Click to play videoMumbai: Terror targeted at India could be funded by playing the stock markets, is something that has been suspected for some time now, what with National Security Advisor, M K Narayanan raising the concern at the 43rd Conference on Security Policy in Munich in February this year.
"Recently one case has come to our notice. It is suspected. I repeat that it is suspected that this case may have some links with some persons who are under watch. This case is under investigation but I am not in a position to give any details,” says Finance Minister, P Chidambaram.
For the government, the worries are three fold:
- First, the terror outfits could use the markets to bring money into India to fund their activities.
- Then the same money invested in stocks could be used to generate profits for funding further terror.
- And finally there is a faint chance that this tainted money could be used to manipulate select stocks.
"It’s a huge impact at least the PM, the IB and the RBI are now acknowledging this presence. Now they need to act!” says Kirit Somaiya of Investors' Grievance Forum.
A phenomenon that analysts and market watchers say is global in its nature. In fact some say that such activities by the al-Qaeda on the NYSE were noted just before 9/11.
Experts say such a situation can be avoided only with stiff measures to regulate the markets.
"Terror money in the Stock exchange is a Global fear and agencies everywhere are trying to arrest this. Its good India too is taking specific steps. The PN notes ban could be a formidable first step,” says Investment Advisor, S P Tulsian.
But with India's economy booming, it's a tightrope walk for the government: should it directly regulate the market out of the fear of misuse by terrorist and scare away investors or should it keep an eye from a distance and risk market manipulation by terror networks?
The recent clamp down by market regulator SEBI on participatory notes also show that all is not well with the fast paced growth of the market as much as the recognition of the problem.
The bigger challenge now lies in being able to arrest the problem well.
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