SEBI can assume justifiable credit for the growth and development of the market from a highly inefficient and (now looking back) tiny market with a capitalisation of Rs 3 lakhs crores and less than 1 percent of the population participating in it to a market cap of more than Rs450 lakh crore market, close to 4 crore investor depository accounts and so on.
Not that its record has not been unblemished. Observers point fingers at its tardiness in enforcement, holding the guilty to account, returning the proceeds of ill-gotten gains of unscrupulous market operators, and so on. It could have done a lot more to foster a culture of research that will aid evidence policy making.
However, by and large, one has to acknowledge SEBI’s role in shaping the development of the securities market. One has to equally acknowledge that SEBI chiefs have stayed clear of controversies, barring the as-yet unclear role of the then SEBI Chief in the co-location episode.
To be fair, she largely lived up to the expectations. Bringing errant promoters to book, strengthening the surveillance infrastructure, warning about the welfare effects of futures on retail investors, and calling out elevated valuations as “froth" were all pointers to a chief who was willing to step beyond the conservatism of a bureaucrat. Her emphasis on corporate governance was well placed as record sums of money were being mobilised from the public markets.
During her term, growing retail participation in the markets—as evident from the increase in the number of investor folios and flow of capital into systematic investment plans—has driven the market to grow from around Rs250 lakh crores to around Rs440 lakh crores in the market capitalisation. Around 16 crore investors, more than 10 percent of the Indian population, participate in the Indian securities market. The financial future of several million more is now tied into the market through the new pension scheme. In short, the stock market is an important institution in India now.
Her continuance as the Chief of SEBI is another matter, though. Given its importance, its chief has to be someone that investors can trust unquestioningly. She holds an office with a fine bureaucratic tradition, starting with GV Ramakrishna. She has to uphold that tradition by taking steps that will assure the average Indian investor that SEBI can do an honest job protecting their investments.
Ms Buch must uphold those traditions of accountability. The plausible argument that stepping down from office would be tantamount to accepting guilt is the sort of line that only incarcerated politicians can take to keep their offices. John Citizen would expect better from the chief of SEBI.
G Sabarinathan is an Associate Professor in the Finance and Accounting area at IIM Bangalore. Views are strictly personal.
First Published: Sep 09, 2024, 11:12
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