File photo of Sudhir Kumar Jain, CMD, Syndicate Bank, who was arrested by the CBI in a bribery case. (Photo: PTI)
Last week, capital markets regulator Securities and Exchange Board of India (Sebi) got more teeth with the Lok Sabha clearing the Securities Law (Amendment) Bill, 2014. Though laws are important but the intention to act is what matters the most.
The reason for saying this is that it has been more than a week since the Central Bureau of Investigation (CBI) arrested Sudhir Kumar Jain, Chairman and Managing Director of Syndicate Bank, for allegedly accepting bribes from private companies to extend credit facilities. But where is Sebi? What about corporate governance? Why hasn't the regulator pulled up the board of Syndicate Bank?
Ask any company they would say what Jain was doing wasn't new and every bank and banker at the top position did that. So why isolate Jain and Syndicate Bank? There could be more than what meets the eye.
There is no defending Jain and what he has done is wrong and the law will take its course, but the people who approved his appointment also should be asked why they nominated him. Though the Companies Act holds board members responsible for their action, it has also to be reflected on ground. Why aren't the board members suspended along with Jain and a new board installed by the regulator? This would bring more confidence to the market and stringent action against the complacent members would be a lesson for all. After all, there is no charity as board members are paid for their services.
The bigger question, however, is of corporate governance and protecting the interests of minority shareholders and why the different yardsticks between the private sector and government sector.
In fact, the regulators should have pulled up the board of Syndicate Bank as it is a public-sector bank. On the contrary, it seems the regulators are going at a snail's pace. But why go far; even for meeting the minimum shareholding norms the PSUs have been given special concession. This is glaring and shows there is no equal treatment to all.
It's been a year since the National Spot Exchange (NSEL) fiasco took place, which saw the promoter of the exchange Jignesh Shah being arrested. But isn't it strange that he was allowed to run a spot exchange without any check.
The Forward Market Commission (FMC), the commodities market regulator, as per its convenience likes to dictate terms to the spot exchange. They did this when it came to N-Spot, the spot exchange run by NCDEX, but when it came to take responsibility for NSEL, the FMC conveniently stated that the FCRA law doesn't allow them to regulate spot exchanges.
Even the Reserve Bank of India didn't take action despite it being brought to their notice by the NCDEX that wrong practices were being conducted by NSEL as it was running a proxy fixed deposit scheme. When it was time to take action everyone tried to wash their hands from responsibility. Even the Ministry of Consumer Affairs, which controls commodity spot exchanges, took over a year to stop trading in NSEL after it came to know about the wrong trading practices at NSEL.
This isn't the first time regulators have used different yardsticks for different entities for the same crime. The government can give lawmakers more teeth but the intention to act in an unbiased manner is far more necessary than just giving power.