The National Stock Exchange (NSE) has inducted former petroleum secretary Girish Chandra Chaturvedi and State Bank of India (SBI) former deputy managing director Anuradha Rao into its board as public interest directors (PIDs).
Sources say Chaturvedi, who is a 1977-batch IAS officer, could even fill the chairman’s post, which is lying vacant since January. This comes as Ashok Chawla stepped down after the Central Bureau of Investigation (CBI) was granted sanction to prosecute him in the Aircel-Maxis case.
The appointments were approved by the NSE board at its meeting held earlier this week, said people in the know. Sources said the NSE, after further deliberations with other board members and stakeholders, could propose the name of Chaturvedi for the chairman’s post. The appointment will have to be ratified by the Securities and Exchange Board of India (Sebi).
Fresh appointments are crucial for the exchange which is looking to go public and bury the ghost of the unfair access controversy.
Getting PIDs on board has become challenging for market infrastructure institutions (MIIs), which are stock exchanges, clearing corporations and depositories, after market regulator Sebi, in February, issued a stricter framework for their appointment and performance review. Under the new norms, the initial tenure of PIDs can be only three years and an extension is subject to performance review by Sebi.
At least a fourth of the board of an exchange should comprise PIDs, who are responsible for upholding the governance standards at MIIs. Sources said the new appointments on the NSE board have been approved and vetted by Sebi.
If Chaturvedi is appointed chairman, he will be the second bureaucrat to head the NSE board after Chawla. Industry players said it helps to have a civil servant as the chairman of an exchange.
“An exchange, being one of the most critical parts of the market ecosystem, has to deal with various stakeholders such as Sebi, the RBI (Reserve Bank of India), the finance ministry and brokers. It is important to have an official at the helm who is experienced in dealing with these stakeholders,” said an industry participant.
Chaturvedi and Chawla both have a civil services link. Currently, Chaturvedi is the non-executive chairman of ICICI Bank. While Chawla was the NSE chairman, he too served on the board of private sector lender YES Bank as non-executive chairman.
Chawla, who had served as the chief of Competition Commission of India (CCI), had joined the exchange at the peak of the unfair access controversy amid several probes at the exchange and on its officials.
In May, Sebi passed an order in the unfair access matter, where it directed NSE to disgorge Rs 625 crore, along with interest at 12 per cent per annum since 2014, for lapses at its co-location (colo) facility, which allowed unfair access to certain brokers. The regulator also barred the exchange for a period of six months from accessing the securities market.
The exchange has challenged the order at the Securities Appellate Tribunal (SAT). The exchange will proceed with its IPO, which has been held back for three years, after the tribunal gives its verdict.