Sebi under Bhave: Power to investors

Sebi under Bhave: Power to investors

Sebi chief Bhave retired today leaving a legacy of leashing the big guns and saving investors.

From taking action against the big and the mighty of the corporate world to saving investors from fees and charges worth thousands of crores rupee,C B Bhave earned many accolades during his three-year term as Indian capital market’s most powerful person.

An electrical engineer by education,Bhave,an IAS officer of 1975 batch,engineered and administered numerous changes in Indian markets ever since he took charge as the Chairman of the Securities and Exchange Board of India (Sebi) on February 17,2008.

Bhave whose terms ends today would be succeeded by UTI Mutual Fund chief U K Sinha,also an IAS officer.

Interestingly,some of the major actions taken by Sebi under Bhave’s leadership concerned mutual fund space.


As per Sebi’s own estimates,the retail investors were saved from charges worth Rs 2,000 crore by the regulator’s decision to bar mutual funds from charging entry loads – a charge paid by investors for buying a mutual fund.

Although,the step invited severe criticism by the fund houses for negatively impacting their businesses,this was lapped up as one of Sebi’s major pro-investor policies.

Another such move was raising the investment limit for retail investors in an initial public offering (IPO) to Rs 2 lakh from Rs 1 lakh. Introduction of ASBA system in public offers,where the money gets debited from investors’ bank account only after allotment of shares,not at the time of bidding for shares was also widely welcomed.

Sebi also proposed to bring minority shareholders at par with promoters in cases of takeover of a company with its suggestion that both promoters and public investors should get same price and same opportunity to exit the company.

The proposal,however,is yet to become a law,as the government wants more deliberations on this front.

Bhave had said that it was the institution that mattered and not the person heading it. But there are not many takers for this view,including both his supporters and detractors.

“Chairmen come and go,but Sebi remains there,” Bhave had said after his last board meeting at Sebi on February 7. While those finding his steps as pro-market and pro-investors said that Bhave brought to fore the real power lying with Sebi,there were also some others who accused him of being anti-market competition and also charged him with becoming larger than the institution.

However,those in support of steps taken by Sebi under Bhave said the market regulator did not differentiate between big and small entities and took all its actions fearlessly during the past three years.

Supporters of Bhave list out actions taken with regard to big entities such as Anil Ambani group,MCX-FTIL,Sahara group,as also a host of small and big brokers,mutual funds,etc and said this has not been the case in recent times.

His proposal to bring Ulips under Sebi’s ambit angered insurance regulator Irda and the Finance Ministry also appeared unhappy over the regulatory tussle.

Initially,there were expectations that Bhave might get an extension,as is the case with many directors at regulatory authorities. Later it was said that he might not be interested in another term and that and his spats with other regulators could have spoilt his chances.

“He doesn’t beat around the bush,” financial services major HDFC Group’s Deepak Parekh had said recently about Bhave.

“He goes strictly by the rules and is not afraid of going after MFs or corporates,irrespective of the stature of the promoters or entities. He has done a remarkable job,” the eminent banker added.

Leading stock exchange NSE’s founder chairman R H Patil had also recently said that “Bhave is one of the most upright persons I know”.

“He is straight to the facts and never plays games,” Patil had said in an interview.

“Three years is a short-term in an organisation like Sebi. Had he been given a longer tenure,say five-seven years,he would have taken Sebi to a different orbit,” Patil had noted.

Not many were,however,willing to speak on-record on their views about Bhave’s three-year term as Sebi chief.

There are speculations that he might be named by the government on some high-profile panels on financial sector regulations and their views about Bhave could boomerang on them,they concurred.

However,one of the few among vocal opponents of Bhave’s policies,the MCX-Financial Technologies group did not mince any words in criticising the outgoing Sebi chief.

“In the case of MCX-SX,the Sebi chairman chose to sit on the MCX-SX proposal for more than seven months. During this period,neither Sebi Chairman nor Sebi responded to a single letter that the Exchange wrote to Sebi,” MCX-SX MD & CEO Joseph Massey said.

Massey was referring to an application by MCX-SX for Sebi’s nod to start a full-fledged stock exchange,which was eventually rejected by the regulator and the matter is currently sub-judice.


“No regulatee will take its regulator to court unless there are strong compelling reasons,” Massey added.