In order to streamline proceedings, the government is planning to fix a time limit for the show-cause notices sent by market regulator Securities and Exchange Board of India (SEBI) to errant companies for alleged violations.

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The finance ministry has sought inputs from SEBI and is likely to announce an amendment to this effect in the February 1 Finance Bill, The Economic Times reported quoting a government official.

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The ministry has asked SEBI to suggest the time limit.

"SEBI is examining the backlog in adjudication and inquiry matters and will accordingly give the status report," the official told the business daily.

The move will ensure that all proceedings of the SEBI are time-barred and no cases are initiated beyond a certain period. SEBI will also be barred from sending notices in old, pending matters.

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The official said the amendment in the SEBI Act could be notified separately after the finance ministry announces the move in the Budget.

At present, the SEBI Act, 1992 does not have any specified time limit for show-cause notices or for completion of the adjudication proceeding. This results in SEBI initiating proceedings several years after the alleged violation, which causes unnecessary hardships to market participants.

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Other law enforcement agencies such as the Income Tax Department also have a time limit. At present, the government has set a three-year time limit for the I-T Department to reopen tax assessment cases. Earlier, the time limit was six years.

Although the government will wait for SEBI’s inputs on the time limit, it could be in line with the Income-Tax Act, another official told ET.

Last month, the Association of National Exchanges of Members of India (ANMI) had urged the government to set a time limit on SEBI’s show-cause notices.

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The stock brokers’ association had also sought the minimum fine on small investors be cut to Rs 1 lakh from Rs 5 lakh at present, for market violation rules, PTI had reported.

''Such time limitation being imposed would greatly improve the efficiency of the securities market regulator,'' ANMI had said in its pre-budget proposals to the finance ministry.

(Edited by : Shoma Bhattacharjee)