SEBI: A reward scheme has been implemented by market regulator Sebi to help collect fines from evasive offenders. The Securities and Exchange Board of India (Sebi) said in a circular that an informant will receive up to 20 lakh in compensation for disclosing information regarding the assets of defaulters.
Sebi’s new initiative to incentivize whistleblowers
The initial and final stages of the award would each be given separately. Additionally, it said that the interim award amount would not be greater than 2.5 percent of the asset’s reserve price, or 5 lakh, whichever was less. While the overall payment would not be more than 10% of the debts repaid or Rs. 20 lakh, whichever is less.
Sebi’s innovative approach to recover difficult debts
Sebi says a trustworthy informant would be someone if he or she offers original information in relation to the asset of a defaulter concerning the dues which are certified as ‘Difficult to Recover’. The difficult-to-recovery debts are those that, even using every available method, could not be paid off. Also, the regulator published a list of 515 defaulters on which any informant may offer information.
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Empowering individuals to combat financial misconduct
The Chief General Manager of the Recovery and Refund Department, the Concerned Recovery Officer with Jurisdiction in the Matter, Another Recovery Officer nominated by the Chief General Manager, and an Officer in the Grade of Deputy General Manager or Higher of the Office of Investor Assistance and Education nominated by the Chief General Manager Responsible for the Investor Protection and Education Fund will make up the Informant Reward Committee established by Sebi (IPEF). The competent authority shall receive recommendations from the informant reward committee on issues relevant to the determination of the amount of reward payable to informants and the eligibility of informants for reward. According to Sebi, the Investor Protection and Education Fund will be used to pay the informant’s incentive. According to Sebi’s annual report for 2021–22, at the end of March 2022, the market regulator classified 67,228 crore worth of debts as “difficult to recover” (DTR).
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