Mon Sep 09 15:08:50 UTC 2024: ## India Needs a Code of Conduct for Regulatory Leaders: SEBI Controversy Highlights Urgent Need for Transparency and Accountability

**New Delhi:** The recent controversy surrounding Madhabi Puri Buch, the chairperson of the Securities and Exchange Board of India (SEBI), has ignited a debate about the need for a comprehensive code of conduct for leaders of regulatory bodies in India. Allegations of potential conflicts of interest have raised concerns about the integrity of SEBI and the broader regulatory ecosystem.

Experts argue that the absence of such a code creates a vulnerability for regulatory bodies, potentially impacting investor confidence and market stability. They point out that leaders of bodies like SEBI, RBI, IRDAI, CCI, and PFRDA wield immense influence over key sectors of the economy, requiring transparency and accountability in their actions.

A robust code of conduct, they suggest, should mandate full disclosure of financial interests, previous associations, and any potential conflicts. It should also include mechanisms for recusal when conflicts exist, ensuring that regulatory decisions are not influenced by personal gains.

The issue goes beyond individual cases, with concerns about regulatory capture – where regulators prioritize the interests of those they are supposed to regulate over public good. A well-defined code, coupled with independent oversight, could help prevent such scenarios.

This call for a code of conduct resonates with past instances where ethical conduct by regulators was more a matter of personal choice than institutional mandate. Former SEBI chairpersons like M Damodaran and CB Bhave went to great lengths to avoid even the appearance of impropriety, demonstrating the possibility of ethical leadership. However, formalizing this through a code would make ethical conduct mandatory, not discretionary.

The lack of publicly available conflict of interest disclosures by regulatory bodies, including PFRDA, IRDAI, and CCI, further underscores the need for a formalized and transparent code of conduct.

The government has been urged to act decisively by implementing a comprehensive code of conduct for all regulatory body leaders, emphasizing transparency, independence, financial probity, and accountability. This would not only strengthen India’s financial markets but also ensure a system that investors can trust, free from any hint of bias or corruption.

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