Upendra Kumar Sinha, 59, had made his intentions clear quite early. “Speed is going to be the essence now,” the 1976-batch Bihar cadre IAS officer had said in one of his first public meetings on taking charge as chairman of the Securities and Exchange Board of India (Sebi).
Just about 10 days to go before he completes a year in the job, Sinha has managed to tick most boxes in the list of initiatives he had promised for this financial year after his first board meeting as chief (on March 25 last year).
It hasn’t been roses all the way. Sinha had a difficult start to his three-year stint when he was dragged into a controversy after K M Abraham, then a Sebi board member, alleged in a letter to the Prime Minister's Office that the chairman asked him to make compromises on certain high-profile cases, citing pressure from finance minister Pranab Mukherjee and the latter’s advisor, Omita Paul. Sinha was quick to deny this, but not much has been heard about it since then.
| ONE-YEAR CHECKLIST |
| Highlights of Sinha’s first year in office |
| * Crackdown on IPO manipulation |
| * Simplification of KYC norms |
| * Two new methods for stake sales to comply with shareholding norms |
| * QFI guidelines |
| * Transactions charges for MF distributors |
| * Listing-day restrictions on stocks making market debut |
| What's on the anvil |
| * Revamp of entire IPO process |
| * New regulations on buybacks through open market route |
| * Uniform KYC for all Sebi-governed entities |
| * Final regulations to govern alternate funds |
Beyond this controversy, the highlight of Sinha's tenure so far has been the crackdown on companies and several other entities, including investment banks, for alleged violation of Initial Public Offer (IPO) norms. In late December, a Sebi probe found several companies misusing or diverting issue proceeds. About 100 entities involved were banned from the securities market with immediate effect. More are under investigation. To avoid similar manipulation in future, Sebi decided to introduce strict listing-day trade controls, including circuit filters and call auctions, for IPO stocks.
A complete overhaul of the entire IPO process was also announced by Sinha. The new guidelines, aimed at making the IPO process simpler and reducing the time taken, are being prepared by a team under his guidance. Expected to take another couple of months, this revamp is likely to be the first major reform under Sinha's leadership.
Sebi says these moves would make bankers and companies more cautious and will help prevent fraudulent companies from entering the market.
When Sinha, the erstwhile chief of UTI Mutual Fund, became head of Sebi, the MF industry was counting on him to reverse the earlier ban on entry loads. That didn’t happen but in his first board meeting itself, the new chief allowed distributors to charge transaction fees.
In another step that brought some relief to the industry, Sinha decided on a more flexible advertising code. At the same time, he tightened valuations norms on liquid funds.
“It has been a mixed bag for us. Although transaction charges cannot make up for the ban on entry load, there has at least been some consideration,” said an executive with a fund house, who asked not to be identified.
To help the government meet its stiff disinvestment target, the regulator introduced two new methods — an Institutional Placement Programme (IPP) and the Offer for Sale of Shares through the stock exchange. These new platforms will also help companies to comply with the 25 per cent minimum public shareholding norm.
Among other measures, Sebi issued investment guidelines for qualified foreign investors (QFIs), after the government gave these direct access to Indian MFs and equity markets. Experts, however, remain sceptical about money coming through this route and have requested the regulator to ease some norms.
To Sinha’s credit, the regulator in recent months launched a slew of measures to help retail investors. One was simplification of the KYC (know your client) process. Sebi has made a KYC registration agency (KRA) mandatory for all new clients. The reform was introduced to make the tedious process shorter, uniform and a one-time affair. Sinha can justifiably take pride in the fact the he was able to implement this reform within six months of it being conceptualised. His prior experience with the finance ministry’s capital markets division and also as the boss of the mutual fund industry body, Amfi, would have helped.
Apart from the Abraham episode, Sinha’s time in office has been mostly smooth. Critics say this is because most of the controversial issues, such as the sub judice case with MCX-SX, rumoured settlement of the Reliance Industries insider trading case through consent or the re-introduction of entry loads in MFs are yet to be decided.
