When Upendra Kumar Sinha walked into his eighth floor office at Securities and Exchange Board of India (Sebi) Bhavan for the first time in February last year, he decided to start in the slow lane.
Sinha took time to change gears but once well-versed with the Sebi machinery, pressed the accelerator. His focus was to punish the guilty and make life easier for the small shareholders.
The 1976-batch IAS officer was not new to the capital markets. With a stint in the capital markets division of the finance ministry as a bureaucrat and then the chief of UTI Mutual Fund, Sinha was well aware of the intricacies.
He, however, took time and the first few months of his tenure saw market men talking ?albeit in hushed tones?about a policy inertia at Sebi. It is often said that hush-hush talks reverberate the loudest but Sinha remained unfazed. The veteran bureaucrat set his eyes on reviewing processes related to primary market offerings. His tenure saw the introduction of abridged documents along with the application form, which provide investors the basic but important details of the issuer company. Sinha, incidentally, has made it clear that he is not yet done with the IPO process reforms.
The listing day volatility, which was often attributed to lack of regulatory checks, was also taken care of by way of circuit filters on the first day and call auction mechanism. He also framed a whole new set of draft norms for alternate investment funds and implemented the all-important new takeover code that would govern all mergers and acquisitions going ahead.
Sinha also simplified the trading account opening process and made know your client (KYC) procedures uniform and centralised. The buyback norms were also made more efficient under Sinha’s regime to give smaller investors more space.
Sinha made merchant bankers behave in a more responsible manner, making it compulsory for them to disclose the performance of their previous issues. Though the banking community appeared miffed, the Sebi chief made his intentions clear that it was only the beginning and the bankers should gear up for more stringent but responsible regulations. Interestingly, when Sinha assumed charge the buzz on the Street was that the North Block will have a bigger say in Sebi Bhavan as the former bureaucrat was considered close to the decision makers in Delhi. Sinha has come to the government’s rescue framing rules that could help the government revive its sagging divestment programme.
The recently introduced institutional placement programme (IPP) and offer for sale through stock exchange platform would go a long way in helping the government plan a quick and efficient divestment strategy. No doubt, the private sector would also benefit with the newer avenues opened for fund raising.
The surveillance capabilities of the capital market watchdog was high on Sinha’s agenda and going by some of the recent regulatory actions, one say that ?Sebi is watching closely??one of Sinha’s favourite lines during most media interactions.
In December, Sebi barred around 100 entities apart from companies and merchant bankers for violating IPO norms. There is already talk that a second order will be released soon, penalising another set of wrong-doers.
Appointments at such high-profile offices are always accompanied by their fair share of controversies and Sinha was no exception. Early in his tenure, he came under attack from former whole time member K M Abraham, who alleged that Sinha wanted him to make compromises on some high-profile cases.
Sebi’s stand under Sinha on the ongoing legal tussle with MCX Stock Exchange was also keenly followed after his comments in a media interaction that there should be ?more competition? within the exchange space. Incidentally, Sebi continued with its tough stance during court proceedings with the Bombay HC yet to pronounce its order. Further, the Sebi chief put a question mark on the efficiency of the consent order mechanism, which was hailed by some of the former chairmen and top officials of Sebi. Sinha was of the view that there was no consistency in the way consent orders were passed and so a review was necessary.
nNext week: Did U K Sinha manage to cheer the MF industry?