The Securities & Exchange Board of India's (Sebi's) prosecution proceedings against defaulters failed to prove to be an effective deterrent because of delays associated with India's criminal justice system, the market regulator said.

Sebi told a parliamentary panel that defaulters are yet to pay Rs 121.8 crore in penalty imposed by it between March 2011 and June 2013.

The regulator underlined that the existing provisions of the Sebi Act, Securities Contracts (Regulation) Act and Depositories Act allows it to initiate only prosecution proceedings if defaulters fail to pay the penalties imposed on them.

The regulator told the Parliament's Standing Committee on Finance, "However, because of the delays associated with the criminal justice system, such actions have not been proved to an effective deterrent."

Officials from the market regulator and Finance Ministry were deposing before the Parliamentary Committee on the Securities Laws (Amendment) Bill, 2013.

As of end of March 2011, a total of 988 defaulters had not paid cumulative penalty of Rs 81.8 crore. The number of defaulters jumped 1,290 and cumulative penalty to Rs 112 crore by 30th of June last year. As on June 30 this year, the outstanding penalty further jumped to Rs 122 crore involving 1,345 defaulters.