New Delhi: The Joint Parliamentary Committee (JPC) has blamed market regulator Securities and Exchange Board of India (SEBI) for lack of alertness that led to withdrawal of Rs 1,900 crore by Reliance from the Automatic Lending and Borrowing Mechanism (ALBM) in less than two weeks, leading to stock market crash in 2001.

"What is appalling to the committee is that SEBI never realised the role played by ALBM in the market crash of 2001 nor did it initiate any investigation of ALBM after the crash," JPC said in a draft report circulated among its members.

"Reliance Shares and Stock Brokers Ltd was the topmost participant in NSE's (National Stock Exchange) ALBM and BSE's (Bombay Stock Exchange) Borrowing and Lending of Securities System (BLESS)," it said pointing out that the firm withdrew Rs 1,900 crore between February 28 and March 7 from ALBM, BLESS and Vyaj Badla financing system of CSE (Calcutta Stock Exchange).

In its response, the then chairman of SEBI (D R Mehta) said, "if one is entitled to put in money, if one is a registered entity, one is entitled to withdraw the money if the activity is legal, unless there is some additional factors to prove that this was done with some kind of intention."

Lambasting SEBI on handling the issue relating to the revised ALBM, the report said, "The committee are concerned to note that no limit had been fixed on financing of ALBM which enabled single player to influence the market."

PTI