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Home > Business > Special

Sebi boss: Saviour, with a bit of luck

Shobhana Subramanian in Mumbai | October 19, 2007

Meleveetil Damodaran seems to have a knack of setting things right wherever he goes. While his formidable abilities have no doubt played a big role in this, circumstances have also helped him greatly.

A career bureaucrat who enjoys watching soccer, the IAS officer's rapport with colleagues and politicians in New Delhi has also stood him in good stead.

Take the case of IDBI Bank, where he negotiated a Rs 9,000 crore (Rs 90 billion) bail-out for the institution. The government would never have let IDBI collapse in the first place, so the rescue act would have happened anyway. But Damodaran was in the right place at the right time and managed it quite well.

Even in his earlier assignment as chairman of the Unit Trust of India (UTI), lady luck was by his side - as always. The image of the institution had taken such a battering after the ignominious departure of the earlier chairman and the markets were in such a bad shape that the only way UTI could go was up.

With the government keen to restore the image of UTI, because public money was involved, Damodaran found it relatively easy to get his proposals cleared. His lasting contribution was to stem the rot by giving fund managers more autonomy and performance-driven incentives. A revival in the markets did the rest.

Damodaran's tenure at Sebi (he took over as chairman in February 2005) has been mixed. The regulator did unearth the demat scam - individuals opening multiple accounts.

The quasi-ban on participatory notes - they will be banned in the F&O segment - has taken its time coming, but is a shrewd move. Once again, luck is on 59-year-old Damodaran's side because the markets are on a roll and given that the economy continues to grow at a fast clip, India continues to be an attractive destination. There may be a temporary slowdown in flows but they should pick up.

Independent observers, however, say the smaller companies have borne the brunt of his battle against price manipulation while the big fishes seem to be getting away.

Also, Sebi hasn't managed to win too many cases; the most high-profile case against foreign brokerage UBS, where Sebi banned it from issuing offshore derivative instruments (ODIs) following investigations into its activities in the crash of May 17, 2004, is still to be heard by the Supreme Court.

If Sebi wins the case, it will be the first instance of the regulator having successfully brought to book an errant player and will be a feather in media-savvy Damodaran's cap.

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