Finance Minister P Chidambaram on Tuesday said the government will tighten the delisting norms for companies.

Replying to a debate on the Securities Law (Amendment) Bill and Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bills, which were passed by the Lok Sabha, he said there was scope for further reforms in the stock markets and the government would periodically review the functioning of the stock exchanges.

On the recent rise in Sensex, Chidambaram said, "Foreign institutional investors are the driving force of market. I would like the retail investors to be the driving force in the market."

He said retail investors were coming back to the market and delivery-based transactions have increased. "But market is just one of the indicators of health of the economy," he added.

Chidambaram said a number of stock exchanges were set up under incorrect models and the National Stock Exchange was the correct model. He said the process of corporatisation of stock exchanges should be speeded up.

The minister said the Securities Laws (Amendment) Bill was modified from what the National Democratic Alliance government had placed before the Thirteenth Lok Sabha to include mutual fund in the category of securities.

Stating that the most important purpose of the passage of Bill was to make the management of stock exchanges more transparent, Chidambaram said it would also strengthen the stock exchanges and make transactions open to public scrutiny.

On a suggestion from Shiv Sena member Suresh Prabhu that investor associations should be made shareholders in the corporatised stock exchanges, Chidambaram expressed fears of cartilisation but said he was willing to consider it.

Replying to the debate on enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, he said the legislation would enable lenders to take over business of borrowers in case of a default.

Comparing the non-food credit offtake of April-December 2004 with that of previous year, he said it showed that the economy was growing and banking like just another business would also show some default. "As credit expands, there may be some defaults," he said.