Ajay Tyagi on twin balance sheet problem: Sebi, RBI working to resolve it

Sebi had set up the 21-member committee on June 2 to advise it on issues relating to corporate governance. It includes representatives from companies, stock exchanges, professional bodies, investor groups, law firms, academicians, research professionals and Sebi officials.

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SEBI, Ajay Tyagi, RBI, Reserve Bank of India, Twin balance sheet, Business news, Indian Express

Sebi Chairman Ajay Tyagi (center) in Mumbai on Wednesday. (Express Photo by Ganesh Shirsekar)

The Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) are working together to resolve the twin balance sheet (TBS) problem, said Ajay Tyagi, chairman of Sebi on Monday. “This is one issue (twin-balance sheet problem) which needs to be addressed and I feel all regulators need to collectively work to resolve it,” said Tyagi, who was speaking at the capital markets summit organised by Ficci in Mumbai. “We are looking at the sanctity of the financial statement, auditors need to take their role seriously,” he added.

Tyagi also said the Uday Kotak committee on corporate governance is expected to submit its report by the end of the September. “We feel much needs to be done on corporate governance. We are very serious that issues that enhance participation of minority shareholders and protect their rights, independence of independent directors and their active participation are in place … Improved disclosures on related party transactions and accountability and evaluation of boards are issues that seriously need to be looked into,” said Tyagi

Sebi had set up the 21-member committee on June 2 to advise it on issues relating to corporate governance. It includes representatives from companies, stock exchanges, professional bodies, investor groups, law firms, academicians, research professionals and Sebi officials. Tyagi said the if markets were to sustain the present momentum, they have to satisfy some broad conditions such as the standard of conduct for all intermediaries including auditors must be benchmarked to be best in the world.+

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Apart from this, Sebi whole time member G Mahalingam said the regulator is working on a few reforms pertaining to the mutual fund industry.
These include merger of mutual fund schemes, bringing down the total expense ratio (TER) of mutual funds and benchmarking of schemes. Mahalingam, who also spoke at the Ficci event said the regulator is working on the nomenclature of mutual funds into debt, equity and hybrid funds. Sebi is also looking if the TER of mutual funds can come down.

Mahalingam said Sebi has asked mutual funds to benchmark their schemes against Total Return Index (TRI), a benchmark that captures dividend income. This will give distributors and investors a truer picture of the fund performance said Mahalingam.