NSE Saga: Beyond ‘Yogi’ & Raids, the Real Mystery is Regulators’ Silence

If you are looking for delicious ironies to feast on this month, try looking at the Income Tax department. They have just been searching the residence of former National Stock Exchange (NSE) managing director Chitra Ramkrishna, in the fervent hope that they might find some evidence of her avoiding the taxman.

Officially, the department wants to find out if there were illegal gains made by Ramkrishna, a chartered accountant by training, through the allegedly unlawful transfer of confidential NSE information, whereas a probe reveals there has even been the disposal of vital laptops.

A Number of Ironies

This dubious search, ironically, is happening five years after she resigned from her post in the wake of a co-location scandal involving unfair access to electronic speed provided to some customers at the expense of others. A year after a whistleblower took the lid off the affair, Ramakrishna took with her a severance package estimated at Rs 44 crore – all very much legal and white, thank you.

Consider Irony Number 2: Ramkrishna has been named in a Securities and Exchange Board of India (SEBI) probe report as having mysteriously appointed a not-so-qualified professional, Anand Subramanian, at a salary multiple times of that at which he was hired. The NSE's own board, investors or supervisors seemed to have no problem with that. It is what we could call a corporate governance problem – not exactly income-tax territory.

Irony Number 3: The NSE shot to fame as an overarching stock exchange, emerging as the planet's biggest single platform in derivatives trading, pushing behind the century-old Bombay Stock Exchange (now BSE Ltd). The NSE was set up as India’s first electronic stock exchange and was founded in 1992. It was a fintech startup before the term fintech or startup became popular in India, and arrived well before the Internet.

Its current estimated valuation is close to Rs 2,00,000 crore as it aims for an initial public offer (IPO) of shares. That is more than 25 billion US dollars in valuation, ie, equivalent to 25 unicorns. The NSE's monthly turnover is in excess of Rs 2,65,00,000 crore.

Surely, you won't expect a woman who spent two decades in electronic supervision to hide outdated CDs or teeny USB drives amid a pile of crisply-ironed Kanjeevaram cotton sarees in the age of cloud computing? Ironic, isn’t it?

Irony Number 4: Ms Ramkrishna, who in her heydey was listed among the world's most influential women by global business magazines, is much in the news because in her own words to SEBI's sleuths, she said she was guided by an as-yet-unidentified Himalayan yogi, who could manifest himself at will but needed an email ID to which she sent voluminous details of her work to make decisions.

It gets quirkier when the yogi in question talks of trips to Seychelles. With such a mix of mystical prowess and electronic yoga at her command, it is unlikely the IT guys will get anything to signal wrongdoing in the apartment of the woman who made a career out of secure electronic data.

'Silence of the Watchdogs'

Let's face it. Before we crack the case, we need to find out what the case is in the first place, and what kind of an irregularity actually took place – from a strictly legal point of view. The SEBI has fined the NSE an amount of about Rs 1,000 crore for the co-location errors, but there is no criminal case so far. But the SEBI's report did mention an unlawful transfer of confidential data from the exchange. We could thus term the I-T department's searches as a desperate, delayed measure or a feeble attempt at headline management.

The elephant in the room is the invisible "Siddha Purusha" yogi, who was way too materialistic. There are also the dogs that did not bark when an intruder ran amok at India's biggest bourse.

Anand Subramanian's appointment as Chief Operating Officer and advisor was no secret. Only the extraordinary freedoms he enjoyed in a Bermuda Triangle that involved him, Ramakrishna, and the mysterious Yogi, is a matter of concern, as is the fact that the NSE's senior officials, colleagues, and regulators seemed to have hardly got wind of it -- or worse, did not seem to think anything was wrong.

"Silence of the Watchdogs” may well be a fine working title for a web series or a documentary on the mysterious ways at NSE. "Who made the dogs quiet?" may be a fine parody on "Who let the dogs out?"

There is a lot to be said on this. From purely a common-sense or Netflixian fantasy point of view, this could be an open-and-shut case of corporate malpractice with political connections aimed at making money, or a psycho-thriller perspective of a woman whose spiritual inclinations enabled someone to mesmerise her enough for her to forget the provisions of the Companies Act, the Securities Act, SEBI regulations or processes of corporate governance.

Chitra Ramkrishna and the North Block

My own theory is less enchanting but perhaps more interesting than that. For that, we need to understand the origin, evolution and structure of the National Stock Exchange. The NSE became not only a magnificent cutting-edge techno-monopoly but an institution resembling a public sector company or a key government department, even as its bosses enjoyed the free-hand style typical of a family-run private sector company.

Books have been written by journalists Sucheta Dalal and Palak Shah on the blessings Ramakrishna enjoyed in the North Block that houses the Finance Ministry. But the real story may well be quite different from Netflix fantasies of politics or vanity.

The I-T department is just about wading into troubled waters. The place to look for secrets may not be the Mumbai apartment of a music-loving lady but whispers in the Steel Frame, also known as the Indian Administrative Service.

That is where we need to dig deep. Why would watchdogs, policymakers and regulators, including the SEBI, play so soft? What could be their motive?

We can keep that story for another day. Perhaps that would make a Netflix prequel. This is where House of Cards may get closer to Rocket Boys.

(The writer is a senior journalist. He tweets as @madversity. This is an opinion article and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)