The Securities and Exchange Board of India (Sebi) faces a critical leadership challenge as two of its four whole-time members stepped down this year, leaving nearly two dozen high-profile cases unresolved. Ashwani Bhatia resigned in May, and Ananth Narayan G. followed in October, creating a situation where the capital markets regulator is functioning at half its intended strength. The pending cases involve companies such as Gensol Engineering Ltd, Religare Enterprises Ltd, and the US-based hedge fund Jane Street, among others.
Bhatia oversaw Sebi’s corporate finance and debt-hybrid securities departments. His cases included disputes over heavy share pledges by Gensol Engineering promoters, open-offer conflicts involving Religare Enterprises, irregularities in small and medium enterprise IPOs, and unregistered online bond platforms. Narayan had initiated a complex case against Jane Street, alleging illegal gains worth Rs 4,843 crore. Final orders in all these cases remain pending, and the distribution of the workload among the remaining two whole-time members is unclear.
The remaining whole-time members, Kamlesh Chandra Varshney and Amarjeet Singh, are expected to step down in June and August next year. Their terms leave the regulator with a significant workload, as they continue to manage ongoing investigations while facing a backlog of unresolved cases. Sebi has initiated approximately 400 investigations since April, in addition to 29 interim orders passed in 2024–25, indicating the scale of the regulatory challenge.
The resignations of Bhatia and Narayan have led to concerns about a potential bottleneck in finalizing enforcement actions. Whole-time members play a crucial role in issuing show-cause notices, conducting hearings, evaluating responses, and signing off on final orders. Without them, the enforcement process slows, delaying market decisions and potentially affecting investor confidence. Historically, Sebi issued 61 final orders in 2017–18 and 64 in 2021–22 when it operated with only two whole-time members. In contrast, final orders dropped to 13 in 2024–25, despite a full board, reflecting both the complexity of cases and procedural rigor.
The government has actively sought replacements for the vacant positions. Applications were called in May and September, with interviews reportedly completed by the Department of Economic Affairs. Two frontrunners have emerged: V.S. Sundaresan, a former SEBI executive director, and Sandeep Pradhan, an Indian Revenue Service officer with a strong enforcement background. Sundaresan is viewed as steady and experienced, familiar with SEBI’s processes, while Pradhan brings a decisive, enforcement-driven approach. The final selections are awaited, but interim measures may be needed to manage the backlog. Sebi could temporarily delegate limited powers to senior officers or appoint alternative adjudicators with the approval of the Securities Appellate Tribunal.
The regulator’s current strain coincides with broader concerns about administrative efficiency and accountability. In India, regulatory failures have sometimes led to significant public harm without consequences for officials. A recent example is the death of children due to toxic cough syrups exported from India, which exposed weaknesses in regulatory oversight.
The pending Sebi cases and leadership vacancies illustrate a broader tension in regulatory architecture. The capital markets watchdog now relies on only two whole-time members to handle an extensive docket of complex investigations. While the enforcement machinery continues under departmental heads, the bottleneck in final adjudication can slow down the delivery of justice and affect market stability. Efficient resolution of these cases is critical, not just for the companies involved, but for maintaining confidence among domestic and global investors. |
