The Securities and Exchange Board of India (Sebi) board meeting on Monday was expected to address allegations of disclosure lapses and conflicts of interest against chairperson Madhabi Puri Buch. However, two board members revealed that the issue was not discussed. This silence has disappointed some participants, particularly given the persistent allegations from the main opposition Congress party. Former officials and legal experts note that the Sebi board has limited scope to act on this matter.
“Chairpersons and whole-time members (WTMs) are appointed by the government. Only the government has the authority to take disciplinary action against them. Unlike a typical company board, they cannot be removed or penalised by the board. Even in cases of apparent conflict of interest, the board lacks the power to initiate formal proceedings,” explained a former chairperson of Sebi on condition of anonymity.
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While the official agenda did not list the conflict of interest issue, sources suggest that it might still be discussed informally. “Between the last board meeting and Monday’s meeting, any significant event concerning the institution, its board members, including the chairperson, has to be taken note of by the board,” said a person familiar with the matter.
While conflict of interest allegations were never part of the official board meeting agenda, a clause in the Sebi rule book that ‘any significant event since the previous meeting concerning the market can be taken note of by the board’ had sparked speculation that the board would take up the issue.
At present, Sebi has eight board members, including the chairperson and four WTMs. The external or part-time members are Ajay Seth, Secretary, Department of Economic Affairs (DEA); Rajeshwar Rao, Deputy Governor, Reserve Bank of India; and Deepti Gaur Mukerjee, Secretary, Ministry of Corporate Affairs.
“This is a matter of regulatory governance by the government. It’s possible that the issue was discussed but not disclosed in the press release, as not all discussions on every agenda are shared publicly. If indeed the board didn’t address the matter, it could be due to an internal process or an ongoing review by the DEA, delaying immediate board-level consideration. As market speculation grows, the finance ministry must communicate the procedural steps being taken to avoid further uncertainty,” said Sumit Agrawal of Regstreet Law Advisors and former Sebi officer.
Governance experts suggest that a statement or clarification from the Sebi board on the allegations would have helped mitigate the negative perception and address concerns.
“While the Sebi board may not be empowered to act against the chairperson, they could have still at least discussed the issue of conflict of interest more proactively. This would have helped overcome the perception that the regulator is shirking the issue. While the chairperson has refuted all the allegations, the Sebi board as an entity too could have discussed the issue,” said Shriram Subramanian, founder and managing director of InGovern Research Services.
The Congress has been firing salvos against the chairperson, alleging violation of the code of conduct and a conflict of interest on account of payments received by Buch from her former employer ICICI Bank. Additionally, they have alleged that Buch, her husband Dhaval Buch, and their consultancy firm Agora Advisory were paid by corporates in return for favours.
Buch and her husband have refuted the allegations by the opposition party in a six-page letter, calling the claims false, malicious, and motivated.
