Corporate Affairs Minister Sachin Pilot told CNBC TV18 that tough new norms to avoid misuse of private placement norms are in the offing. Pilot added that the government was aware that this route had been misused by companies.
Below is the edited transcript of Sachin Pilot's interview with CNBC-TV18
Q: What is your take on Sebi order?
A: First of all, we at no point want to curtail the environment in which individuals and companies want to raise capital. For the economy and businesses to grow, they have to raise money from banks, private entities and all companies are free to do so.
However, while they do that anyone trying to raise money fraudulently or by misleading investors - some cases have come to notice where these placements have been done with some shroud of secrecy and non-compliance.
Q: Am I given to understand then that you are looking into cases where companies have misused this route to raise funds?
A: Most certainly. If there is any company or companies that have been non-compliant to the rules, have tried to misuse the clauses that have existence today in the companies law, we will take strict action.
There can be a small investor putting Rs 10,000-20,000 in a company with some fraudulent advertising or misleading information or some forged documents.
In a small town or small city those people have lack of information and very limited resources to contest and claim their money back. It is these small investors that we as government must making a priority to protect their interests.
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