Lok Sabha Question No. 3760 (UNSTARRED), answered on 2017-03-24
Subject: Private Equity
Ministry: FINANCE
Asked by: KALIKESH NARAYAN SINGH DEO

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS FINANCIAL MARKETS DIVISION

## LOK SABHA UNSTARRED QUESTION NO. 3760 TO BE ANSWERED ON FRIDAY, 24TH MARCH, 2017/ CHAITRA 3,1939 (SAKA)

## PRIVATE EQUITY

## QUESTION

## 3760. SHRI KALIKESH N. SINGH DEO:

Will the Minister of FINANCE be pleased to state:

(a): whether the Government is aware that any specialised private equitylalternate fund was sold to retail investors for investment into production of cinema and art in the country and if s0, the details thereof;

(b): whether these funds have returned any profits including capital to investors and if s0, the details thereof and if not; the reasons therefor including timeline of closure;

(c); whether these funds have met compliances to regulators and clients as mandated in contract and if = the details and if not; the reasons therefor; SO,

(d): whether any complaints from clients and investors have been received on activity of the funds, if so, the details thereof and the action taken thereon by Government bodies such as Securities and Exchange Board of India (SEBI) and Enforcement Directorate and if not; the reasons therefor; and

(e): whether the Government proposes to prosecute fund managers and the banks from marketing and misleading the products to retail investors and if so, the details thereof?

## ANSWER

## MINISTER OF' STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

(3to (e): The minimum investment from sophisticated investors under SEB] (Venture Capital Funds) Regulations, 1996 was Rs. 5 Lakhs, which has been enhanced to Rs. 1 crore under  SEBI (Alternative   Investment Funds\_ Regulations, 2012; Further; such funds cannot solicit investments from public or retail and are mandated to seek investments only through private placement of their units through private placement memorandum: Therefore, such funds are not targeted at retailpublic investors and are restricted only to sophisticated and high new worth investors.

The private placement memorandum contains the terms of the fund; investment strategy; tenure; corpus and other aspects including the distribution of profit; if any.

SEBI has received complaints from sophisticated investors for 2 (two) funds, which are investing in cinema and allied sectors The complaints received against these two funds were taken Up by SEB] with the respective funds for their comments and subsequently, suitably addressed. Further; based on the complaints received, inspection has been conducted for one fund.

The   investors can lodge their  complaints on a web based centralized   grievance redress system called  SEBI Complaint Redress System (SCORES) SCORES enables investors to and  follow up their complaints and track the status of redressal of such complaints online. Complaints received, if any, are sent to the funds for their comments, and subsequently, suitably addressed. lodge

Grievances pertaining t0 intermediaries are taken up with them directly for redressal and continuously monitored by

The intermediary is required to respond in prescribed format in the form of Action Taken Report (ATR) Upon the Feceipt of ATR,the status of grievances is updated: If the response of the intermediary is insufficient / inadequate, follow up action is initiated.