For Madhabi Puri Buch, the first female chief of the Securities and Exchange Board of India (Sebi), the first year in office has been quite eventful with a slew of policy reforms and key initiatives that many within the regulatory agency also found unconventional.
But that has not stopped Buch from taking the road less travelled and also ensuring that capital market stakeholders go the extra mile to make the Indian markets more robust and safer from an investor point of view.
Last week, the former investment banker reiterated the importance of the “spirit of the law” while addressing the media post a board meeting of the capital market watchdog. Incidentally, this was the second successive such conference where she harped on the importance of complying with the spirit of the law and not just with the letter of the law.
More importantly, she said that in her second year of her term – she completed her first year in the corner office last month – she will focus more on enhancing the compliance with the spirit of the law.
“I have been asked this question quite frequently over the last couple of months that now since you have finished one year at Sebi what is it that you want to do going forward,” she said while addressing the media last week.
“When you want to deliver something in year two, you have to start the work in year one otherwise it doesn’t get delivered in year two. One of the areas that Sebi has in anyways been looking into and speaking to a bunch of people is the whole issue of spirit of the law versus letter of the law. And we have been very actively engaged that in the coming year we want to take forward this concept of spirit of the law versus letter of the law and we have been seeking feedback that on what we as a regulator need to do about it,” she added.
Interestingly, the latest statement comes less than four months after the Sebi chief had highlighted that while there is compliance with the letter of the law, there is not much compliance with the spirit of the law.
“The reality is that today in our market there is compliance with the letter of the law. Compliance with the spirit of the law is not happening,” she had said while addressing the media after a Sebi board meet on December 20, 2022.
“I think it is just sad. I think it is nothing else, it is just very sad because people are bright enough, smart enough and they know what is the regulatory intent and the objective of the regulation but to constantly find ways to circumvent and to do things that are technically in compliance but in spirit completely violative is not a good thing,” she had said.
Meanwhile, last week the Sebi chief also highlighted the fact that the regulatory agency has been in active consultations with many entities that have a “third-party fiduciary” role – like law firms, audit/accounting firms, investment bankers, etc. – on how to create an ecosystem wherein the spirit of the law is also adequately complied with.
We certainly intend to take it up in the coming year, she said.
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