Home / Markets / Stock Markets /  Chitra Ramkrishna: Portrait of a stunning fall

MUMBAI : Soon after she took over as the managing director and chief executive of the National Stock Exchange of India Limited (NSE) in April 2013, Chitra Ramkrishna, always dressed immaculately in Kanjivaram sarees, met brokers several times in Delhi and Mumbai. In the hub-and-spokes architecture of modern markets, exchanges are the hubs, or clearing houses of trades, and brokerages are the spokes where trades and orders originate. For an exchange to be successful, it needs to understand the pulse and needs of brokerages.

To the brokers, she came across as a natural leader—someone who radiated passion and ambition, but with reassuring calm and poise. Her predecessor at the NSE, Ravi Narain, avoided interactions with the brokers. She was going to be different—it was immediately obvious.

“She wanted to figure out what the NSE could do better for brokers and where they thought the exchange was lacking," one of the brokers, who didn’t want to be identified, said.

Soon, she developed a reputation for competence far beyond the small circle of brokers who first understood she was a formidable leader.

Ramkrishna was awarded ‘Forbes Women Leader of the year’ in 2013. A few years earlier, Fortune India called her “the most powerful woman in India’s securities market". Business Today featured her in its ‘Most Powerful Businesswomen’ list. Around 2008, when she was the deputy managing director of the NSE, she told the magazine that power to her meant “shunning media glare and letting her actions speak for her work".

Fourteen years since, Ramkrishna has all the nation’s media attention. But for all the wrong reasons.

Tech maven to Yogi’s puppet

The markets regulator, the Securities and Exchanges Board of India (Sebi) has indicted her for corporate governance transgressions in a manner than has grabbed the world’s attention—the head of a modern stock exchange known for ushering in modern technology to India’s markets infrastructure has claimed to have been guided by a Himalayan yogi, or a mystic, as explanation for why she had shared confidential information relating to the exchange with an unidentified email id.

She also appointed Anand Subramanian, an executive with little or no experience in the financial sector, in a senior position with egregious compensation and extraordinary hikes. Little is known about Subramanian, and his appointment remains a mystery, too, but he was called as ‘Subbu’ by NSE insiders. This was a “glaring conspiracy of a money-making scheme" involving Ramkrishna and Subramanian, along with the unknown guru, the Sebi order stated.

A person who was once regarded as the jewel of the NSE, is now being referred to as the puppet of a Himalayan Yogi who went by the title ‘Rigyajursama’.

On 17 February, Ramkrishna was dealt yet another blow: she became the subject of a tax department probe. This is the second tax raid on her, the first one was in November 2017, in the infamous colocation scam.

Since her resignation from the NSE in December 2016, Ramkrishna has been caught up in a litigation with Sebi. In the past six years, she hasn’t made a single public appearance. She hasn’t taken up any company directorship or even an academic appointment.

Her spectacular rise from being a graduate of RA Podar College of Commerce and Economics (in Mumbai) to heading the NSE and her subsequent downfall is the stuff of bad fiction. But the details that have emerged so far have only given rise to more questions—was she a gullible person who got manipulated? Or did she actually hatch a money-making scheme?

It will be sometime before we know the answer. Meanwhile, those who knew her remain both shocked and disappointed.

“RH Patil, the founder of the NSE, would be deeply saddened by what is happening at the exchange today. It is his handpicked team which has been caught doing this massive disservice to this institute of national importance," a former regulatory official, who didn’t want to be identified, said.

Mint spoke to a number of people who knew Ramakrishna—colleagues, rivals, exchange officials, brokers—to stitch together this remarkable tale—and the lessons it hold.

Mint reached out to Ramkrishna over messages and calls. She did not respond.

In the meantime, Ramkrishna, the NSE itself and the exchange’s former compliance officer, VR Narasimhan, have all started mounting their legal defense. Ramkrishna is being represented by counsel S Priya; Narasimhan is consulting law firm Trilegal.

The beginning

Ramkrishna was born in a Tamil-Brahmin family in the suburbs of Mumbai in 1963. Her father was a chartered accountant and her grandfather a cost accountant. She once described her family as ‘enlightened’—it’s unclear if this refers to an inclination towards spirituality.

By the time she was 21, Ramkrishna had completed her chartered accountancy. The Industrial Development Bank of India (IDBI) appointed her in its project finance department, in 1985.

“It is at IDBI she met her husband. Beyond this, not much is known about him. She was a very private person," said a person who knew her from the 1990s. Outside of work, she was known for her passion for Carnatic music. She played the veena and attended Carnatic music concerts.

Between 1988-1990, IDBI was tasked with drawing up the Sebi Act. IDBI had put together a small team to do the groundwork and Ramkrishna was part of it. The Sebi Act came into being in 1991-1992.

After the 1992 Harshad Mehta scam, the Indian government wanted a professional exchange with screen-based trading. IDBI, again, was given the responsibility. The then Chairman, SS Nadkarni, handpicked a team, which included Chitra Ramkrishna, RH Patil (former IDBI director), Ravi Narain, Raghavan Putran, and Ashish Kumar Chauhan (the current chief executive of Bombay Stock Exchange).

While the BSE conducted trading through an open outcry system in the pit, the NSE set up a satellite-based system to facilitate screen-based trading. Incorporated in 1992, the NSE commenced operations in 1994.

Over the years, two of the founding members–Putran and Chauhan—quit. Putran left allegedly because of his connection to the stock lending scam of 2000.

In March 1995, the NSE had 135 companies and the daily average turnover for equities was barely 17 crore. By the time Ramkrishna became the chief executive, the NSE had over 1,600 actively traded companies and the average daily turnover in the cash segment had grown to around 15,000 crore. Today, the NSE is the world’s largest derivatives stock exchange in terms of volumes.

Ramkrishna’s moment in the sun came in November 2012, when Ravi Narain announced her as his successor. This marked her rise—and the beginning of turbulence.

The controversies

The day Ramkrishna assumed office, on 1 April 2013, she walked in with Anand Subramanian, the former exchange official said. This is corroborated by Sebi, who in its order of 11 February, said that Subramanian was appointed in March 2013 as a consultant. The salary was eye popping— 1.63 crore—11 times the salary he drew at Balmer & Lawrie, a state-owned industrial corporation where he was a full-time employee.

Subramanian’s irregular hiring is the focal point of Sebi’s order. “His appointment led to huge resentment within the organization. An organization which was known to be professional and offered opportunities to grow with it had now fallen prey to a culture of favoured hiring," the former exchange official said. He added that Ramkrishna brought in Subramanian because she needed someone completely loyal to her, out of concern that the existing officials were perhaps loyal to Narain, the outgoing boss.

“It’s people like us who suffered tremendous collateral damage like litigation with Sebi for three years due to the misdeeds of Chitra. Not to mention, the loss of peace of mind we had to go through saluting and indulging someone like Anand," Umesh Jain, the NSE’s former chief technical officer, said on twitter.

From being a consultant, Subramanian was subsequently hired as the chief operating officer. Various functional heads of the exchange—the chief people officer, chief marketing officer, strategic business heads, and chief technical officers among others—were all made to report to him. The appointment did not pass through the nomination and remuneration committee and his salary, now hiked to 4.21 crore, was all cleared and appraised by Ramkrishna.

The resentment against Subramanian was still brewing when a whistle-blower complaint complicated things further. It surfaced in late 2015, from an individual who went by the name Ken Fung. The allegation: the NSE’s co-location and algo trading services provided an unfair advantage and access to a few brokers. Co-location refers to the service where the exchange permitted brokers to locate their servers in its own premises. This reduces latency and enables faster access to market data and thereby trading.

Back then, Ramkrishna was staunch in her denial of any wrongdoing.

Regulator steps in

The complaints reached Sebi.

“At the beginning, the regulator nudged the board to investigate. But they resisted. Then we referred the allegations of unfair access to the technical advisory committee, which recommended a probe," said a former Sebi official who was part of the probe.

Three forensic audits followed—by EY India on NSE’s cash and currency segments; a second one by the Hyderabad-based International School of Business (ISB) to determine illegal gains made by the brokers due to unfair access; and a third by Deloitte Touche Tohmatsu India Llp.

These three reports formed the backbone of the first Sebi order against the NSE, and its former chiefs– Ramkrishna and Narain—in May 2019. Sebi held that the NSE had failed to ensure equal and fair access to all members when they were using its algorithmic trading platform and co-location services.

The exchange was subsequently asked to deposit 1,000 crore as penalty in an investor protection and education fund. Narain and Ramkrishna were asked to pay back 25% of their salaries each. The duo was also barred from the markets for a period of five years.

The NSE appealed the order. The Securities and Appellate Tribunal (SAT) has completed the hearings and a final order is expected.

“While investigating the unfair access case, Sebi came across certain emails which suggested that some of NSE’s information was being shared with an individual outside the exchange," said the former regulatory official.

Sebi also started exerting pressure on the board to investigate and take action on the irregularities in hiring. By now, the NSE had a new board. Some old board members were eased out and new Sebi-chosen members inducted in the months of May and June 2016. Chairman SB Mathur was replaced by Ashok Chawla on 3 May 2016.

The new board was more receptive to what Sebi was asking as compared to the earlier board.

“Till the time Subramanian was a consultant, Sebi could not do much. But as soon as he was elevated to becoming the COO, Sebi got involved. At one-point, Sebi told the new board to sack Subramanian and Ramkrishna," said a person familiar with the then board’s thinking. “This led to the sacking of Subramanian. The board wanted to sack Ramkrishna but she offered to resign. The board allowed her to go gracefully considering her years of service," the person added.

This generosity from the board hasn’t gone down well with the regulator, who held the exchange accountable for not taking action.

The mystery

This brings us back to the curious case of Subramanian and the Himalayan mystic.

Sebi’s order stated that Ramkrishna knew Subramanian as he was the husband of her friend and NSE employee Sunitha Anand. However, people who have worked with the two of them said they have known each other a long time.

“He may have known Ramkrishna as they both had the same Guru. No one is aware of his whereabouts now. But he has made appearances before Sebi during the probe and the quasi-judicial hearing," said a market participant.

The NSE’s version of events state that the so-called yogi who corresponded with Ramkrishna with the alias ‘Rigyajursama’ was none other than Subramanian. EY’s probe says the same, too. The exchange supplemented its response to the regulator with a report from a practitioner dealing with human psychology. It stated that Subramanian exploited Ramkrishna by creating another identity in the form of Rigyajursama to manipulate her. This reasoning portrays Ramkrishna as naive.

“It cannot be ruled out that Subramanian is the unknown third person but the EY findings are inconclusive. If they are the same, then why go through the exercise of creating a new persona?" said the former regulatory official cited earlier.

Ramkrishna has told Sebi that the third party is a ‘siddha-purusha’ or ‘paramhansa’, her spiritual guide for over 20 years—not Subramanian.

Sebi, therefore, has its work cut out. It needs to hold the NSE’s board accountable while referring the matter to other enforcement agencies who have better tools to figure out the identity of the guru—like the Central Bureau of Investigation (CBI).

Jayshree P Upadhyay
Jayshree heads a team of reporters focussing on legal, regulatory, investigative stories. She has worked for over a decade, reporting on financial scams, legal stories and the intersection of corporate and regulatory issues. She is based in Mumbai and has previously worked with Business Standard, Mint, The Morning Context and Bloomberg TV India.
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