With his closely cropped hair and self-effacing style, the slimly built C B Bhave who still plays tennis four times a week is an unlikely taxman.
Yet this chairman and managing director of the National Securities Depository Limited is the modern face of the country's tax department -- last week, he was given the go-ahead to begin work on the next phase of the Tax Information Network, which will focus on catching taxpayers who under-report incomes.
TIN-II will get information on purchases/sales of above a certain value from jewellers, automobile showrooms, property registrar offices and so on, these organisations will file details of the person who has bought/sold the item along with his/her Permanent Account Number from various centres set up by NSDL, and NSDL's software will automatically match this with the income tax returns filed by the individual.
So, if you buy a Baleno for Rs 600,000 but show your annual income as Rs 150,000, the taxman will know.
TIN-I has already resulted in huge savings -- it is estimated around Rs 2,500-3,000 crore (Rs 25-30 billion) is given each year as credit for tax deductions at source without such tax actually being paid.
With TIN, the taxman can match each credit with actual receipts. For this, NSDL will get Rs 1.25 per transaction subject to a minimum of Rs 20 crore (Rs 200 million) a year (in the first three years) from the taxman.
And since he spent around Rs 50 crore (Rs 500 million) on developing the system, Bhave's quite thrilled. Though it has lowered its fees for stock market transactions by more than half over two years, NSDL made a profit of Rs 33 crore (Rs 330 million) on sales of Rs 94 crore (Rs 940 million) last year.
A 1975-batch IAS officer of the Maharasthra cadre, Bhave has been deputy secretary in the petroleum ministry between 1984 and 1989, and followed his then boss (G V Ramakrishna) to the Securities and Exchange Board of India -- Bhave was the executive director in charge of the secondary and later the primary markets between 1992 and 1996.
It's difficult to judge his exact contribution at Sebi since he wasn't the boss -- as part of Sebi, Bhave did have had a role in ensuring the new NSE's surveillance systems were top class, but the "vanishing companies" scam did hit the headlines when Bhave was responsible for the primary markets.
At NSDL, however, Bhave revolutionised the capital market. It took all Bhave's skills to get market players to accept the new system of dematerialised shares and debentures.
He got the buyers' support by arguing demat would eliminate bad deliveries of shares which only affected them, and was able to get sellers' support arguing this would facilitate early settlement and early payments.
While the pre-NSDL markets were plagued with bad deliveries/fake shares, when's the last time you heard of these? Not surprisingly, Bhave's reading habits are more attuned to biographies, or as he puts it, "you know, more real life stuff."
Indeed, when NSDL was to be set up, a committee recommended following the US depository example and wanted to build a silo in a mountain, near Mumbai, where all shares would be kept and changes in their ownership would be done electronically.
NSDL, however, decided to demat the shares (so, no silo), and set up the depository at under Rs 100 crore (Rs 1 billion) or a seventh of the original estimate, and achieved paperless trading within just three years, the fastest in the world.
Today, its computers handle 10-12 million messages (to debit and credit individual investor accounts) on a 24x7 basis and deal with three databases simultaneously -- its own, that of each of its 215 depository participants and those of over 6,000 companies whose demat shares/bonds have been bought or sold.
Despite the fact that NSDL today is responsible for keeping details of transactions in shares/bonds worth Rs 13,68,000 crore{(Rs 13,680 billion) that's the value of dematerialised paper today}, there has hardly been any instance of either companies or individuals alleging their shares have been sold off illegally or that confidential data has leaked out.
It is this ability to deal with and process such large number of transactions on an online basis, and with complete confidentiality, of course that ensured NSDL was able to get the mandate to execute TIN.
The flipside, of course, is that the success of NSDL and TIN has ensured people are now obstructing NSDL's future plans. NSDL had proposed that small savings certificates like NSS and NSCs be dematerialised, but the proposal remains stuck for a variety of reasons.
This is both a tribute to Bhave as well as a challenge.