Sebi tweaks rules for appointment of executive directors

Giving in to employees' demand, the Securities and Exchange Board of India (Sebi) tweaked the appointment rules for executive director (EDs). According to sources, the market regulator has decided to increase the number of ED posts to nine from eight. Six of them would be for staffers and the rest would be lateral or on deputation basis.

To carry out the decision, Sebi will appoint one external candidate and promote two internal employees to the posts of ED, said a source. Sebi staffers were lobbying for more internal promotions and had even moved Bombay High Court over this. However, the court had dismissed the petition, observing that Sebi has the power to make external appointment.

On April 11, Sebi Employees' Association (SEA) sought review of a rule that said the regulator has to recruit half of the EDs from outside Sebi.

An SEA letter sent to Sebi chairman, and seen by this newspaper, said, "The current regulation is akin to placing an artificial barrier on the natural progression of the internal talent pool to the post of EDs. The practice of bringing outsider as ED serves no purpose and is rather causing grave damage by devaluing internal expertise gained over years of hard work and experience. This creates a sense of frustration and resentment among employees." 

The six EDs at present are: S V Murali Dhar Rao, market regulation, surveillance, and policy analysis; J Ranganayakulu, legal affairs; S Ravindran, investigation and intermediaries supervision; P K Nagpal, corporate finance; Anantha Baruah, investment management; and S K Mohanty, commodities.

Sources said there are two to three candidates within Sebi who are eligible for the post of ED. They include R S Srivastav, chief general manager and Amarjeet Singh, an executive assistant to the chairman. Both are seen as front runners for the posts of ED.

SEA wants appointment rules for ED to be in line with the Reserve Bank of India policy, which directs RBI to choose all EDs from within the central bank. Also, a problem with lateral hiring is that the chairman fills posts with candidates of his choice, a source said, adding various instances in the past when chairmen have brought in their people.

Recently, the ED issue heated up when Sebi came up with vacancies for two ED posts in January. Then-chairman had put the appointments on hold.