SEBI – The Right Hand v/s the Left Hand

The right hand does not know what the left hand is doing!

Unfortunately, it is apt for SEBI, the securities market regulator of India.

To be specific, SEBI’s head office and its regional offices are disconnected in thinking and process.

Here’s a little background and why this is true.

In October 2016, SEBI issued a press release with the title ‘SEBI introduces online system for Investment Advisers and Research Analysts’. Click here to view the same.

In the press release, it is clearly mentioned that

Applicants seeking grant of registration as Investment Advisers and Research Analysts are now required to submit ONLY online application to SEBI at https://siportal.sebi.gov.in.

The same is also evident from the prominent link displayed on the home page of SEBI’s website (www.sebi.gov.in).

On the same lines, another press release was issued in August 2017 with the title ‘Online Registration Mechanism for Securities Market Intermediaries’. Click here to view the same.

So, in good faith, an applicant, Dinesh (not the original name) from Indore applied online for registration as an Investment Adviser.

As per SEBI, the applications are dealt with either the SEBI’s head office or its regional office, depending on the place of business of the applicant.

In this case, it is SEBI’s Indore office.

Further, as per the details mentioned on SEBI’s website,

“Generally  on  receipt  of  Application,  the  applicant  will  receive  a  reply  from  SEBI within one  month”.

Now, more than one month passed after submission of the application. Yet, Dinesh received zero response from SEBI.

Of course, currently, there is no way to track online the current stage of the application.

With some initiative on his part, Dinesh was able to get on phone with an officer with SEBI’s Indore office.

The officer at the Indore Office claimed to NOT receive any information about the so called online application and asked the applicant to submit the whole application, along with the documents in physical, to the regional office. Again!

In fact, he also stated that he did not even have any information on the application fees paid online. He asked the same to be paid via a DD along with the application and documents.

Dinesh was shocked!

He mentioned that he has paid the fees online and also has a confirmation of the same along with the copy of the application form generated online. However, the officer insisted to submit the whole application in physical again.

There seems to be no sync amongst SEBI’s various offices.

On the one hand, SEBI is tomtomming its online process and issuing press releases about it to the public.

On the other hand, the officer in Indore was not aware of the online process set up by SEBI. He was not even aware of that the fees can be paid online.

As I said earlier, the right hand does not know what the left does.

This is not a lone case.

A similar case was experienced by an applicant at Bangalore where the officer took a long time to process his application and kept on demanding for documents which did not appear necessary to process the application.

Just to clarify, SEBI’s Mumbai office processes all applications for registration, online.

This brings to the fore some key questions:

• Is the SEBI Head Office even aware about this?
• What level of discretion is allowed to individual officers?
• Most important, has SEBI given training to its officers at Regional Offices?
• Can the Head office process the application in such a scenario?

SEBI needs to understand that while people are willing to comply with the regulations it has to treat the market participants as its customers and showcase an acceptable level of service.

It should also consider that the applicant has to bear the opportunity cost for delay in starting its business.

We all evolve and I hope SEBI too does so. I am hopeful.

Hence, I would like to make my suggestions to SEBI:

1. Once the application is “successfully submitted”, SEBI should inform the applicant the name of the officer to whom the application is assigned.
2. There should be an option for the applicant to track the progress of the application. In fact, autogenerated weekly alerts/reminders can be sent.
3. Although there is a system where the investors can complaint against intermediaries, there should be a system where intermediaries can complaint or give suggestions to SEBI for better functioning and to reduce delay in the process of approval of application.

This will soothe the nerves of anxious applicants and get them going faster.

SEBI has a huge role to play. The left hand should know about the right hand.