SEBI’s recent moves to protect NSDL damage its credibility irreparably

The machinations of the venerable directors of the Securities and Exchange Board of India (SEBI) to protect its ring-fenced chairman, CB Bhave, is threatening to ruin the credibility of the regulatory process altogether. In a system where nobody dares to criticise a powerful regulator, the story needs to be told.

The Securities and Exchange Board of India’s (SEBI) decision to standardise some aspects of the Power of Attorney (PoA) signed by investors is an excellent move that is, at least, five years overdue. The introduction of compulsory dematerialisation of securities for secondary market transactions was a blessing and a curse. It allowed us to eliminate the ills of physical delivery and settlement...

Policy decisions by the stock market regulator are usually the result of lobbying by specific groups or intermediaries or the result of a volley of investor complaints. The usual procedure is to prepare a note, put it before the primary or secondary market advisory committee, then seek public comment on the distilled wisdom that is obtained and then frame the rules. Even this is not foolproof....