"Why would someone take any decision if fear is instilled that he or she could be subjected to such agony years later," eminent banker and chairman of financial sector conglomerate HDFC Group, Parekh, told PTI over telephone.
Calling Sebi's former Chairman C B Bhave a person of high integrity with an excellent service record, Parekh said, "When genuine persons are being subjected to such harassment, how can you blame bureaucrats for not taking decisions."
These comments at a time when various experts have been talking about an apparent laxity in bureaucracy for decision making, especially because of various scams coming to light.
In the present case, a Preliminary Enquiry registered by CBI against Bhave, another former senior official of Sebi, K M Abraham, and others for alleged irregularities in grant of license to MCX Stock Exchange way back in 2008.
The move is being criticised because the enquiry has been apparently initiated on the basis of an already disposed-off Income Tax Department probe against the exchange's erstwhile promoters. Even Bhave has said that CBI has ignored the fact that the I-T department itself did not find any merits in the case and had closed it years ago.
Asked whether such developments would impact good people from bureaucracy and corporate sector taking up regulatory roles especially in complex areas like financial markets, he said: "Why would a bureaucrat or a say a bank chairman take a decision if such things happen.
"People can see who is straight and who is not. If such people are being harassed, it is a disgrace on our system. Why would someone take any decision if a fear is instilled that he or she could be subjected to such agony years later."
Reacting to the action against Bhave and Abraham, Parekh said he was "very saddened to read that CBI was going after Bhave and Abraham".
"I have know Bhave for a long time and I can say that you can not find a more upright person. He is a person who walks straight as a straight line. He is person of high integrity," the top industry leader said.
Parekh said he has worked with Bhave on various occasions, including at the time of Satyam crisis when he was appointed by the government to an interim board to oversee revival of the scandal-hit IT company.
Besides, Parekh also served as Chairperson of Sebi's Primary Markets Advisory Committee during Bhave's tenure, while he was also on a committee on bond markets.
"I have not known anyone as clean as Bhave. I have worked with him in different capacities. Being in financial world, I worked with Bhave for many years and I can say that I've never met anyone as upright. He is clean as a whistle and CBI is going after the wrong person," said Parekh.
Parekh, however, dismissed suggestions that the latest CBI move could be part of some larger political conspiracy ahead of general elections.
"I don't see that possibility," he said, when asked whether the bureaucrats and regulators were being targeted as part of some conspiracy ahead of elections.
"Asserting that CBI was "going after a wrong person," Parekh said he had "heard of some cases when he (Bhave) was pressurised to do things which were not right and to give favours to people, but he never heeded to any of them.
"He never did anything wrong and he did not even get an extension as Sebi Chairman."
"So many people including Jairam Ramesh have criticised the move and you can ask anyone who has had working relationship with him and he would say the same thing," he added.