Mumbai, July 1 (PTI): Market regulator Sebi will set up an investor protection fund with an initial corpus of Rs 10 crore.

The decision was taken at its board meeting on Saturday in which 23 of the 30 agenda items were cleared, including approval of the annual accounts, Sebi sources said today.

This follows finance minister P. Chidambaram’s announcement in the budget that the fund would be set up initially with a corpus of Rs 10 crore and it would protect the interests of small investors.

The fines and penalties levied by Sebi will not go into the fund right now. It requires an amendment to the Sebi Act, for which there is a process in Parliament and it would take some time.

The fines and penalties go into the Consolidated Fund of India. The next board meeting is scheduled for July 18.

During the board meeting, Sebi’s whole-time director T.C. Nair is understood to have offered his resignation “at the heat of the moment” following an argument with another member.

Since Nair is a board member, the resignation has to be submitted to the Union government with a three-month notice. In that sense “no resignation” has been made, the sources said.

Speaking at the CII’s Mutual Fund Summit 2007 in June, Sebi chairman M. Damodaran said the regulator would focus on a nation-wide investor education campaign.

He also asked the Association of Mutual Fund in India (Amfi) to play the role of a self-regulatory organisation. Given its skill-sets, Amfi could become the first such organisation in this sector, he said.