Sebi sees slowdown in decision-making

Ashish Rukhaiyar
Mumbai, 21 September 2011

The Securities and Exchange Board of India (Sebi) is short of senior management. Besides, recent controversies surrounding former whole-time member K M Abraham’s letter to the finance ministry had slowed down the decision-making process significantly, said market participants.

This was reflected in some of the recent meetings that the finance ministry has had with market participants, including stock exchanges. Participants in the meeting said queries from the finance ministry on progress on the separate platform for small and medium enterprises could not be addressed because Sebi was represented by a northern zone official. Similarly, the takeover code has not been notified though it had been cleared by both the finance ministry and the Sebi over a month before.

The vacancies created by the exit of two whole-time directors, M S Sahoo and K M Abraham, who completed their terms, haven’t been filled for two months. At present, there is only one whole-time director – Prashant Saran – with the market regulator.

“The working of Sebi has certainly been affected, as the work that was divided among three members is now being looked after by just one,” a Sebi official said. “The Sebi mandate encompasses a lot of segments and it is difficult for one person to look after so many verticals simultaneously,” he added, wishing not to be named.

Some reports suggest that former Central Bank of India chairman and managing director S Sridhar, along with Rajeev Agrawal, a 1983-batch Indian Revenue Services (IRS) officer, have been selected as members. A formal notification is still awaited.

Also, while three of the four executive directors (ED) — K N Vaidyanathan, J N Gupta and Pradnya Sarvade — have completed their terms, only one ED, J Ranganayakulu, was granted an extension. According to Sebi sources, the three EDs have been replaced by S Ravindran, S Raman and R K Padmanabhan.

Interestingly, there has been no formal notification about the appointments of Raman and R K Padmanabhan on the market regulator’s website. Padmanabhan, a Maharashtra cadre IPS officer, is yet to join Sebi, while the other three have assumed their new roles.

Saran, the lone whole-time member, is looking after all the verticals till the new members assume charge. According to the Sebi website, Saran is directly in-charge of collective investment schemes, foreign institutional investors and the enquiry & adjudication department. The others are handled by executive directors who report to Saran.

As a whole-time member, Sahoo was in-charge of derivatives & new products, legal affairs, enforcement and regulation & supervision of market intermediaries, while Abraham handled corporate finance, investigations, vigilance and integrated surveillance, among other things.

Even the court recently remarked in a high-profile case that the affected party should go back to Sebi for a dispassionate hearing, as a new regime was in place.