As part of its efforts to recover fines from elusive offenders, the Securities and Exchange Board of India (SEBI) has implemented a reward system to encourage individuals to provide reliable information about defaulters’ assets.
The new rules, which went into effect on March 8th, allow for rewards of up to Rs 20 lakh that can be paid out in two stages—interim and final—and are available for use. The final reward will not exceed 10% of the dues recovered or Rs 20 lakh, whichever is less, and the interim reward will not exceed 2.5% of the asset’s reserve price. Informants can provide information on a list of 515 defaulters that SEBI has made available.
The informant reward committee, which will decide whether informants are eligible for rewards and the amount of rewards that will be paid, will be made up of the Chief General Manager of the Recovery and Refund Department, the concerned Recovery Officer who has jurisdiction over the matter, another Recovery Officer nominated by the Chief General Manager, and an officer in the Office of Investor Assistance and Education in the grade of deputy general manager or higher nominated by the Chief General Manager.
To be eligible for a reward, informants must provide original information about a defaulter’s assets and the “Difficult to Recover” dues. Dues that can’t be recovered even after trying every possible method are referred to as difficult-to-recover dues.
In its annual report for the years 2021–22, the regulator of the markets declared 67,228 crore rupees worth of debts “difficult to recover” (DTR). The remuneration of the witness will be paid from the Financial backer Insurance and Instruction Asset.
SEBI emphasized that the informant’s identity, name, and payment must remain private in order to entice informants to come forward and provide reliable information.
