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Inability of SEBI to safeguard the investors

Published: 28th Feb, 2022


The Securities and Exchange Board of India (Sebi) had shared information sought by the Central Bureau of Investigation (CBI) related to the National Stock Exchange (NSE) as far back as 2018, when the federal agency registered an FIR in the co-location matter.

The case involves Ms. Chitra Ramakrishnan.


  • National Stock Exchange (NSE)’s former Managing Director (MD) and Chief Executive Officer (CEO) Chitra Ramkrishna has been accused of
  • sharing confidential information about and from the Exchange to an unknown person
  • appointing a high ranking NSE official, Anand Subramanian, in an arbitrary manner
  • The regulator states that her unknown spiritual guru influenced her decision making.


What is SEBI?

  • The Securities and Exchange Board of India is a legal administrative body set up on the 12th of April, 1992.
  • The main purpose of SEBI is to manage and regulate the securities and commodity market of India while forming guidelines and rules.
  • The administrative center of SEBI is in Bandra Kurla Complex, Mumbai.
  • SEBI has a corporate structure involving different divisions, each oversaw by an office head.
  • Key-functions: SEBI is basically set up to ensure the interests of financial backers in the protections market.

How the issue is of ‘Corporate governance’?

  • There is never a dull moment with issues of corporate governance in India.
  • Boardrooms and living rooms have been equally spell-bound by the latest revelations emerging from the country’s premier bourse, National Stock Exchange (NSE), that an ascetic was said to have guided its management with business counsel and regulatory advice.
  • The NSE is expected to act as our stock market’s first point of control, a preliminary regulator before the legal oversight exercised by the Securities and Exchange Board of India (Sebi).
  • Yet, forensic reports on the NSE’s operations and governance offer disturbing evidence of multiple breaches, raising the spectre of a first-stage regulator in need of close supervision.
  • Infractions at the NSE—which was accused in 2015 of an alleged split-second early-data edge given to some traders—go beyond the misdeeds of one person and implicate board members who had the fiduciary responsibility of monitoring, fixing and reporting lapses and violations.
  • With a long rope granted to the exchange’s top executives, its board apparently betrayed the trust of shareholders whose interests they had to protect.


  • Three points are worth raising here.
    • One, the idea itself seemed a bit inappropriate in the context of corporate structures where family-owned firms dominate our business arena, especially with such a long record of entrepreneurs who run their own businesses.
    • Two, with the split idea floating around for four years, space was opened for political rent-seeking as corporate groups lobbied for relaxation. Sebi, in that sense, could be viewed as having wittingly or unwittingly worsened crony capitalism.
    • But, finally, the proof of the pudding lies in the empirical evidence of offences occurring in companies even where those posts had been separated, with NSE a prime example.

All this raises another question: Will this rule now be reversed for banks, where role-separation has been in force for some time but failed to prevent scandals like those at Yes Bank and ICICI Bank?


As self-regulatory organisations, stock exchanges have a front-line responsibility for regulation of their markets and for controlling compliance by members of rules to which they are subject,” the order read. Organizations must work to ensure that stocks are reliably traded and that issuers meet standards of corporate governance. Stock exchanges as institutional mechanisms have an important role to play in ensuring the stability of the financial and economic system.

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