Feature
No hasty action on SIT report on money laundering: Jaitley
New Delhi: Reacting to a SIT report suggesting that market regulator SEBI needs to monitor participatory note misuse for money laundering, the government on Monday said it would avoid any knee-jerk decision that could hurt investor sentiment.
The government also said that it would study the Special Investigation Team (SIT) recommendations in due course of time.
The BSE Sensex fell sharply by over 400 points in intra-day trade on concerns over curbs on P-notes, while the 50-scrip Nifty fell below its support level of 8450.
“No step would be taken which could adversely impact investment sentiment in the country. But the government will certainly not take any such action in a knee-jerk fashion, particularly one which has any adverse impact on investment environment,” Finance Minister Arun Jaitley told reporters in his parliament office.
“The government will apply its mind in due course keeping in mind the investment environment of the country as also the objective behind the SIT recommendations and then take a final view on the matter,” he added.
“The government will study those recommendations, and take decision after due consultation with all stakeholders,” Revenue Secretary Shaktikanta Das also told reporters here.
“At this point, there is no need for the market to respond or react in any manner and not show any panic,” he said.
“The KYC (know-your-customer) and other requirements under P-notes regime have been improved over the last few years,” he added.
The Supreme Court-appointed SIT on black money on Friday said Securities and Exchange Board of India (SEBI) must have a monitoring mechanism for unusual rise of stock prices and study the misuse of participatory notes for money laundering.
“SEBI needs to have an effective monitoring mechanism to study such unusual rise of stock prices of companies while such a rise is taking place,” the SIT said in its report titled ‘Misuse of exemption on long-term capital gains tax for money laundering’.
“Once such instances are detected, SEBI should invariably share this information with the Central Board of Direct Taxes (CBDT) and Finance Intelligence Unit (FIU),” it said.
“Enforcement Directorate (ED) should then be informed to take action under the Prevention of Money Laundering Act for the predicate offences,” the report added.
The SIT cited SEBI investigations on companies with poor financial fundamentals in terms of past income raising huge capital by allotment of preferential shares to various entities. This is followed by a sharp rise in share prices, once the preferential allotment is done, through circular trading.
The market regulator has also been asked to put in place a mechanism to monitor the beneficiaries of participatory notes.
“Obtaining information on “beneficial ownership” of P-notes is of crucial importance to prevent their misuse. SEBI needs to examine the issue and come up with regulations where the ‘final beneficial owners’ of P-notes are known,” the SIT said.
Regarding P-notes, the SIT noted that based on the data provided by SEBI, a major chunk – over 31 percent – of outstanding Offshore Derivative Instruments (ODIs) invested in India are from Cayman Islands.
“This translates to roughly Rs.85,006 crore. The Cayman Islands had a population of 54,397 in 2010, according to Wikipedia. It does not seem conceivable that a jurisdiction with a population of less than 55,000 could invest Rs.85,000 crores in one country,” the report said.
The SIT further said that the Serious Fraud Investigations Office (SFIO) should mine data to track shell companies and share information with other agencies like CBDT, ED and FIU.
Norms are needed to check the menace of betting in cricket since a massive amount of black money is used and generated in this way, the SIT said.
The State Scores Extra High on Gaming-Friendly Industry Index
Meghalaya scored 92.85 out of 100 possible points in a Gaming Industry Index and proved to be India’s most gaming-friendly state following its recent profound legislation changes over the field allowing land-based and online gaming, including games of chance, under a licensing regime.
The index by the UK India Business Council (UKIBC) uses a scale of 0 to 100 to measure the level of legalisation on gambling and betting achieved by a state based on the scores over a set of seven different games – lottery, horse racing, betting on sports, poker, rummy, casino and fantasy sports
Starting from February last year, Meghalaya became the third state in India’s northeast to legalise gambling and betting after Sikkim and Nagaland. After consultations with the UKIBC, the state proceeded with the adoption of the Meghalaya Regulation of Gaming Act, 2021 and the nullification of the Meghalaya Prevention of Gambling Act, 1970. Subsequently in December, the Meghalaya Regulation of Gaming Rules, 2021 were notified and came into force.
All for the Tourists
The move to legalise and license various forms of offline and online betting and gambling in Meghalaya is aimed at boosting tourism and creating jobs, and altogether raising taxation revenues for the northeastern state. At the same time, the opportunities to bet and gamble legally will be reserved only for tourists and visitors.
“We came out with a Gaming Act and subsequently framed the Regulation of Gaming Rules, 2021. The government will accordingly issue licenses to operate games of skill and chance, both online and offline,” said James P. K. Sangma, Meghalaya State Law and Taxation Minister speaking in the capital city of Shillong. “But the legalized gambling and gaming will only be for tourists and not residents of Meghalaya,” he continued.
To be allowed to play, tourists and people visiting the state for work or business purposes will have to prove their non-resident status by presenting appropriate documents, in a process similar to a bank KYC (Know Your Customer) procedure.
Meghalaya Reaches Out to a Vast Market
With 140 millions of people in India estimated to bet regularly on sports, and a total of 370 million desi bettors around prominent sporting events, as per data from one of the latest reports by Esse N Videri, Meghalaya is set to reach out and take a piece of a vast market.
Estimates on the financial value of India’s sports betting market, combined across all types of offline channels and online sports and cricket predictions and betting platforms, speak about amounts between $130 and $150 billion (roughly between ₹9.7 and ₹11.5 lakh crore).
Andhra Pradesh, Telangana and Delhi are shown to deliver the highest number of bettors and Meghalaya can count on substantial tourists flow from their betting circles. The sports betting communities of Karnataka, Maharashtra, Uttar Pradesh and Haryana are also not to be underestimated.
Among the sports, cricket is most popular, registering 68 percent of the total bet count analyzed by Esse N Videri. Football takes second position with 11 percent of the bets, followed by betting on FIFA at 7 percent and on eCricket at 5 percent. The last position in the Top 5 of popular sports for betting in India is taken by tennis with 3 percent of the bet count.
Local Citizens will Still have Their Teer Betting
Meghalaya residents will still be permitted to participate in teer betting over arrow-shooting results. Teer is a traditional method of gambling, somewhat similar to a lottery draw, and held under the rules of the Meghalaya Regulation of the Game of Arrow Shooting and the Sale of Teer Tickets Act, 2018.
Teer includes bettors wagering on the number of arrows that reach the target which is placed about 50 meters away from a team of 20 archers positioned in a semicircle.
The archers shoot volleys of arrows at the target for ten minutes, and players place their bets choosing a number between 0 and 99 trying to guess the last two digits of the number of arrows that successfully pierce the target.
If, for example, the number of hits is 256, anyone who has bet on 56 wins an amount eight times bigger than their wager.
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