Separately Identifiable Department or Division
SIEFL School for Investor Education and Financial Literacy
SLB Securities Lending and Borrowing
SLR Statutory Liquidity Ratio
SMAC Secondary Market Advisory Committee
SME Small and Medium Enterprises
SMS Short Message Services
SOP Standard Operating Procedure
SPV(s) Special Purpose Vehicle(s)
SRO(s) Self Regulatory Organisation(s)
SRSS School for Regulatory Studies and Supervision
SSE School for Securities Education
SSIR School for Securities Information and Research
STT Securities Transaction Tax
STWT Securities Trading using Wireless Technology
SWFs Sovereign Wealth Funds
TAC Technical Advisory Committee
T-Bills Treasury Bills
TC Technical Committee
TER Total Expense Ratio
TM Trading Member
UAT User Acceptance Test
UIDAI Unique Identification Authority of India
UIN Unique Identity Number
UK United Kingdom
UPSE Uttar Pradesh Stock Exchange Limited
USA United States of America
USD United States Dollar
USE United Stock Exchange
UTI Unit Trust of India
VaR Value at Risk
VCF(s) Venture Capital Fund(s)
VPN Virtual Private Network
WDM Wholesale Debt Market
WFE World Federation of Exchanges
WPI Wholesale Price Index
WTM Whole Time Member
ABBREVIATIONS

PART ONE: POLICIES AND PROGRAMMES
The Annual Report of the Securities
and Exchange Board of India (SEBI) for
2013-14 reviews significant developments
in securities markets in the backdrop of an
unprecedented spell of financial turbulence
transmitted by the tapering concerns, and the
subsequent restoration of normalcy in macro-
economic fundamentals. Indian economy
and financial markets came under acute
stress by the turmoil in the global financial
markets generated by the US Federal Reserve
announcements on tapering. However with
a swift and decisive policy response, India
was able to minimise the fallout on the real
economy and maintained financial stability.
SEBI Annual Report for 2013-14
articulates the policies and programmes
embarked during the financial year while
ensuring to fulfill its stated objective to
strengthen the Indian regulatory framework
of capital markets. This report has been
prepared as per the format prescribed by
the Securities and Exchange Board of India
(Annual Report) Rules, 1994. SEBI continued
to pursue its endeavour to achieve the
three statutory objectives viz. (a) protection
of the interests of investors in securities,
(b) promotion of the development of the
securities market and (c) regulation of the
securities market.
In 2013-14, SEBI continued to channelise
its efforts to achieve these objectives by
reviewing its policies, implementing fresh
initiatives, disciplining the market through a
variety of appropriate enforcement actions,
facilitating redressal of grievances of investors
and nurturing a security culture for the orderly
and expansive growth of capital market. The
major policy issues are discussed in public
domain through discussion papers to ensure
transparency, efficiency, fairness, safety and
integrity of the capital market. The various
quasi-judicial orders passed by the Board
during the year are also posted on the website.
In line with the stated objectives, this
Report provides the manner in which SEBI
discharged its responsibilities and exercised
its powers during the year in furtherance of
the objectives enshrined in (a) the Securities
and Exchange Board of India Act, 1992, (b)
the Securities Contracts (Regulation) Act,
1956 (c) the Depositories Act, 1996 and (d) the
relevant provisions of the Companies Act,
and newly enacted Companies Act, 2013. It
also covers the global developments relevant
to the Indian securities market.
1. REVIEW OF THE GENERAL
ECONOMIC ENVIRONMENT
AND THE INVESTMENT
CLIMATE
After the recovery of global economic
conditions in late 2012-13, the current
financial year unfolded an unprecedented
stress to Indian economy and markets. The
tightening of global liquidity increased
external pressures and heightened the focus
on India’s macroeconomic imbalances viz.,
high inflation, large current account and fiscal
deficitsandstructuralweaknessesparticularly
supply bottlenecks in infrastructure, power
and mining. The impact of US Federal
Reserve’s May 2013 announcement on Indian
financial markets was one of the most severe
amongst emerging markets with the rupee
depreciation weighing on the stock market,
foreign outflows from the debt market further
aggravating the forex markets and impacting
yields as also the equity market. Thus, the
global developments since May 2013 have
brought to the fore not just the stress in
the financial markets and asset prices, but
also their impact on other macroeconomic
parameters,includinggrowth,publicfinances
1

2
Annual Report 2013-14
and inflation, as also financial stability. In
the wake of intense exchange rate pressures,
stabilisation of the economy by restoring
exchange rate stability was the foremost
task. A series of exceptional monetary policy
actions were taken to tighten interest rates to
siphon off liquidity, to restrain the current
account deficit (CAD) and to improve its
financing. With the resultant improved
stability in the foreign exchange market,
exceptional liquidity and monetary measures
were normalised.
Having built the buffers in the interim,
Indian economy and markets withstood
the December 2013 tapering announcement
better than its emerging market peers. In
spite of the recent improvements in statistics,
country faces a challenging macro-economic
situation with growth slowing down,
persistent inflation and lingering structural
bottlenecks.
The growth concerns remain dominant
for Indian economy with GDP growth
recording below 5 percent for seven
successive quarters and index of industrial
production (IIP) growth stagnating for two
successive years. Even though the agriculture
outputandexportperformancestrengthened,
industrial growth continues to stagnate.
The leading indicators of the services sector
exhibited a mixed picture. During the year,
growth picked up in emerging markets, but
the momentum appeared to be weaker than
in the advanced economies mainly due to
less favourable external environment and
country specific concerns like high inflation
and wide current account deficit producing
weak investor sentiments for emerging
markets.
I. Growth
The Indian economy, which witnessed
a slowdown after a robust growth of over
8 percent in 2010-11, troughed to a decadal
low rate of 4.5 percent in 2012-13 and the
provisional estimate stood at a marginal
high of 4.7 percent in 2013-14. As per the
provisional estimates of Central Statistical
Office (CSO), Gross Domestic Product (GDP)
at factor cost at constant (2004-05) prices in
the year 2013-14 is `57,41,791 crore, as against
the first revised estimate of GDP for the year
2012-13 of `54,82,111 crore (Table 1.1).
In 2013-14, the overall growth is
expected to improve on the back of a reviving
agriculture sector, with a growth rate of 4.7
percent as compared to 1.4 percent in 2012-
13. However, Industry which recorded a
growth of 0.9 percent continues to dampen
further over the previous year. Service sector
continued to maintain its momentum over
the previous two years with a growth of 6.2
percent in 2013-14. However, sub-sectors
trade, hotels, transport and communication
recorded a sluggish growth of 3.0 percent in
2013-14.

3
Part One: Policies and Programmes
II. Agriculture
The post-monsoon rainfall and
favourable progress of Rabi crops sown
in the current financial year is expected
to boost growth prospects in agriculture
sector remarkably by 4.7 percent in 2013-14
from that of 1.4 percent seen in 2012-13. The
production of food grains is expected to rise
by 5.6 percent in 2013-14, unlike the previous
year when the production grew at 2.8 percent
(Table 1.2). However, unseasonal rains and
the possible effects of El Nino in various
parts of the country, makes the sector prone
to uncertainties for future harvests. In this
context, the ability of agriculture sector to
meet increased food demand and mounting
input prices poses a challenge.
Although share of agriculture in the
GDP accounts for approximately 14 percent
since last three years, but it is still the main
source of livelihood for majority of the rural
population. The agricultural growth had
accelerated significantly during 11th
five
year plan with an average growth rate of
3.7 percent as opposed to the achievement
of 2.4 percent in the 10th
five year plan. With
new structural changes taking place within
the sector, the 12th
five year plan (2012-17)
maintained the growth target for agriculture
at 4.0 percent.
Table 1.1: National Income (at 2004-05 prices)
(` crore)
Item 2011-12 2012-13 2013-14
(2nd Revised
Estimate)
( 1st Revised
Estimate)
(Provisional
Estimate)
1 2 3 4
A. Estimates at Aggregate Level
1. National Product
1.1 Gross National Income (GNI) at factor cost 52,01,163 54,16,659 56,73,857
(6.9) (4.1) (4.7)
1.2 Net National Income (NNI) at factor cost 45,73,328 47,28,776 49,20,183
(6.5) (3.4) (4.0)
2. Domestic Product
2.1 Gross Domestic Product (GDP) at factor cost 52,47,530 54,82,111 57,41,791
(6.7) (4.5) (4.7)
2.2 Net Domestic Product (NDP) at factor cost 4,619,695 47,94,228 49,88,116
(6.2) (3.8) (4.0)
B. Estimates at Per Capita Level
1. Population (million) 1,202 1,217 1,233
(1.3) (1.2) (1.3)
2. Per Capita NNI at factor cost (`) 38,048 38,856 39,904
(5.1) (2.1) (2.7)
3. Per Capita GDP at factor cost (`) 43,657 45,046 46,568
(4.9) (3.2) (3.4)
Notes: 1. Figures in the parentheses are percentage change over the previous year.
2. Growth rates in 2011-12 are based on growth calculated over 3rd
revised estimates of 2010-11.
Source: Central Statistical Office

4
III. Industry
The prospects of industrial sector still
remain uncertain with negative growth
rate expected at 0.1 percent in 2013-14 from
0.9 percent as observed in 2012-13 (Table
1.2). Subdued investment pattern and
low consumption demand, encompassed
by dwindling production of capital
goods and consumer durables resulted in
downfall in industrial output. Mining and
manufacturing sector continued to record
a downfall similar to the previous fiscal
year, in contrast to electricity sector which
witnessed a significant growth of 6.1 percent
in 2013-14 as opposed to 4.0 percent in
2012-13 (Table 1.3).
The Index of Industrial Production
contracted by 0.1 percent in 2013-14 when
compared with an expansion of 1.1 percent
recorded in 2012-13, led primarily by a
slowdown in core sector growth, which
stood at 2.6 percent in 2013-14 as against
3.2 percent in 2012-13. This sluggishness, in
part, reflects contraction in natural gas and
crude oil production and slow growth in all
other core industries, except electricity sector
which continues to outpace the others in the
year 2013-14.
Table 1.2: GDP (at Factor Cost) by Economic Activity (at 2004-05 prices)
(` crore)
Industry 2011-12 2012-13 2013-14 Percentage Change
over Previous Year
(2nd
Revised
Estimate)
(1st
Revised
Estimate)
(Provisional
Estimate)
2012-13 2013-14
1 2 3 4 5 6
1. Agriculture, Forestry & Fishing 7,53,832 7,64,510 8,00,548 1.4 4.7
2. Mining and Quarrying 1,10,725 1,08,328 1,06,838 -2.2 -1.4
3. Manufacturing 8,54,098 8,63,876 8,57,705 1.1 -0.7
4. Electricity, Gas and Water Supply 1,00,646 1,02,922 1,09,018 2.3 5.9
Industry (2+3+4) 10,65,469 10,75,126 10,73,561 0.9 -0.1
5. Construction 4,15,188 4,19,795 4,26,664 1.1 1.6
6. Trade, Hotels, Transport and Communication 14,02,261 14,73,353 15,17,826 5.1 3.0
7. Financing, Insurance, Real Estate and
Business Services
9,45,534 10,48,748 11,83,714 10.9 12.9
8. Community, Social and Personal Services 6,65,246 7,00,579 7,39,477 5.3 5.6
Services (5+6+7+8) 34,28,229 36,42,475 38,67,681 6.2 6.2
GDP at Factor Cost 52,47,530 54,82,111 57,41,791 4.5 4.7
Note: Construction as per RBI classification comes under services sector.
Table 1.3: Index of Industrial Production (Base: 2004-05=100)
Month
Mining
(141.57)
Manufacturing
(755.27)
Electricity
(103.16)
General
(1000.00)
2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14
Average
April-March 125.5 124.5 183.3 181.9 155.2 164.7 172.2 172.0
Growth over the corresponding period of previous year
March -2.1 -0.4 4.3 -1.2 3.5 5.4 3.5 -0.5
April-March -2.3 -0.8 1.3 -0.8 4.0 6.1 1.1 -0.1

5
Mining sector, partly accountable for
the overall contraction in industrial output,
recorded a decline of 0.8 percent in 2013-14
as against a decline of 2.3 percent in 2012-
13. The sector with 14.1 percent weight
in IIP continues to exhibit weak activity
as compared to other sectors of the IIP on
account of regulatory and environmental
concerns (Table 1.3).
Manufacturing sector, which accounts
for a significant 75.5 percent weight in IIP,
witnessed 0.8 percent contraction in the
output in the current year as compared to
1.3 percent growth in 2012-13, highlighting
the weak domestic growth impulses. In
2013-14, the number of sub-sectors of the
manufacturing sector displaying contraction
rose to 10 out of 22, including industries like
radio, TV and communication equipment,
rubber and plastics, fabricated metal
products and motor vehicles. In terms of
Use-based classification, pace of growth
of intermediate goods output rose to 3.0
percent in 2013-14 from 1.6 percent in
2012-13. The contraction recorded in
production of capital goods, a barometer of
demand, eased to 3.7 percent 2013-14, from
6.0 percent in the previous financial year.
In order to capture a better share in GDP, it
is indispensable to increase manufacturing
sector growth to 12-14 percent over the
years amidst global competitiveness and
sustainable environment, as perceived in
the National Manufacturing Policy.
The growth of electricity generation
improved to a robust 11.5 percent in February
2014 as compared to previous months of the
fiscal, led primarily by a pickup in growth
of thermal as well as hydro electricity
generation. On the whole, the sector posted
an improved growth of 6.1 percent in 2013-14
as compared to 4.0 percent growth in 2012-13,
continuing to outpace the other two sectors
in the current financial year. However, the
availability of electricity supply still remains
an area of concern, particularly in rural
areas where the per capita consumption of
electricity is mere 8 units per month.
Chart 1.1: Share of Components of GDP (at Factor Cost)

6
IV. Services
Services sector has been a major
contributor to India’s GDP and growth with
a rising share of 67.3 percent in the GDP in
2013-14 as against 66.4 percent in 2012-13.
The sector, however, is expected to grow
at 6.2 percent in 2013-14, similar to growth
observed in 2012-13 but much higher than
the other two sectors of the economy.
The sector with high growth potential
was largely hampered due to a tad increase
of 3.0 percent observed in ‘Trade, Hotels,
Transport and Communication’ sub -sector,
as compared to 5.1 percent recorded in 2012-
13. Weak consumer confidence has impacted
the sale of passenger cars, commercial
vehicles and three wheelers. Nonetheless,
the reduction in excise duty on passenger
vehicles and two wheelers, as announced in
the interim budget for 2014-15, is expected to
augur well for the sector.
‘Financing, Insurance, Real Estate and
Business Services’ sub-sector has further
increased its share in GDP from 19.1 percent
in 2012-13 to 20.3 percent in the current year.
The sub-sector continues to outperform the
other three sub-sectors while recording a
growth rate of 12.9 percent in 2013-14 as
compared to 10.9 percent observed in 2012-
13. Construction sub sector, with 7.4 percent
weight in GDP, is expected to grow at 1.6
percent in 2013-14 as against 1.1 percent
recorded in the previous financial year.
‘Community, Social and Personal
Services’ sub-sector, which contributes 13.1
percent share in GDP, is estimated to grow at
5.6 percent in the current year, slightly higher
than the growth rate of 5.3 percent achieved in
2012-13. India’s services sector has emerged
as a prominent sector over a decade in terms
of its contribution to national and states
incomes, FDI inflows and employment.
V. Savings and Investments
As per the update of Central Statistical
Office (CSO), India’s Gross Domestic Savings
as a percentage of GDP at market prices is
reflecting a downward trend since 2009-10,
sliding further to 30.1 percent in 2012-13 from
31.3 percent in 2011-12. The decrease came
primarily on the back of reduced Private
corporate savings from 7.3 percent in 2011-
12 to 7.1 percent in 2012-13 accompanied
by Household savings in physical assets
moving from 15.8 percent in 2011-12 to 14.8
percent in 2012-13, which may be attributed
to inflationary pressures experienced by
the economy for most of the year. The
mobilisation of financial savings impacted
by low deposit rates in the face of high
inflation saw a modest increase of 7.1 percent
(as a percentage of GDP at market prices) in
2012-13 from 7.0 percent in 2011-12, while
Public sector savings as a percentage of GDP
at market prices stood at 1.2 percent in 2012-
13 as well as in 2011-12. The investment too
has seen a dwindling trend, declining to 34.8
percent in 2012-13 from 35.5 percent in 2011-
12 and the peak of 36.5 percent recorded in
2009-10 and 2010-11.
The expenditure side of GDP at market
prices indicates that the aggregate demand
of the Indian economy during the year
continued to remain weak even as net exports
remained strong. Private final consumption
expenditure, a principal component of GDP
at market prices, decelerated from 17.9
percent in 2011-12 to 12.3 percent in 2012-13 in
absolute terms on account of low agricultural
production and insistent high consumer price
inflation. On the contrary, the growth rate of
government final consumption expenditure
increased marginally from 15.3 percent in
2011-12 to 15.9 percent in 2012-13 due to
fiscal consolidation.

7
In absolute terms, Gross Domestic
Savings at current prices in 2012-13 stood at
`30,43,474 crore as against `28,24,459 crore in
2011-12, registering a growth of 7.8 percent.
The savings of household sector has increased
by 7.7 percent from `20,54,737 crore in 2011-
12 to `22,12,414 crore in 2012-13. While the
savings in physical assets witnessed a modest
growth of 5.1 percent to `14,95,283 crore in
2012-13 from `14,22,541 crore in 2011-12, the
financial savings increased by 13.4 percent
from `6,32,196 crore in 2011-12 to `7,17,131
crore in 2012-13. Private corporate savings
observed a rise of 8.3 percent from `6,58,428
crore in 2011-12 to `7,13,141 crore in 2012-
13 while Public sector savings recorded a
growth of 6.0 percent in absolute terms from
`1,11,295 crore in 2011-12 to `1,17,919 crore
in 2012-13 (Table 1.4).
The slowdown in savings rate as a
percentage of GDP at market prices across
the sectors has led to further widening of
the saving-investment gap in recent years
and the same stood at 4.7 percent in 2012-
13, up from the 4.2 percent recorded in the
previous financial year. Consequently, there
has been heavy reliance on capital inflows
which increased by 27.0 percent from
`3,76,174 crore in 2011-12 to `4,77,925 crore
in 2012-13. Addressing structural policy
measures to lower inflation and facilitating
implementation of large investment projects,
while containing the fiscal deficit would cater
to reduce the savings investment imbalance.
Table 1.4: Gross Domestic Savings and Investment
S.No. Item (Amount in `crore) (Percent of GDP at market prices)
2009-10 2010-11
(3rd RE)
2011-12
(2nd RE)
2012-13
(1st RE)
2009-10 2010-11
(3rd RE)
2011-12
(2nd RE)
2012-13
(1st RE)
1 2 3 4 5 6 7 8 9
1 Household Saving
of which :
16,30,799 18,00,174 20,54,737 22,12,414 25.2 23.1 22.8 21.9
a) Financial Assets 7,74,753 7,73,859 6,32,196 7,17,131 12.0 9.9 7.0 7.1
b) Physical Assets 8,56,046 10,26,315 14,22,541 14,95,283 13.2 13.2 15.8 14.8
2 Private Corporate Saving 5,40,955 6,20,300 6,58,428 7,13,141 8.4 8.0 7.3 7.1
3 Public Sector Saving 10,585 2,01,268 1,11,295 1,17,919 0.2 2.6 1.2 1.2
4 Gross Domestic Saving 21,82,338 26,21,742 28,24,459 30,43,474 33.7 33.7 31.3 30.1
5 Net Capital Inflow 1,80,794 2,19,715 3,76,174 4,77,925 2.8 2.8 4.2 4.7
6 Gross Domestic Capital
Formation
23,63,132 28,41,457 32,00,633 35,21,399 36.5 36.5 35.5 34.8
8 Total Consumption
Expenditure (a+b)
44,78,717 52,50,459 61,67,791 69,61,191 69.1 67.5 68.5 68.8
a) Private Final
Consumption
Expenditure
37,07,566 43,60,323 51,41,896 57,72,059 57.2 56.0 57.1 57.1
b) Government Final
Consumption
Expenditure
7,71,151 8,90,136 10,25,895 11,89,132 11.9 11.4 11.4 11.8
Memo Items
Saving-Investment Balance (4-6) -1,80,794 -2,19,715 -3,76,174 -4,77,925 -2.8 -2.8 -4.2 -4.7
Public Sector Balance# -5,82,203 -4,55,180 -5,84,540 -7,04,043 -9.0 -5.8 -6.5 -7.0
Private Sector Balance# 5,29,599 3,96,343 3,77,342 5,04,791 8.2 5.1 4.2 5.0
a) Private Corporate Sector -2,45,154 -3,77,516 -2,54,854 -2,12,340 -3.8 -4.8 -2.8 -2.1
b) Household Sector 7,74,753 7,73,859 6,32,196 7,17,131 12.0 9.9 7.0 7.1
RE: Revised Estimate; #: Investment figures are not adjusted for errors and omissions.

8
VI. Current Account Deficit
The year 2013-14 for Indian economy
reflected concerns with the current account
deficit and it’s financing in the early months.
However, circumstances improved and
external risk mitigated in second half of
the year. The narrowing of CAD followed a
lower trade deficit due to the higher exports
helped by a depreciating rupee as well as
moderation in imports, by curbing the import
demand arising from gold and other non-
essential imports through tariff hikes and
administrative measures and to boost capital
flows through liberalisation and special
schemes.
India’s Current Account Deficit (CAD)
was USD 32.4 billion in 2013-14 (1.7 percent
of GDP), much lower than USD 87.8 billion
(4.7 percent of GDP) recorded in 2012-13 on
account of narrowing trade deficit and rising
net invisibles receipts. In Q4 of 2013-14, CAD
stood at USD 1.2 billion (0.2 percent of GDP)
compared to USD 4.2 billion (0.9 percent of
GDP) during Q3 of 2013-14, which is much
lower than USD 31.9 billion, a historic high
of 6.5 percent of GDP, during Q3 of 2012-13.
There has been a significant deceleration in
valuables with curbs on gold imports and this
is expected to positively impact household
financial savings and help restrain CAD.
In Indian context, sustaining CAD
to a comfortable level is not only desired
but indispensable too as it would reduce
economy’s dependence on volatile foreign
capital inflows such as portfolio investments
to fund current account deficit. This leads to
a balanced situation funded through foreign
direct investment that is highly stable.
In addition to containing the current
account deficit, efforts have also been made
to make the Indian economy more resilient by
building buffers. Foreign exchange reserves
have been replenished by mobilising USD
34 billion by way of non-resident Indian
(NRI) deposits and bank borrowings in
the international market. India’s foreign
exchange reserves, which stood at USD 303.7
billion as on March 28, 2014, are comfortable
in terms of various reserve adequacy criteria.
While India may still be vulnerable to debt
outflows on account of disorderly exit
from quantitative easing by major central
banks, this risk has been mitigated due
to the containment of the current account
deficit, reduction in the stock of the volatile
component of capital flows, and an increase
in foreign exchange reserves.
VII. Fiscal Deficit
As the elevated fiscal deficit posed
a major challenge to the economy, several
measures for fiscal consolidation were
adopted such as phased reduction of diesel
subsidies. The fiscal performance in 2012-13
was better as the actual gross fiscal deficit
declined to 4.9 percent of GDP in 2012-13
as against the budgeted level of 5.1 percent.
For 2013-14, gross fiscal deficit stood at
4.5 percent of GDP. It has been budgeted
at a further reduced level of 4.1 percent for
2014-15.
VIII.Liquidity
After tighter liquidity conditions
observed in 2012-13, the Q1 of 2013-14
witnessed considerably improved scenario
with liquidity deficit staying within the
comfort zone together with a decline in
deposit rate of SCBs, following a reduction
in the repo rate. However, to restore stability
in the foreign exchange market grounded
by capital outflows subsequent to the
announcement of tapering of US quantitative
easing programme, exceptional liquidity
measures were undertaken to tighten the

9
monetary and liquidity conditions. Hike in
Marginal Standing Facility (MSF) rate and
Cash Reserve Ratio (CRR) requirement, cap
on daily Liquidity Adjustment Facility (LAF)
borrowing and weekly auctions of cash
management bills (CMBs) were some of the
measures carried to drain out liquidity from
the economy.
Moderation of exchange rate pressures
from September 2013 onwards and evolving
macroeconomic situations significantly eased
the tight liquidity conditions of Q2 witnessing
ongoingnormalisationinexceptionalmonetary
measures. However, liquidity conditions
altered during the last quarter of 2013-14 as it
startedwithmonetarytighteninginthefirsthalf
of February 2014 owing to frictional pressures
primarily on account of government cash
balances and a rise in currency in circulation.
The situation was eased later due to injection
of additional liquidity through term repos and
forex swaps.
During the year, liquidity injection
through the Open Market Operations
(OMOs) has been to the tune of about `52,000
crore, while injecting an average daily net
liquidity of `90,600 crore through LAF, MSF
and term repos. Further to this, Export Credit
Refinance (ECR) has inducted a liquidity
of `29,400 crore during the year. In 2013-14,
the policy repo rate under the Liquidity
Adjustment Facility (LAF) has been increased
by 25 basis points to stand at 8.0 percent.
IX. Credit Growth
The credit growth decelerated in early
2013-14 owing to slack in macroeconomic
activity and deterioration in asset quality.
However, later during the year, credit
off-take accelerated on account of build-
up in credit to services and personal loan
category. Deployment of credit to industries
decelerated to 14.1 percent in 2013-14 led by
sectors like gems and jewellery, petroleum
and mining even though credit to agriculture,
food processing, construction, glass and
paper recorded a pick up.
Credit flow rate to large and medium
sector industries has been lower as compared
to micro and small industries. Improved
macroeconomic outlook besides easing of
liquidity conditions on account of rolling back
of the policy rate corridor, has moderated
the credit growth in line with the indicative
trajectory.
X. Inflation
The inflationary pressures experienced
during the financial year started moderating
from December 2013. Both WPI and CPI
inflation showed signs of easing from the
elevated levels recorded during April-
November 2013.
The y-o-y WPI inflation was 5.9 percent
in 2013-14 compared to 7.4 percent in 2012-
13. Commodity-wise break-up shows that
inflation on primary articles remained high
at 9.9 percent in 2013-14 compared to 9.8
percent in 2012-13. This was primarily due
to ascending food prices in major part of the
year due to supply-side pressures. The fuel
and power segment inflation was 10.1 percent
in 2013-14 compared to 10.3 percent in 2012-
13.Buttherewassignificantmoderationinthe
inflation of manufactured goods which was
2.9 percent in 2013-14 as against 5.4 percent
in 2012-13. As the manufactured products
constitute 64.97 percent in the WPI, their
impact on the overall moderation in inflation
level in 2013-14 has been significant.
Retail inflation measured by Consumer
Price Index (CPI) moderated in the current
year and stood at 8.9 percent as end March
2014 compared to 10.4 percent as end March

10
2013, driven by the sharp disinflation
observed in food prices primarily in last
quarter of the year. Food and beverages
group, which contributes 47.6 percent
weight in CPI, may be held accountable for
the overall CPI inflation as this segment
witnessed double digit inflation during
the year. However, second half of the
year saw moderation in CPI inflation and
the figure stood at 8.3 percent as on end
March 2014. For the Indian economy to be
on a disinflationary path guided by stable
monetary policy, it is intended to maintain
8.0 percent CPI by 2015 and further attaining
a level of 6.0 percent by 2016.
XI. Trade Balance
Cumulative value of exports in India
for the current year stood at USD 312.3
billion as against USD 300.4 billion in 2012-
13, registering a growth of 4.0 percent.
Meanwhile, imports for the current year
witnessed a decline of 8.9 percent over the
previous year with a cumulative value of
USD 450.1 billion in 2013-14 as against USD
490.7 billion in 2012-13. Consequently, India’s
trade deficit narrowed to USD 137.8 billion,
much lower than that of USD 190.3 billion in
2012-13.
Import of gold and silver in 2012-13
stood at USD 55.79 billion, which declined
to USD 33.46 billion in 2013-14 mainly due
to depreciation of the rupee and limitations
imposed by the Government on inbound
shipments of the precious metal in order
to minimize the current account deficit in
2013-14. On the contrary, India’s exports
have shown improvement during the
year, however, it could not withhold the
momentuminNovember2013andeventually
turned negative in February 2014 on account
of domestic and global factors. Improvement
in global and domestic growth prospects in
the months to come would lead to a path of
recovery in India’s exports growth.
The foreign exchange reserves
replenished during the year and reached
their highest during 2013-14 at USD 303.7
billion on March 28, 2014 indicating a rise of
USD 11.7 billion from the level of USD 292.0
billion at end March 2013 enhancing India’s
capacity to withstand spillovers from the
global economy thereby reducing the macro
instability risks.
XII. Exchange Rate
During the year, exchange rate
movement of rupee in terms of dollar
exhibited varied trends with intense pressure
in the early months and later recovery owing
to various policy reforms and narrowing of
current account deficit. The exchange rate
as on end March 2013 stood at 54.4 per USD
and remained stable in the range of 53-55 per
USD in May 2013. However, after May 2013,
the monthly average exchange rate of the
rupee started depreciating and stood at 68.36
per USD in August 2013. However, rupee
survived the US Fed tapering announcement
in December 2013 vis-a-vis peer emerging
market currencies and the exchange rate
stabilised in a narrow range and stood at 59.9
on March 31, 2014, depreciating 10.1 percent
over the previous year.
XIII. Capital Markets
The year 2013-14 reaped
accomplishments for Indian securities
markets with benchmark indices, BSE Sensex
and NSE Nifty registering all-time highs
in the wake of high volatility observed
throughout the year due to global headwinds.
Indian stock markets extended their record-
breaking spree with the Sensex hitting a new
peak and closing 22,386 on March 31, 2014,
breaching the 20,000 mark touched during

11
2012-13. Nifty, too, crossed the 6,000 mark
of 2012-13 and logged to a new lifetime high
by closing at 6,704 on March 31, 2014. While
Sensex observed a growth of 18.8 percent,
Nifty recorded a growth of 18.0 percent.
The market capitalisation of BSE stood
at `74,15,296 crore as on last trading day of
March 2014 as against `63,87,887 crore at end-
March 2013 while its ratio to GDP stood at 65.3
percent for 2013-14. The market capitalisation
of NSE was `72,77,720 crore at end-March
2014 compared to `62,39,035 crore as of end-
March 2013 while its ratio to GDP stood at
64.1 percent for 2013-14. The third national
level stock exchange, MCX-SX, recorded a
market captilisation of `72,39,670 crore in
2013-14 and its ratio to GDP at 64.0 percent.
The demat statistics at depositories, NSDL
and CDSL exhibited an accelerating trend in
termsofnumberofdemataccountsanddemat
quantity. The number of demat accounts at
CDSL and NSDL witnessed a growth of 5.4
percent and 2.9 percent respectively over
the previous year. Moreover, the number of
listed companies at NSE and BSE continued
to rise. (Table 1.5a and 1.5b)
The trading activity rebounded slightly
in the global listed derivatives markets in
2013, after suffering the largest decline in
volumes in more than a decade. As per the
Futures Industry Association (FIA) Annual
Survey 2013, the total number of futures
and options traded on exchanges worldwide
reached to a level of 21.6 billion contracts,
up by 2.1 percent compared to the previous
year but still well below the levels seen in
2011 and 2010. Nonetheless, NSE’s CNX
Nifty Index options were the world’s most
traded options while, U.S. Dollar/Indian
Rupee Futures at NSE and MCX-SX were
ranked first and second respectively in terms
of foreign exchange futures and options
contracts traded in 2013.
The turnover in the Equity derivative
segment exhibited an increase of 22.9 percent
and stood at `4,75,75,571 crore in 2013-14.
Amidst the volatile rupee during the year,
the currency derivative segment turnover
registered a decline of 23.9 percent to reach
`69,80,855 crore in 2013-14. The oldest Stock
Exchange, BSE, commenced its operations in
currency derivative segment in November 2013
and recorded `2,44,312 crore turnover during
November 2013 - March 2014. (Table 1.6)
The introduction of cash settled Interest
rate futures on 10-year GoI security in
January 2014 heralds the beginning of a new
era in the fixed income derivatives market.
This step towards integration of the Indian
Securities Market with the rest of the world
may be seen as a path breaking initiative as
it is expected to pave the way for various
innovations at the derivative front in the time
to come. Interest Rate Derivative segment at
NSE also picked up the momentum in 2013-
14 and the combined turnover of NSE, BSE
and MCX-SX stood at `39,944 crore.
The foreign investments in India
contributedbytheFIIs/SAsstoodat`15,93,869
crore in 2013-14, an increase of 19.3 percent
over the previous year. On the same lines,
FDI investments also witnessed a rise of 22.5
percent and assets under custody valued at
`2,94,945 crore in 2013-14. (Table 1.7)
SEBI also succeeded in promoting
and sustaining an efficient and robust
global financial infrastructure with a view
to streamline investor protection and to
make investors confident and aware while
investing in securities market. Various policy
reforms in the area of Investor Grievance
Redressal Mechanism have been embarked
during the financial year. Foreign Portfolio
Investors Regulations were notified in
order to harmonize the different routes

12
for foreign portfolio investments along
with introduction of Institutional Trading
Platform (ITP) for SME including startups,
adoption of new CPSS-IOSCO standards
of PFMIs, launch of cash settled Interest
Rate Futures, dedicated debt segment and
many such reforms, elaborated in upcoming
sections.
Table 1.5 (a): Demat Statistics
Year
NSDL CDSL NSDL CDSL
Quantity
(million shares)
Quantity
(million shares)
Demat Accounts
(in lakh)
Demat Accounts
(in lakh)
2011-12 5,79,801 1,33,570 120.5 79.0
2012-13 6,86,476 1,51,792 126.9 83.3
2013-14 7,95,503 1,77,311 130.6 87.8
Source: NSDL and CDSL
Table 1.5 (b): No. of Listed Companies
Year
NSE BSE MCX-SX
No. of Companies Listed No. of Companies Listed No. of Companies Listed
2011-12 1,646 5,133 Na
2012-13 1,666 5,211 0
2013-14 1,688 5,336 12
Source: NSE, BSE and MCX-SX
Table 1.6 Growth of Turnover in Various Segments of Indian Stock Market
Year
Turnover ( ` crore)
Cash Segment Equity Derivatives Currency Derivatives
Interest Rate
Derivatives
2011-12 34,78,391 3,21,58,208 98,96,413 0
2012-13 32,57,087 3,87,04,572 87,10,504 0
2013-14 33,41,338 4,75,75,571 69,80,855 39,944
Note: Cash segment of MCX-SX commenced its operations from February 11, 2013
Source: BSE, NSE, MCX-SX and USE
Table 1.7 Value of Assets of Foreign Investors reported by Custodians
Year
FIIs/SAs Foreign Depositories FDI Investments
Foreign Venture
Capital Investments
Amount (` crore) Amount (` crore) Amount (` crore) Amount (` crore)
2011-12 11,07,399 1,43,370 2,31,841 35,041
2012-13 13,36,557 1,57,159 2,40,731 54,144
2013-14 15,93,869 1,90,529 2,94,945 48,854
Source: SEBI

13
2. REVIEW OF POLICIES AND
PROGRAMMES
With a view to keep the Indian securities
market integrated with the worldwide
regulatory regime, incessant developments
are essential while in harmony with the
objectives enshrined in the SEBI Act, 1992.
Alike ever year, 2013-14 as well witnessed
various policy reforms initiated by SEBI
which are presented in this section.
Thedevelopmentsarecategorizedunder
seven major heads viz., Primary Securities
Market, Secondary Securities Market,
Mutual Funds, Intermediaries associated
with Securities Market, Foreign Institutional
Investors, Other policies and programmes
having a bearing on the working of securities
market and Assessment and Prospects.
I. Primary Securities Market
The primary market enables the
government as well corporates in raising
the capital that is required to meet their
requirements of capital expenditure and/
or discharge of other obligations such as
exit opportunities for venture capitalist/PE
firms. A well developed primary market is
fundamental for an economy to prosper. In
order to further refine the primary market
design and boost investor confidence, various
measures have been undertaken by SEBI in
2013-14. This section throws light on the policy
measures initiated during the financial year:
A. Compliance With The Provisions Of
Equity Listing Agreement By Listed
Companies - Monitoring by Stock
Exchanges
In order to improve the effectiveness of
monitoring mechanism of stock exchanges
to ascertain the adequacy and accuracy of
disclosures made in compliance with the
Listing Agreement, the stock exchanges have
been advised to put in place appropriate
framework to effectively monitor the
disclosures. The stock exchanges have also
been advised to put in place an appropriate
mechanism for handling complaints related
to inadequate and inaccurate disclosures
and non-compliances. Stock exchanges are
further required to submit ‘exception reports’
to SEBI containing details of companies not
responding to the clarifications sought by
them and/or where the response submitted
by the company is not satisfactory. Further,
the stock exchanges have also been advised
to disclose the details of promoters / directors
/ key managerial personnel of defaulting
companies on their websites.
B. IPO Grading made voluntary
Considering the requests received
from market participants, viz. Investor
Associations and Association of Investment
Bankers of India (AIBI), the recommendation
of the advisory committee of SEBI, and to
align with the principles laid down by the
Financial Stability Board (FSB) on reducing
the reliance on credit rating agencies, the IPO
grading mechanism was made “voluntary”
as against the earlier provision of the same
being “mandatory”.
C. Introduction of General Information
Document
The concept of General Information
Document (GID) has been implemented.
GID shall contain information which is of
generic nature (like issue and allotment
procedure) and not specific to the issuer,
thereby eliminating the repetition of common
information in abridged prospectus. This
is expected to bring down the size of the
abridged prospectus and ultimately reduce
the cost of printing.

14
D. Amendments to SEBI (Issue of
Capital and Disclosure Requirements)
Regulations, 2009 relating to
preferential issue
With a view to enhance transparency,
ensure adequate audit trail and apply lock-in
for the shares allotted in preferential issues,
the following amendments were carried
out to SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2009:
a. Preferential issue shall be subscribed
only through the allottee’s own bank
account. Further, the issuing company
shall disclose the natural persons who
are the ultimate beneficial owner of
allotted shares and/or who ultimately
control the allottee, subject to the
condition that if in the ownership chain
there is any listed company, mutual
fund, bank or insurance company, no
further disclosure will be necessary.
b. Allotments in preferential issues shall
only be made in dematerialized form.
c. Shares allotted in the preferential issue
shall not be transferred till trading
approval is granted for such shares by
the stock exchanges. Further, the lock-
in period shall commence on the date of
such trading approval.
E. Revised illustrative format of
Statement of Assets and Liabilities in
SEBI (Issue of Capital and Disclosure
Requirements) Regulations, 2009
The illustrative format of Statement of
AssetsandLiabilitiesinofferdocumentwhich
is provided under Regulation - (2)(IX)(B)(9)
(f) of Part-A of Schedule VIII of SEBI (Issue
of Capital and Disclosure Requirements)
Regulations, 2009 was updated and brought
in line with the revised Schedule VI of the
Companies Act, 1956 and Schedule III of the
newly enacted Companies Act, 2013.
F. Format for Auditors’ Certificate
required under Clause 24(i) of the
Equity Listing Agreement
Clause 24(i) of the Equity Listing
Agreement requires that the company, while
filing for approval of any draft Scheme of
amalgamation / merger / reconstruction,
etc. with the stock exchange under clause
24(f) of the equity listing agreement, shall
also file an auditors’ certificate to the effect
that the accounting treatment contained
in the scheme is in compliance with all
the accounting standards specified by the
Central Government in section 211(3C) of
the Companies Act, 1956. It was observed
that there is no uniform format for auditors’
certificate as required under clause 24(i)
of the equity listing agreement. Auditors’
certificate in different formats was being
submitted by the companies with the stock
exchanges. In view of the same, a standard
format for the same has been prescribed to
ensure standardization.
G. Amendments to SEBI (Buy Back
of Securities) Regulations, 1998
governing Buy-Back through Open
Market Purchase
As part of SEBI’s constant endeavour
to align regulatory requirements with the
changing market realities as well as to
enhance efficiency of the buy-back process,
the following changes to buyback of shares
or other specified securities from the open
market through stock exchange mechanism
have been carried out vide amendments to
SEBI (Buy Back of Securities) Regulations,
1998:
a. The minimum buy-back has been
mandated as 50 percent of the amount
earmarked for the buy-back, failing
which amount in the escrow account
wouldbeforfeitedsubjecttoamaximum

15
of 2.5 percent of the total amount
earmarked. However, companies may
not be liable for penal action on failure
to comply with this requirement in
specified circumstances.
b. The maximum buy-back period has been
reduced to 6 months from 12 months.
c. The companies shall create an
escrow account towards security for
performance with an amount equivalent
to at least 25 percent of the amount
earmarked for buy-back.
d. The company shall not raise further
capital for a period of 1 year from
the closure of the buy-back except in
discharge of subsisting obligations as
against the existing 6 months.
e. The company shall not make another
buy-back offer within a period of 1 year
from the date of closure of the preceding
offer.
f. The disclosure requirements have been
rationalized requiring disclosure of the
shares bought back on a cumulative
basis on the website of the company
and the stock exchange, only on a daily
basis instead of the current requirement
of disclosure on daily, fortnightly and
monthly basis.
g. The companies shall buy-back 15
percent or more of capital (paid-up
capital and free reserves) only by way
of tender offer.
h. The procedure for buy-back of physical
shares(odd-lot)inopenmarketpurchase
method has been introduced which
includes creation of separate window
in the trading system for tendering the
shares, requirement of PAN/Aadhaar
for verification, etc.
i. The companies shall extinguish shares
bought back during the month, on or
beforethefifteenthdayofthesucceeding
month subject to the last extinguishment
within seven days of the completion of
the offer.
j. The promoters of the company shall
not execute any transaction, either on-
market or off-market, during the buy-
back period.
H. Disclosure of Non Disposal
Undertaking by Promoters
It was specified that all types of
Non Disposal Undertakings (NDUs) by
promoters will be covered under the scope
of disclosures of “Encumbrances” under the
SEBI (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011. These NDUs
may, inter-alia, include undertaking for:
a. not encumbering shares to another
party without the prior approval of the
party with whom the shares have been
encumbered;
b. non-disposal of shares beyond a certain
threshold so as to retain control;
c. non-disposal of shares entailing risk
of appropriation or invocation by the
party with whom the shares have been
encumbered or for its benefit.

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