In an interview about the lack of public response by SEBI and the very minimal response by the government to the Adani ‘scandal’ and the wider concerns this affair has raised about corporate governance, independent directors, accountants, bankers, analysts and the stock market in India, U.K. Sinha, a former chairman of SEBI, has said that given the unprecedented nature of the Adani crisis “perhaps SEBI should have indicated in some way that they are inquiring into this matter”.
Sinha also “conceded” that after it was confirmed by a minister in parliament in 2021 that SEBI is inquiring into the Adani group’s compliance with its regulations and the Adani CFO has claimed that SEBI has dismissed charges against the group, SEBI should have made the matter public and formally released the results and outcome of that inquiry.
In a 35-minute interview to Karan Thapar for The Wire, Sinha, who is also a former chairman of UTI Mutual Fund, said he would find it hard to believe that SEBI has not already started an inquiry into the matter even though it has not publicly indicated it’s doing so. Sinha explained that SEBI receives dozens of complaints on a daily basis and, as he put it, “you do not start commenting on day one”. He added “you start inquiring but not react at the first instance”.
Sinha said that if the Adani crisis had had a larger impact on the Indian stock market there would have been a need for both SEBI and the government to speak more openly. But that is not the case. The stock market rose today.
The issues raised in the interview include allegations in the Hindenburg report about SEBI’s incompetence, partisanship and even corruption, whether SEBI should have started inquiring into Adani shares two years ago when they rose dramatically, whether SEBI should have been concerned about the exaggerated PE ratios of many Adani shares, whether the government’s response (finance secretary and finance minister) is adequate, whether there is a need for the government to say more to reassure international investors, particularly at a time when the government wishes to encourage foreign investment and the Adani crisis is major news abroad and possibly putting investors off as well as the Financial Times Lex column’s analysis of which says “Loose capital will now favour investments in China”.