Madhabi Puri Buch won’t forget 2024 in a hurry. In an interview to a business magazine at the beginning of the year, she had proudly proclaimed that she knew exactly “where all the skeletons are hidden”. Just about six months after that statement, the world turned upside down for the first woman chairperson of the Securities and Exchange Board of India (SEBI), with many questioning whether the so-called “skeletons” were actually hidden in her cupboard.
Most of the questions raised about her integrity are still mere allegations as they have not yet been proven but her position as a markets regulator who would often talk to the regulated about the virtues of governance and proper disclosure has become uncomfortable. That the high-profile Buch is feeling the pressure is evident from her relatively fewer appearances in public forums after the allegations started flying thick and fast, even though the government seems to be backing her. Not even her worst detractors would describe her as media-shy; yet, she has started avoiding direct media interactions and didn’t hold the post-board meet presser since October — a rare deviation.
It all started going awry from August this year when US-based short seller Hindenburg Research accused Buch and her husband of complicity with the Adani Group, pointing out that the couple used the ‘exact same funds used by Vinod Adani, brother of Gautam Adani’ to invest — which it interpreted as a key reason for SEBI’s inaction against the group. The Congress caught on to the allegations and made several of their own, many bordering on being ridiculous, but it nevertheless kept the pot boiling and continues to do so. The Buch couple has vehemently denied all the charges.
There were also allegations about conflicts of interest due to a 99% ownership in the Indian consulting firm Agora Advisory, which continued to earn revenues despite her appointment as SEBI’s whole-time director and chairperson. Again, these were denied by the Buchs, but the continuous uproar has definitely crimped Buch’s style of operation. Clearly, she is yet to win the perception game.
Her second-biggest setback was the handling of employee protests. After reports accused senior SEBI officials of misbehaviour, the markets regulator did the unthinkable — first, issued an official statement accusing employees of being influenced by outsiders, and then withdrew it as outraged employees continued to protest – a PR and HR disaster.
Like former SEBI chairman M Damodaran told FE in a recent interview: “When you issue a press release, you should be able to stand by it later. It is an unfortunate development.”
Among other things, Buch’s grand plan to implement T+0 settlement—the first globally—simply fell flat. Even though she made a very strong pitch that funds will move away from the regulated markets towards crypto and similar assets, if bourses don’t move towards instantaneous settlement, neither brokers, nor the exchanges made a real effort to back her. The government, which usually likes to boast of ‘firsts,’ didn’t put its heft behind her plans either. Of course, it has been officially launched, but most are ignoring it.
Another one — making depositories pay directly to investors, thereby taking away brokers from the equation — failed to take off. The move was made ‘optional’ over two decades ago, but SEBI decided to give the entire system a hard push by making it ‘mandatory’ within a few months. The result: The system collapsed on Day 1. And, since then, no one is speaking about its resurrection. Even her enthusiasm about regulating cryptocurrencies seems to have fallen on deaf ears, for now, at least.
For now, all is quiet on the SEBI front with the Congress also moving on to other things. Whether she continues as the SEBI chairperson three months down the line (her three-year term ends in March, 2025) is anybody’s guess. But one hopes the unfortunate controversy around her does not prompt the government to go back to the comfort zone of appointing bureaucrats in regulatory positions.
There is some merit in the argument that she should have known better than not adequately disclosing certain facts, but no one can deny that having been groomed by ICICI Bank’s Late N Vaghul and then KV Kamath, Buch was probably among those most qualified for the SEBI chair’s position. Her admirers compliment her for not being dependent on second-hand reports to make decisions. Moreover, some of SEBI’s actions, like on the derivatives market, was backed by solid data.
In any case, observers say this is not about individuals. The government should not shut the doors of the SEBI chairmanship to credible names from the private sector who may bring in deeper insights and understanding on the functioning of markets. Buch is the first person from the private sector to head SEBI; hopefully she won’t be the last one.