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Charting the Course: Madhabi Puri Buch Unveils Insights on Capital Markets and Corporate Governance

Sebi Chairperson Madhabi Puri Buch talks about how knowing all the tricks in the market helps, corporate governance standards and more

Madhabi Puri Buch, 57, the first woman Chairperson of the Securities and Exchange Board of India (Sebi), has completed a little over two years at the capital markets regulator. Buch is the second non-bureaucrat in about two decades to head Sebi. In an exclusive interview with Business Today’s Sourav Majumdar at the BT Most Powerful Women in Business Awards, Buch talks about her journey, her passion for technology and data, women at the workplace and her agenda for the remainder of her term.

1. How would she describe her journey as the Chairperson of Sebi?

As the Chairperson of Sebi, she reflects on her journey, emphasizing the significance of her prior role as a whole-time member. Her four and a half years in this position served as a period of invaluable 'house training,' tasked with striking a delicate balance between public accountability and preserving the entrepreneurial spirit of the private sector. Bestowed with the privilege of this dual mandate, she has consistently worked to harmonize these elements, drawing on over two decades of market experience and five years within the regulatory ecosystem.

2. How does that impact her interactions with market intermediaries, because they know that she is someone who already knows all the tricks?

Her market insights have a dual impact – firstly, she possesses a keen awareness of industry intricacies, having been hands-on in market operations. This knowledge allows her to confront market intermediaries with a firsthand understanding, ensuring a transparent dialogue. Secondly, her deep empathy stems from personal frustrations within the regulatory process, recognizing the critical nature of timing in capital raising. Leading Sebi, she emphasizes the profound impact of regulatory actions on market participants, driven by a profound understanding cultivated through her own market experiences.

3. Being passionate about technology and data. Why is that so and how has that helped her and, more importantly, Sebi to evolve into a much better regulatory body?

Passionate about technology, particularly data-driven solutions, she sees them as transformative tools that break traditional trade-offs. The ability to simultaneously reduce costs, manage risks, and delight customers is akin to magic in her eyes. Within Sebi and the broader market ecosystem, she advocates for the deployment of technology. Equally fervent about data, she stresses the importance of a logical, data-backed approach in regulatory decisions. For her, discipline and accountability come from being transparent about the data-driven basis of opinions, emphasizing the need for adaptability if the data evolves.

4. As the first female Chairperson of Sebi, did she encounter any specific challenges in that role?

At ICICI, gender was inconsequential – a testament to the culture of professionalism that defined roles. Upon joining Sebi, she observed a seamless continuation of this ethos. Gender never emerged as a focal point for her; her supportive boss treated her on par with colleagues. Present-day interactions with colleagues reveal a gender-neutral dynamic, suggesting an environment where gender has never played a defining role in her experience.

5. Even when she interacts with market participants? In fact, they might be more careful when they deal with her because they know your background…

In her interactions with market participants, gender is a non-issue. The prevailing tone of these conversations stems from her shared experiences, understanding of their positions, and past roles. The dynamics are shaped by a common professional background, with her current position adding a different dimension to the equation. Consequently, the issue of gender does not register in her perception of these interactions.

6. Sebi has implemented measures to empower women in the workplace, such as mandating the Top 1,000 companies to include at least one woman independent director. Is there consideration for an expansion of this initiative to include a larger number of companies, given the initial steps taken?

The gender issue holds significant importance for the country and the individual. However, the belief is that the contribution of a dozen or two dozen privileged women, serving on multiple boards, is insufficient for the nation. This perspective has translated into a key metric articulated by Sebi in its core Business Responsibility and Sustainability Report (BRSR). Focusing on gender, Sebi has identified two essential metrics. Firstly, the emphasis is on the percentage of payroll cost allocated to women, avoiding tokenism and promoting genuine inclusion across all organizational levels. This metric addresses aspects like equal representation at different levels, fair pay practices, and support for women returning to work post-childbearing. The second metric revolves around POSH (Prevention of Sexual Harassment) complaints, recognizing its ongoing relevance. These metrics, aimed at fostering substantive change, reflect the core considerations for Sebi on the gender front.

The emphasis is on practical initiatives by companies, such as establishing factories in Tier IV towns and creating secure hostels for women employees, actively involving parents in the process. A company with 80 percent women in its workforce and a commitment to their well-being is considered more impactful than merely adding another individual to the board. The focus is on seeing gender inclusivity permeate through various levels, encouraging the presence of more women in key management positions (KMPs). The belief is that when these foundational steps are taken, representation at the board level will naturally follow. This approach rejects the notion of parachuting individuals into top positions without addressing the broader inclusion at lower levels, reflecting a holistic vision for gender equality in the country.

7. Having been immersed in the market for an extended period, both within and beyond Sebi, how does she perceive the evolution of governance standards? In her observation, what improvements stand out, and are there specific areas of concern she identifies?

In her approach to governance, she emphasizes its direct correlation to trust. The fundamental principle at Sebi is fostering trust through disclosure. The regulator refrains from interfering in a company's operational decisions and focuses on two key aspects on behalf of investors. Firstly, it advocates for comprehensive disclosure, guiding companies on what information is crucial for investors to make informed decisions. The second aspect involves stipulations on the approvals required for different transactions. Sebi believes that, for most decisions, there's a high alignment of interests between promoters, dominant shareholders, and minority shareholders. The potential divergence in interests arises mainly in related-party transactions, where honest and law-abiding disclosure becomes crucial to maintaining the desired level of governance. Beyond this, she holds the belief that governance is a market-driven process, allowing investors to decide and vote based on the information provided.

8. With nearly two years completed at the helm and just over a year remaining in the current stint, what are the two or three key unfinished tasks that she aims to prioritize in the time ahead?

In her vision for the future, she plans to divide her focus between internal initiatives within Sebi and external efforts in the marketplace. Internally, after successfully restructuring Sebi in a remarkably short period, her goal is to institutionalize the changes made, ensuring they endure beyond her tenure. Externally, she emphasizes the importance of fostering greater financial inclusion. A key aspect of this involves working with mutual funds to reduce the viability of a monthly SIP from Rs 500 to Rs 250, aiming to emulate the transformative impact of products like the shampoo sachet. This move, she believes, will not only expand the market but also strengthen India's financial inclusion and market resilience. Reflecting on recent market dynamics, she underscores the significance of domestic and retail investments that filled the void left by foreign money, contributing to the resilience of Indian markets. Her objective for the next year is to make the Rs 500 SIP more accessible, laying a foundation for sustained growth and market resilience in the years to come.

Sumit Poddar

Chief Investment Officer & Smallcase Portfolio Manager

Tikona Capital

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