Critique of SEBI
To give a brief description, Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental there to".
It would be uncharitable to say that SEBI has done little in the last 27 years. The transparency in share trading, quicker pay-ins and pay-outs, dematerialisation of securities, speedier IPOs are some of the reforms for which due credit ought to be given to SEBI.
Despite all that SEBI has achieved the question whether a small common investor is satisfied with the functioning of the body persists, and it is therefore necessary to introspect.
There exists a general notion amongst the Indian society that government establishments are not implementing laws honestly and impartially. Unfortunately, the fate of SEBI and the SEBI Act are no different.
Whenever an investor complains to SEBI, it only forwards the complaint to the concerned company and informs the complainant about this by sending him a standard computer-generated prescribed letter. It does not care to find out about the outcome of the redressal.
As a matter of fact, the concerned company should be scared and should redress the grievance in right earnest on knowing that the investor has knocked the doors of SEBI. But this does not seem to be happening. The far more serious thing is that SEBI also does not seem to be concerned about this as, if it were, it would have questioned such companies. But there are hardly any instances of this.
It must be said in all fairness to SEBI, that barring a couple of exceptions, the information officer of SEBI provides the information and the appellate authority issues his order within the prescribed time. But a wider and a more important question is, apart from technical compliance, whether the information seeker is satisfied with the information provided or not.
Many times, the information is either incomplete, incorrect or misleading. There have been attempts to stonewall the information and to wear and tire out the applicants. Similarly, there have been instances where the same information is given to one but denied to other.
Sec. 2(f) of the RTI Act
empowers SEBI to call for information from intermediaries under it. However, it has failed to take any action against those who were arrogant enough to refuse to provide the information.
In fact, there is a shocking instance where SEBI appellate authority held the hearing at eight 'o clock at night when officials of the intermediary refused to come for a hearing scheduled during office hours citing office work.
Whenever a citizen writes to SEBI to consider policy issues, instead of looking at it with an open mind by following due process, SEBI officials adopt an adversarial attitude. As a matter of fact, a regulatory body should encourage such articulate citizens and increase their participation in the affairs of the body. The officials do not show even the basic courtesy of informing the decision to the concerned person and one has to take recourse to RTI. This indeed does not bring grace to the organisation.
As a result, citizen feels insulted, demoralised, while errant companies are emboldened and go scot free.
- Assuring and trustworthy regulator
Regulator is a public body and a common investor approaching it must feel assured that he will be received well and not insulted. An assuring and trustworthy regulator is a precondition for wider participation of investors in the capital market. The regulator and the citizens must have a cordial and mutually respectful relationship rather than a hostile one.
Grievance redressal should be achieved through dialogue, mutual trust and confidence. Protection and preservation of customers' interest should be the ethos of any organisation more so of the regulator. The officials of the regulator must demonstrate by their actions that they are making honest efforts to redress the grievance.
One does not really feel sorry if decision is not in his favour but he certainly is restive and feels cheated if he realises that due process was not followed. This causes resentment against the regulator.
It is thus concluded that like any institution SEBI despite having made a lot of progress and accomplished quite a lot, still has a long way to go. It needs to look into its complaint redressal mechanism soon so that it does not lose the trust of investors.