Mumbai: Chandrasekhar Bhaskar Bhave, 60, is a man who evokes extreme emotions on both sides of the spectrum. As he steps out of the eighth-floor chairman’s office at the Securities and Exchange Board of India (Sebi) building in Mumbai’s Bandra Kurla Complex for the last time on Thursday, it can be safely said that no one with any connection to the capital markets could have ignored him during his three-year stint at the head of the regulator.
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His supporters say Bhave transformed Sebi into a smart, swift and bold regulator. K.N. Vaidhyanathan, executive director of Sebi and Bhave’s trusted lieutenant, dubs it Sebi Version 2.0. Qualified as an electrical engineer before he entered the Indian Administrative Service (IAS), Bhave came to Sebi with a clear vision, having built up a wealth of experience.
He was senior executive director at Sebi in 1992-96 under its first chairman G.V. Ramakrishna and then served as chairman and managing director of National Securities Depository Ltd before being appointed to head the capital market regulator in 2008.
He also carefully chose his team when he picked the people who would turn his vision into action and make Sebi and the entities it regulated investor-centric.
His team included Dr K.M. Abraham, an IAS officer who has brought a vast change in the way Sebi orders are written, making them comprehensive and watertight. This ensured that it became harder for Sebi’s rulings to be overturned in the appellate forum.
Another member of Team Bhave was Pradnya Sarvade, an Indian Police Service (IPS) officer who changed the way investigations were conducted.
Vaidhyanathan, an alumnus of the Indian Institute of Management, Ahmedabad, talked to the funds in their language and cracked the whip whenever required. Bhave also brought in structural changes, bifurcating the investigation and adjudication departments and doing away with the inherent ambiguity created by the overlap of these functions.
Of the three years he headed Sebi, the first tested his firefighting skills as he weathered the impact of the global financial crisis. Bhave also acted quickly and decisively to restore confidence in Indian firms following the accounting fraud at Satyam Computer Services Ltd that was uncovered in January 2009.
Bhave’s second year was occupied with far-reaching initiatives, the most high profile of which was the abolition of entry loads in mutual funds.
According to Sebi’s estimates, this has resulted in savings of Rs2,000 crore in the past one year for small investors. He also changed norms for initial public offerings (IPOs) —money does not leave investor accounts unless shares are allotted.
This led to investors saving money and issuers timing their IPOs better.
The third year was Bhave’s most controversial as he targeted brokers, companies and exchanges. This included the Sahara group, Reliance Industries Ltd, Anil Ambani’s Reliance Group, MCX Stock Exchange and the insurance regulator. Perhaps, Bhave’s contribution was to ensure that Sebi remained relevant. At the regulator’s last board meeting, he summed things up thus: “Chairmen come and chairmen go, but Sebi remains.”
RH Patil,founder chairman, National Stock Exchange
I think comparisons may not be appropriate. Bhave has shown firmness and has not cowed down under pressure. He is a man of high integrity, has had a great amount of clarity in his mind as to what needs to be done for the capital market. He is an absolutely rare person at that. He has done a lot of cleaning up in the system. A great many number of cases were pending and Bhave has taken a lot of firm decisions.
Three years is a short term in an organization like Sebi. So, it is difficult to point out what he did not do. Had he been given a longer tenure, say five-seven years, he would have taken Sebi to a different orbit.
On the road ahead:
Sebi is really a living organization. There are no stale issues. Every day new things come up. The chairman should tackle them adequately and should not sit on them. That itself would be a great job.
Viral Acharya,professor of finance at Stern School of Business, New York University
In my interactions with him in the past year and a half, I have found him very balanced and quite independent in his views on the market as well as the financial crisis. He was quite aware of the implications of any action on growth and stability of the economy. His tenure has ensured that markets have grown at the right pace, with the right safeguards and in a way that has benefited most even if specific constituencies might have been unhappy with him.
By being tough and at the same time market friendly, he has lifted the stature of the institution he headed, Sebi...
I would actually give him a 10/10 given the past somewhat conservative stance of Indian regulation and of regulators he worked with.
On the road ahead:
I think the most important agenda would be to bring greater transparency and measures for minority investor protection. The other important agenda would be development of a corporate bond market that is linked to the credit derivatives market. India has a thriving equity market that contributes to the growth of the nation and if we have a similar corporate bond market, that would ease problems of financing considerably and probably help the economy grow faster.
Percy S Mistry,chairman, Oxford International Associates
Chandrasekhar Bhave was the best chairman that Sebi has ever had. The particular attributes he brought to the job were insight, intelligence and integrity of a rare order. Many IAS officers who have reached dizzy heights have those qualities; but few exercise them, to the same extraordinary degree, that Mr Bhave did at Sebi. He acted with impartiality, integrity and honesty without fear or favour. He made Sebi responsive in real-time to acute market pressures. He blocked issues that were not in public interest and took on heavy-weight opponents with strong political backing and clout. Yet he did so in a very mild-mannered, measured and self-effacing way. I have never heard Chandu raise his voice.
His tenure at Sebi was marked by the kind of probity that even those adversely affected by it had to admire and respect. Contrary to every stereotype that Indians have, of the bureaucrats who govern and regulate various aspects of their lives, I know of no one who thought that under his leadership Sebi had done anything contrary to the best interests of ensuring that India’s capital markets functioned as efficiently, honestly, transparently and responsibly as any market in the world. His signal contribution and value addition was to make Sebi the only Indian regulatory institution (perhaps, the only public Indian institution) that was unarguably world class and probably rated among the best in that class.
It is with great sadness that I see him leave Sebi though I believe, whether through accident or design, that his successor—Mr U.K. Sinha—brings the same qualities to this challenging and difficult job in one the largest and fastest-growing markets in the world. The only other person I can think of in the same class of outstanding individual, with the same combination of technical and managerial ability and integrity, is K.P. Krishnan, the former joint secretary of the capital markets division in MoF, whom I had the privilege of working closely with for over a year on the MIFC report. Sadly, people of that calibre and independence seem not to be in high demand in policymaking circles in North Block these days.
One can only hope that, in a decisive break with the past, the future leaders of India’s regulatory agencies are appointed to meet the extraordinary standards that Mr Bhave set at Sebi. In a highly politicized India, the appointment to leadership positions of senior bureaucrats from an incestuous pool, incubated in a byzantine bureaucracy like the IAS, has in the past been governed by criteria that measured their ability to “go along in order to get along” and their amenability to the wishes of their political masters. In rare instances, like Mr Bhave at Sebi and Dr Y.V. Reddy at RBI, those criteria took second place to extraordinary capability and integrity. As a result, India and its financial system benefited immeasurably.
Let’s hope that in the future, India is regulated, whether in finance, telecom, power, or any other sector, more and more by men with Mr Bhave’s unusual personal qualities, attributes and extraordinarily high calibre.