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Redressal of Investor Grievances

    SEBI has instituted a process for redressing investor grievances arising from the issue procedure, from investor dealings with brokers and sub-brokers and against mutual funds. The largest number of investor grievances are caused as part of the issue process.

Investor grievance redressal and guidance - policies and programmes

Compliance officer

    In order to build up investor confidence and trust and to protect the investors, SEBI advised listed companies in July 1996 to appoint compliance officers. As of March 31, 1997, 1,431 companies reported appointment of compliance officers. These officers:

    1. will liase with SEBI in matters related to investor grievance
    2. will ensure implementation of the various laws, rules, regulations and other directives of SEBI by companies
    3. will report to the board of the company on the status of investor complaints received through various sources - directly, stock exchanges, investor associations, SEBI and Department of Company Affairs

NRI Cell

    Keeping in view the objective of investor protection and also the importance of investment by NRIs, the SEBI created with effect from January 1, 1997, a separate "NRI cell" at SEBI Head Office, Mumbai to attend to the grievances that the NRI investors may have. SEBI has taken this step to give a more focused attention to and speedy redressal of the problems faced by the NRI investors in their dealings in the securities markets. The following is an illustrative list of complaints/grievances that an NRI investor may have against a listed company which they can take up with the NRI cell of SEBI for appropriate redressal

    1. Non receipt of refund orders/ allotment letters/ stock invest
    2. Non receipt of dividend
    3. Non receipt of share certificates/ bonus shares
    4. Non receipt of debenture certificates/ interest/ redemption amount/ interest on delayed payment of interest on debentures
    5. Non receipt of rights forms/ interest on delayed receipt of refund order

Decentralisation of processing of investor grievances

    SEBI has set a mechanism for redressal of investor grievances arising from the issue process. Investors may send their complaints by mail or may give them in person. It was observed that several investors would travel from outside Mumbai to submit their complaints in person or to obtain guidance from SEBI staff. In order to mitigate the difficulties of the investors in approaching SEBI at its Head Office, Mumbai, the work relating to attending to investor grievances has, with effect from January 1997, been delegated to the Regional offices of SEBI at Calcutta, Chennai and New Delhi.

    Issue of NOC for release of the 1% security deposit placed with the regional stock exchange

    As a measure of protecting investors' interest, SEBI had advised all stock exchanges in August 1994 that the 1% security deposit kept with them by companies who bring out the issue of securities will be released only after the companies concerned obtain a "No Objection Certificate" from SEBI. In July 1996, the criteria based on which the NOC is released were tightened to include satisfactory redressal of complaints received at SEBI against the company and the paying of underwriting/brokerage commission as well as registrars and lead managers fees. SEBI has also decentralised its operations relating to processing of requests for issue of the "No Objection Certificate" Accordingly, the Regional Offices of SEBI situated at Delhi, Calcutta and Chennai, with effect from January 1997, process applications for the issuing of the "No Objection Certificate" for companies which fall under their territorial jurisdiction. The SEBI Head Office at Mumbai continues to process such applications from companies which fall in the Western Region.

Defaulting companies

    Companies with whom SEBI takes up investor grievances generally respond to and take effective steps to redress the grievances. However, certain companies either do not respond despite reminders that their grievance redressal is unsatisfactory. During the year 1996-97, SEBI charted an action programme to make these companies more compliant. According to this, SEBI holds meeting with the officials of such companies and during the meetings, the need for immediate corrective action by the companies is insisted upon. Such meetings are held periodically until the redressal status becomes satisfactory. Further issue of securities by these companies are subjected to their satisfactory redressal of the outstanding investor grievances.

Investor associations

    As a part of the Investor Education programme and with a view to create a greater degree of awareness among the investors throughout the country, SEBI has been registering investors associations. At the end of 1996-97, there were 8 such registered associations. SEBI is reviewing the policy of granting registration/ renewing the registration with a view to encouraging formation of more and effective investor associations.

Investor education/guidance

    SEBI undertakes several measures to educate and assist the investors. SEBI provides "walk-in" service at its Head Office at Mumbai and at its regional offices at New Delhi, Chennai and Calcutta on all working days. Investors can meet the officials and get guidance relating to the grievances that they may have against issuers. Investors can also meet the higher officials of SEBI on specified working days. As a part of the Investor education, SEBI had issued pamphlets under Investor Guidance Series. These are being updated.

Investor grievance redressal and guidance - review of working

Grievance redressal

    The grievance redressal rate of SEBI has been increasing through the years as can be seen from Table 35 and Table 36 The reasons for the improvement in the rate of investor grievance redressal in the current year are effective follow up with the companies, tightening of the procedure for issuing No Objection Certificate for release of the 1% security deposits kept by the companies with the stock exchanges and periodic meetings held with the recalcitrant companies. The grievances received during the year 1996-97 were substantially lower than those received in the earlier years. The average receipts has consequently declined to around 600 per day. The decline was pronounced with regard to non receipt of refund orders, allotment order, share/debenture certificates on allotment. It can be observed from Table 36 that the redressal rate has been consistently increasing over the years.

    Table 35 : Investor Grievances
    Received Resolved
    upto 1991
    Table 36 : Investor Grievances - Cumulative
    Received Resolved Redressal Rate
    Upto 31.03.91
    Upto 31.03.92
    Upto 31.03.93
    Upto 31.03.94
    Upto 31.03.95
    Upto 31.03.96
    Upto 31.03.97

Co-ordination committee

    During the year 1996-97, a meeting of the co-ordination committee on investor grievance redressal comprising of representatives of DCA, NIC, BSE and DSE besides SEBI was held in September 1996. It was decided in the meeting to develop a common software for these agencies to help better management of investor complaints.

Co-ordination with Overseas Regulators

    SEBI is a member of the International Organisation of Securities Commissions (IOSCO), and participated in its meetings at Montreal, Canada; and Warsaw, Poland. SEBI is also a member of the Development Committee of IOSCO. In 1996- 97, SEBI was elected to the chairmanship of the Asia Pacific Regional Committee of IOSCO and becomes a member of the Executive Committee of IOSCO, its highest policy making body. SEBI also liases with IOSCO in enforcement matters and in 1996-97 participated in the IOSCO Technical Committee Working Party No. 4 on Enforcement Matters and also in the Asia Pacific Enforcement Meeting.

    SEBI is committed to working with overseas regulators on issues related to entities which act as intermediaries or investors in different jurisdictions, and maintains close contact with them. An agenda has been set within IOSCO for achieving a given standard of disclosure norms, capital adequacy and compliance standards for different markets. SEBI remains committed to implementation of this agenda for ensuring that the fairness, integrity and transparency of Indian securities markets remain comparable to markets abroad. During 1996-97, SEBI initiated the process of entering into a Memorandum of Understanding with the United States Securities and Exchange Commission.