'NSE is not just Chitra and Anand alone'

'NSE has thousands of employees. It is their institution. So it's a dear family.'
'One should not hurt the morale of these people.'

"I will tell you in our exchange system -- including BSE, NSE, MCX -- our systems are better than any other system in any other exchange in the world," J N Gupta -- former executive director of the Securities and Exchange Board of India -- tells Prasanna D Zore/Rediff.com in the second segment of a three-part interview.

• Part 1: NSE Mess: 'Chitra was wrong'

How do you look at the role of the NSE board at the time when Chitra Ramkrishna allegedly rode roughshod over everybody at the NSE while appointing Anand Ramkrishna as the CSA, and later as GOO, and how he was remunerated for his part-time role as a consultant?

I will not comment on any individual. But I would say action was taken against them (the members of the NSE board). But you must admit that these problems (of corporate governance) are not confined to the NSE alone. Although NSE is at a different level being a semi-regulatory organisation.

But tell me, out of the 4,000 listed companies, in how many companies did we have a whistle-blowing act or a director has resigned because of governance issue?

You only have a few examples like YES Bank and PTC Financial Services. Does that mean that all the listed companies have impeccable corporate governance? The answer, obviously, is no. So, the problem is systemic.

In this case, Sebi has acted though people have an issue with the delay in order. But the crux should be is there any consequence of the delay? What is the materiality?

The Sebi order has charged the NSE board members with disobedience for not responding to its queries. Doesn't Sebi wield more powers than just calling it disobedience for summoning NSE board members? Is Sebi a toothless tiger?

Calling Sebi a toothless tiger has been in fashion ever since Sebi came into being. And tomorrow if Sebi develops another set of tooth people would still call it a toothless tiger. It is a permanent tag. Nothing can ever set this right.

Let me explain this with a very simple example.

When you buy something from the market at a particular price after haggling a lot with the seller and then when you go home you always feel you could have bargained better and bought whatever you did at a price lower than what you actually paid after all your bargaining.

In a similar way, there will always be a gap between what you (the Sebi) has achieved and what people expect you to do. This expectation gap can never be filled by anybody.

Sebi will always be called a toothless tiger irrespective of what it does or does not. But the problems go deeper; why blame Sebi alone?

Then who should be blamed?

There are some people (journalists) who have reached (blamed) even the finance ministry. The problem is not always finance ministry.

In India, the legal system is such that getting things done is a very difficult proposition.

Last year there was a case between PNB Housing Finance and SAT (the Securities Appelate Tribunal) where two retired chief justices of the high court and other members were deciding upon the issue whether Articles of Association are paramount and prevail over other provisions, or not.

The two learned judges could not come to a conclusion. One said yes, the other said no. Although in April 2021, the Supreme Court had said very clearly that Articles of Association are bedrock of company management.

Now, if two retired high court judges cannot decide basic things, which even the level 1 student of secretarial practice knows, then what do we say about the legal system in the country?

Would you agree that the way in which Sebi handled the Chitra Ramkrishna and Anand Subramanian issue has led to Sebi's image taking a beating? What could Sebi as market regulator do more to enhance its integrity?

I would say Sebi has no business to go and publicise itself. Being a regulator, Sebi does its job well and quietly. It is your (the media's) job to create an image of an institution.

I believe that Sebi, BSE, NSE, NSDL, MCX are all national institutions. Let us take pride in them; not damage their reputation.

I will tell you in our exchange system -- including BSE, NSE, MCX -- our systems are better than any other system in any other exchange in the world. We never take pride in this.

Doesn't it cut the other way? Since the media keeps questioning these institutions it acts like a check on public as well as private institutions and push them to keep doing better.

I am very happy about this questioning, but there is a way to question. The way the media is questioning (Sebi) today is very demoralising.

NSE is not just Chitra and Anand alone. NSE has thousands of employees. It is their institution. So it's a dear family. One should not hurt the morale of these people.

Question as much as you want to, but let your questions be rational and not speculative and sensational.

I am managing director of a proxy advisory company (SES) and I question everybody. But I never get personal or irrational.

Should investors be worried about the corporate governance issues at the NSE?

My answer is: Not at all.

Why?

Simply because systems are functioning smoothly. The margin, trading, and settlement systems are functioning smoothly and transparently.

Has there been any problem in last 20 years? No. So, there is no systemic worry. Then, why do you (the media) want to drill this worry into the heads of investors?

• Part 3: 'Smarter people will bend the law'