Madhabi Puri Buch’s tenure as SEBI chief was marked by increasing scrutiny over procedural violations, ethical breaches, and allegations that she sat in judgment over her own decisions. This fundamental conflict of interest is anathema to any regulatory body that aims to function with integrity. A regulator is expected to be above personal biases, ensuring that the rules are applied uniformly and fairly. However, during Buch’s tenure, SEBI appeared to have drifted from these principles, becoming a battleground for power struggles rather than an impartial arbiter of market fairness. The extent of government intervention and protection granted to her has raised concerns about the independence of regulatory institutions in India.
One of the most damning aspects of Buch’s tenure was the manner in which investigations into alleged irregularities were conducted—or rather, stifled. Several reports suggested that she actively influenced inquiries that should have been independently reviewed. This raises serious concerns about transparency in regulatory processes. A market regulator is only as strong as the trust investors place in it. The mere perception that SEBI may have been manipulated to serve personal or political interests is enough to weaken that trust, making investors wary of the regulatory framework within which they operate.
The erosion of SEBI’s credibility under Buch’s leadership has far-reaching consequences. Financial markets thrive on confidence, and a compromised regulator shakes the very foundations of that confidence. When investors believe that rules are selectively enforced, or that those in power are shielded from scrutiny, they hesitate to invest freely, fearing that the playing field is skewed against them. This, in turn, can lead to capital flight, reduced market participation, and a slowdown in economic activity. In a rapidly growing economy like India, where attracting investment is key to sustaining momentum, such damage to market integrity is particularly perilous.
Furthermore, the allegations of government protection afforded to Buch raise questions about political interference in regulatory bodies. Regulators are supposed to function independently of political and corporate interests, ensuring that their decisions are based purely on market principles and legal frameworks. However, if the government takes extraordinary measures to shield a regulator from facing due process, it sets a dangerous precedent. It signals that those in positions of power are above accountability, eroding faith in institutions and creating a culture of impunity.
This crisis is not just about one individual but about the systemic weaknesses it has exposed. The very fact that a SEBI chairperson could allegedly wield unchecked influence over investigations highlights the need for stronger oversight mechanisms. The Indian regulatory framework must ensure that those at the helm of such institutions are subject to the same standards of scrutiny as the entities they regulate. Without this, the integrity of the system is at risk.
Rebuilding SEBI’s reputation will not be easy. The new leadership must act decisively to restore faith in the regulator. This means revisiting past decisions, ensuring accountability for any lapses that may have occurred, and instituting reforms that guarantee transparency and independence. Investors need to see concrete steps being taken to correct the course, not just rhetoric about integrity and governance.
One key area of reform should be the way SEBI’s leadership is appointed and monitored. A regulator must not be beholden to political interests, nor should it function as a tool for those in power. Strengthening the checks and balances in the appointment process, ensuring greater independence from government influence, and enforcing stricter conflict-of-interest policies will go a long way in preventing similar crises in the future. Transparency must be the guiding principle of all regulatory actions, with clear mechanisms in place to review and audit decisions taken by SEBI officials.
At a broader level, Buch’s tenure is a stark reminder that institutions are only as strong as the values they uphold. India’s financial regulatory framework has been lauded globally for its robustness, but its credibility depends on continuous vigilance against the very lapses that characterized Buch’s tenure. The government must realize that short-term political gains from protecting an embattled official pale in comparison to the long-term damage inflicted on institutional integrity.
Ultimately, SEBI must reclaim its position as an impartial and effective watchdog of the financial markets. The exit of a controversial leader is just the beginning; what follows will determine whether this crisis was merely an aberration or a sign of deeper institutional decay. If SEBI is to restore its credibility, it must demonstrate, beyond doubt, that no individual is above accountability, and that the principles of fairness, transparency, and justice will always guide its actions. (IPA Service)
DARKEST PHASE OF INDIA’S CAPITAL MARKET REGULATION HISTORY ENDS WITH BUCH’S EXIT
RESTORING SEBI’S CREDIBILITY IS NEW DISPENSATION’S MOST IMPORTANT TASK
K Raveendran - 11:56
The departure of Madhabi Puri Buch from the Securities and Exchange Board of India (SEBI) marks the end of what many consider the darkest period in the history of India’s market regulator. SEBI, the institution responsible for ensuring transparency, fairness, and accountability in India's financial markets, found itself embroiled in controversies that not only undermined its credibility but also called into question the fundamental principles on which it was built. With allegations of misconduct, conflicts of interest, and regulatory overreach clouding her tenure, Buch’s exit is unlikely to erase the deep scars left behind by the crisis. Instead, it should serve as a moment for introspection on the governance of regulatory bodies in India and the dangerous precedent that political protection of erring officials can set.