M Damodaran, Chairperson of Excellence Enablers and Former Chairman of SEBI, has made a case for revisiting the r selection and appointment process for persons in regulatory positions.
According to him, nothing in law prevents a person from the private sector from heading a regulatory organisation, and there have been several instances in the past in which such persons have taken up regulatory positions.
SEBI is a creature of statute, neither an attached office nor a subordinate office of the Government of India. That is why the government must not become the single authority to decide on the incumbent of this office.
“For it (SEBI) to discharge its duties impartially and independently, it is necessary that it has the functional autonomy to do so, and equally importantly, is perceived as having the functional autonomy that should characterise its working,” Damodaran said in a newsletter for Excellence Enablers.
The Cabinet Secretary currently heads the selection committee. Instead of just inviting applications for the post of SEBI chief, Damodaran believes the Committee can morph into a Search-cum-Selection Committee that also looks for persons who fit the bill but have not chosen to throw their hat in the ring. The short interview with the candidates could make way for an in-depth conversation to better ascertain the vision of the candidate.
On the question of accountability of the SEBI chairperson, Damodaran said that considering that SEBI regulates public sector entities, the possibility of pressure exerted by government functionaries on SEBI cannot be ruled out.
“The ideal situation would be for the organisational head to report twice a year to the appropriate Committee of Parliament. Such an approach would strengthen the concept of functional autonomy, while ensuring that the organisation remains accountable,” he said.
In countries like the US, every person identified for appointment to an important office has to appear before a Committee of the House or the Senate, which would then assess the credentials of the person, as also look at the past track record or any other matter that might negatively impact the functioning of that person in the office to which he/she is proposed to be appointed.
“Such an approach might reduce, if not eliminate, the possibility of complaints of lack of credentials and suitability, subsequent to the person being appointed. Post appointment mud-slinging is never the best way for the head of a regulatory organisation to get started on the assignment.In the Indian context, the best procedure would be to have a Search-cum-Selection Committee, headed by a distinguished person, preferably from the area of finance, with Committee members selected for their ability to contribute to the process, rather than being ex-officio members of the Committee,” Damodaran said.