Sebi assessing impact of virus on stock markets

Mumbai: Stock market regulator Sebi is internally assessing the potential impact of the coronavirus epidemic on the capital markets, its Whole-Time Member S K Mohanty said on Wednesday.

He, however, said the Financial Sector Development Council (FSDC), an apex body of regulators formed by the government, is yet to get involved in the discussions. The comments come a day after the action by central banks across the world, including a surprise 50 basis points cut in rates by the US Federal Reserve. The Reserve Bank of India (RBI) on Tuesday also came out with a statement assuring the markets of all help.

"Sebi is aware of coronavirus and the possible impact that it can have on the market. We are taking the necessary steps," Mohanty told reporters here. "We have seen the RBI statement; we are aware of it. Whatever has to be done, has to be done. We are internally assessing the situation," he added. When asked if the issue has been discussed at FSDC, he said, "Not yet".

Addressing a capital markets summit organised by industry lobby Assocham earlier, Mohanty said Sebi has taken up the contentious issue of taxation on real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) with the government. The Budget 2020-21 has provisions for changing the dividend distribution tax (DDT) for REITs and InvITs, which was seen as a dampener by the industry.

"The taxation part is not in the hands of Sebi but we have taken it up with the government. Let's hope for the best," he said. "If that happens, if we stick to the taxation incentive to REITs and InvITs given in 2016, if that is restored, then definitely India will get billions of dollars which will help our economy in a great way," he said.

Speaking to reporters later, realtor Niranjan Hiranandani, who also chairs Assocham, welcomed the Sebi efforts. In 2019, India was able to get $20 billion in investments through the REITs and InvIT flows and the industry was expecting the same to go up to $30 billion in 2020, he said warning that continuing with the Budget provisions will adversely affect capital inflows into the country.

The government is proposing to tax dividends at the hand of unit holders and there are concerns on double taxation as well, which have collectively put a question mark over the future of the business trusts' existing investments and also future plans.