Sebi's chief finds himself helpless as the stock market regulator goes after his former organisation, but doesn’t lose his essential optimism and can-do spirit.
Chandrasekhar Bhaskar Bhave loves to look in the mirror. That’s obvious, we feel since, at the age of 59, most of us would love to have his jet black hair and his slim build, the result of daily yoga and playing tennis, write Shyamal Majumdar and Rajesh Bhayani.
But the reason for Bhave’s love for mirrors, it appears, is quite different: He looks into the mirror, he says, only to ask the question “Am I proud of what this guy did today?” If the answer is a resounding yes, nothing else bothers him. “After all, your conscience will never lie,” the Securities and Exchange Board of India (Sebi) chairman says, taking a sip of sugarcane juice at the Taj Land End’s Masala Bay restaurant.
The reference to his conscience was provoked by our query on the ongoing controversy over a Sebi panel’s order on the National Securities Depository Ltd (NSDL) issue. The panel has criticised the functioning of the premier depository, which was previously headed by Bhave.
Bhave refuses to discuss any details, except for referring to his favourite habit of looking into the mirror. His only comment is that, when he took up the Sebi job, he never imagined he’d be in a situation where he couldn’t utter a word on the issue, even while no one else involved in the matter has any such compulsions.
Bhave had initially declined the Sebi post since, when he headed it, NSDL had challenged the Sebi order implicating it in the IPO scam. But Finance Minister P Chidambaram was insistent and even asked him whether money was the issue (the Sebi chairman’s job pays a lot less than the NSDL one). It wasn’t, Bhave said, so a solution was worked out — it was decided that Bhave would recuse himself from the NSDL case.
“The main reason why I took up the Sebi job was my training as a public servant. When the PM or the FM asks you to take up a challenge, you simply can’t say no,” he says.
Getting the Sebi chairman to talk on the NSDL issue for the first time was something we were tempted to pursue further. So we ask: Does it hurt when everyone is taking potshots at you, when your hands are tied? Bhave takes another sip of the juice and says that while holding a public office, one has to deal with situations — fair and unfair — and then asks the waiter to serve the main course. We get the message and give up on our efforts.
The lunch, comprising naans, grilled pomfret and chicken curry with vegetables, is served at lightning speed, and Bhave talks about his modest family background. His father, who started his career as a clerk and retired as Divisional Engineer in the telephone department, was the main reason why he too opted for a government job. Though a topper in his school and engineering college, he managed to get into the IAS in 1975 in only his third attempt.
Bhave says his days in the IAS have given him valuable lessons in management. For example, as the Collector of Nanded, he faced one of the most formidable challenges in his career — organising flood relief measures on an unprecedented scale. But, when the then Chief Minister Vasantdada Patil came for a visit, the local MLA complained to him about Bhave and the district administration’s failure to rise to the challenge.
Patil visited some of the relief camps and asked Bhave to accompany him in his car (the MLA was told to come in another car) on his return journey to the helipad. Bhave says the signal to the MLA was clear: The CM had full faith in the Collector.
But the second lesson was more crucial: The Collector was politely told to foster a greater sense of participation in local politicians. “There is no harm in involving them more — setting up committees could be an answer, as they might come up with something new,” he was told. Bhave hasn’t forgotten that lesson in environment management from a veteran politician whose formal education stopped at class IV.
That lesson must be coming in handy now as he holds the post of India’s capital market regulator. Bhave has decided to involve more and more market participants in the decision-making process. For example, one of the first things he did as the Sebi chairman was to set up a committee which would represent the interests of mutual fund investors for the first time. He has also revamped many other committees.
The main course is over and Bhave opts for kulfi only after some prodding from the waiter. He talks fondly about his ex-boss, G V Ramakrishna, who had brought him to Sebi as the executive director in 1992. “I knew nothing about the markets at that time, but Ramakrishna’s persuasive powers were infectious.”
Those few years were a huge learning experience, as that was the time when Sebi was taking its initial steps to reform the stock exchanges and putting systems in place to ensure investor protection. It was during his stint in Sebi that his boss, G V Ramakrishna, banned badla.
“During meetings, Ramakrishna would start with a line of argument and then ask for feedback. Just when everyone present agreed with his argument, he would start saying the exact opposite of what he had said earlier. I learnt how to weigh the pros and cons of an issue from him,” Bhave says.
Bhave resigned from the IAS in 1996, to take up what was then seen as a rather low-profile job — to create India’s first share depository, even though he had the option of going there on deputation. “The job needed full-time commitment from me and from the team I was recruiting. How would I get it, if I did not burn my boats myself?” he says.
The result was stupendous: NSDL revolutionised the capital market by getting market players to accept the new system of dematerialised shares and debentures. He won buyers’ support by arguing that demat would eliminate bad deliveries of shares and impressed upon the sellers that this would facilitate early settlement and early payments. Setting up of a depository that converts physical share certificates into an electronic form was not easy, but the NSDL set up the depository at under Rs 100 crore, or a seventh of the original estimate, and achieved paperless trading within just three years, the fastest in the world.
The lunch is over, but the Sebi chairman isn’t in a hurry to leave. Apart from domestic capital market issues, Sebi now has to be externally-focused on international developments, he says. For example, Sebi has been invited to join the International Organization of Securities Commissions (IOSCO) Technical Committee — the idea being to involve some of the fastest-growing emerging market regulators to discuss and debate global cooperation and evolution of standards on capital market regulations. Sebi has already set up an international affairs division for this and has been holding meetings with key market intermediaries to pick their brains on the subject.
All these are reasons why the Sebi chairman doesn’t remember when he last went on long leave. His wife, who was his batchmate in the IAS, understands the job compulsions, and since his son and daughter are now both settled in the US, this gives him that much more time to pursue his goals.
As his Honda Civic drives into the hotel portico, Bhave says he hasn’t thought about retirement as yet, but would love to teach maths to young children one day. “People have forgotten how to teach such a fantastic subject. I would love to do that exactly the same way as my grandfather taught me maths,” he adds.