How top bureaucrat GV Ramakrishna turned bullfighter to clean up India's stock market

So when a former bureaucrat with no experience in capital markets was appointed to head the toothless Securities and Exchange Board of India (Sebi), still lacking statutory powers, there seemed little reason to fear anything would spoil their party.

However, they underestimated the resoluteness and brilliance of GV Ramakrishna (GVR), the man appointed as Sebi chief, and his ability to quickly grasp the rules of the business. Having spent 50 years in the Indian Administrative Services (IAS), he had thrived in far more hostile conditions, including quelling mobs. 

Over the years, he crossed swords with powerful politicians and came out unscathed, thanks to his deep understanding of bureaucratic and regulatory mechanisms. This background proved invaluable in his role of transforming India's securities market.

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The markets were a far cry from the gold medallist in M.Sc. from Mysore University who had started his career as a biochemist with the Rockefeller Foundation, researching haematology at Bowring Hospital in Bangalore. A career in the civil services followed, including stints as Chief Secretary of Andhra Pradesh in the early 1980s and various positions at the Centre. 

A bureaucratic career didn’t mean he lacked business acumen. In the course of his career, he attended Harvard University for his Master in Public Administration (MPA). The programme included a business policy course at Harvard Business School, where he studied economics under economists like John Kenneth Galbraith.

In 1990, two years after retiring from the IAS, he was appointed Sebi chief just ahead of India’s economic liberalization that began the following year. Given Sebi’s ambiguous role at the time, many saw it as a dead-end posting. Not GVR. He pored through reams of laws and by-laws governing the markets and introduced landmark reforms that brought transparency, accountability, and investor protection to the financial ecosystem.

Upon taking over as Sebi head, GVR knew he needed to lay down the law for errant market players. The regulator began publishing a list of companies with the most investor complaints. Initially derided, the exercise of “naming and shaming" defaulters had a major demonstration effect, pushing companies to start paying attention to investors. This was the first step in his push for higher corporate governance standards in Indian business. 

He also advocated for enhanced disclosure norms for listed companies, a significant move toward building investor confidence.

But GVR’s most telling blow came when he banned the shady badla, a local carry-forward system created by the BSE to solve the perpetual liquidity problem in the secondary market. This system allowed investors to buy stocks using borrowed money and carry over transactions by paying interest on the outstanding amount. It was prone to speculative excesses, and broker failures were common. The system was a major factor in the 1992 speculative bubble and the Harshad Mehta securities scam. 

Despite massive opposition, including strikes by brokers across the country, GVR banned badla in 1993, by now leading a statutory Sebi. The practice stubbornly reappeared in various forms over the years until it was finally replaced by futures and options (F&O) trading in 2001.

GVR’s lasting impact

A soft-spoken man with a wry sense of humour, GVR ended his stint at Sebi that year, moving on to the Planning Commission and later as chairman of the Disinvestment Commission. By then, he had already set in motion a series of changes to bring the domestic stock markets into the modern era, in tandem with the broader economic shifts. 

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His intervention was crucial at a time when the country was opening up to global investments and needed robust regulatory mechanisms to attract and protect international capital.

Though he cultivated an image of a tough, uncompromising regulator, his tenure struck a sensible balance between introducing stringent regulations and fostering an environment conducive to market growth. He understood that protecting investors and promoting market development were not mutually exclusive goals.

In 2001, GVR moved to Chennai, where, in addition to continuing to chair various government committees, he also found time to write two books—his autobiography Two Score and Ten: My Experiences in Government and Indian Governance: An Insider’s View.

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He passed away in Chennai in March 2021 at the age of 91. India’s stock markets as they exist today owe much to the foundational work done by regulators like him, whose vision and determination were key in bringing about systemic changes during a transformative period in India’s economic history.