Study of a public issue; State Bank of India

Abstract

The reforms in the financial sector, especially the capital market segment, have moved at a greater pace than the reforms in the rest of the economy have. Abolition of the office of the Controller of Capital Issues (CCI) was a landmark in this regard. The free pricing of the issue ushered in by this gave the much needed fillip to the primary capital markets. The subsequent empowerment of the SERI by the SERI Act of 1992 was another major step in the direction of reforms. The red-tapism of the CCI was replaced by the swiftness of the SERI. A spate of equity issues hit the market in the ensuing period. During the first three months of the current year more than 5@@ capital issues hit the market, one of which was of course the MS shoes east issue. This avalanche has since thinned down to a trickle in the wake of the MS shoes scandal. The increasing deregulation of the capital markets has lent it Vulnerable to abuse by the unscrupulous operators and market intermediaries. This was first reflected in the securities scam in which among other irregularities several foreign banks made a misuse of the funds entrusted with them under the portfolio management scheme”. And recently and more starkly reflected in the composite issue of the MS shoes which personified most of the dlis plaguing the Indian capital markets today. All these Stresses the need for building up adequate safeguards in the form of institutional mechanism to prevent the recurrence of such incidents.