SEBI Chairperson Controversy: Madhabi Puri Buch’s Salary Scandal

In recent weeks, Indian politics and financial regulatory circles have been abuzz with a major controversy involving Madhabi Puri Buch, the Chairperson of the Securities and Exchange Board of India (SEBI). The Congress party has leveled serious accusations against Buch, alleging that she received significant payments from ICICI Bank after her appointment as a whole-time member of SEBI in 2017. These claims include a purported total of ₹16.80 crore in salary and Employee Stock Options (ESOPs) over the past seven years. ICICI Bank has strongly denied these allegations, asserting that Buch only received her legitimate retiral benefits following her retirement from the bank. This unfolding drama has not only stirred political debates but has also raised questions about regulatory integrity and transparency in India’s financial sector.

Congress Accusations: A Detailed Examination

The Congress party’s accusations against SEBI Chairperson Madhabi Puri Buch have ignited a fierce debate about conflict of interest and governance within India’s financial regulatory framework. Pawan Khera, head of Congress’ media and publicity department, has brought these allegations into the limelight. According to Khera, Buch’s financial dealings with ICICI Bank raise serious concerns.

Alleged Financial Transactions

1. Salary Discrepancies: Khera claims that Buch received a total of ₹12.63 crore as salary from ICICI Bank between 2017 and 2021, a period during which she was also serving as a whole-time member of SEBI. This claim is particularly concerning given that SEBI’s regulations prohibit its employees from receiving remuneration from other organizations. Khera argues that this contravenes Section 54 of the SEBI (Employees’ Service) Regulations, 2001, and Section 5 of SEBI’s Code on Conflict of Interests for Board Members (2008), which are designed to prevent such conflicts of interest.
2. ESOPs and Additional Income: The Congress party also alleges that Buch received Employee Stock Options (ESOPs) from ICICI Bank valued at ₹2.84 crore between 2021 and 2023. This, according to Khera, violates the ICICI Employees Stock Option Scheme 2000, which is intended to regulate the allocation and vesting of stock options. Additionally, between 2017 and 2024, Buch is said to have earned ₹22.41 lakh from ICICI Prudential, another entity within the ICICI Group.
3. Tax Evasion Claims: A significant portion of the allegations concerns the alleged tax evasion on the ESOPs. Khera claims that Buch was subjected to ₹1.10 crore in Tax Deducted at Source (TDS) on the ESOPs, which he asserts is a form of salary and thus a violation of SEBI’s Code of Conduct. Khera argues that this represents a ₹50 lakh tax escape, further compounding the severity of the accusations.

ICICI Bank’s Response: A Comprehensive Denial

In response to the Congress party’s allegations, ICICI Bank issued a formal statement to the stock exchanges. The bank’s denial is robust and detailed, aiming to refute the claims point-by-point.

1. Retiral Benefits: ICICI Bank has asserted that since Madhabi Puri Buch’s retirement from the bank in October 2013, she has not received any salary or ESOPs from the bank or its group companies, apart from her legitimate retiral benefits. This statement underscores the bank’s position that any financial transactions involving Buch after her retirement are strictly in accordance with the rules governing such benefits.
2. ESOPs Vesting Rules: The bank explained that ESOPs granted to employees vest over a period of time. Buch, according to the bank, exercised her ESOPs within the rules stipulated at the time. The difference between the stock’s exercise price and its fair market value is considered perquisite income and is subject to tax, as outlined in Part B of Form 16. This, the bank contends, is standard practice and complies with applicable tax regulations.
3. Regulatory Compliance: ICICI Bank also emphasized that any ESOPs Buch received were in line with the bank’s policies at the time of their grant. The bank’s statement clarifies that the payment of perquisite tax and retiral benefits is in compliance with both income tax rules and internal regulations.

Political and Regulatory Implications

The controversy surrounding Madhabi Puri Buch has broader implications for India’s financial regulatory landscape. The allegations have sparked debates about the integrity of SEBI and its leadership, as well as the effectiveness of oversight mechanisms within the financial sector.

Impact on SEBI’s Reputation

The allegations and subsequent denials have put SEBI, India’s principal securities market regulator, under intense scrutiny. The controversy highlights potential gaps in regulatory oversight and conflict of interest management. SEBI’s effectiveness relies heavily on its leadership’s credibility and impartiality. The ongoing debate about Buch’s financial dealings could undermine public trust in SEBI’s ability to regulate and oversee the financial markets impartially.

Political Fallout

The Congress party’s accusations have significant political ramifications. The opposition has used the controversy to question the Prime Minister’s role in appointing SEBI’s Chairperson. Congress President Mallikarjun Kharge has demanded Buch’s immediate dismissal and a Joint Parliamentary Committee (JPC) investigation into what he describes as the “Adani Mega Scam.” This political maneuvering underscores the broader political implications of the allegations and reflects the high-stakes nature of such controversies in India’s political arena.

Recent Developments

In recent weeks, there have been additional developments related to the Buch controversy:

1. Increased Scrutiny: The controversy has led to increased media scrutiny and public interest. Investigative journalists and political commentators are closely examining the financial and regulatory aspects of the allegations. This heightened scrutiny is putting pressure on both ICICI Bank and SEBI to provide clear and transparent explanations.
2. Official Investigations: The government has announced that it will review the allegations and conduct an internal investigation to assess the validity of the claims. This move aims to ensure that all regulatory and legal standards are upheld and that any potential conflicts of interest are thoroughly addressed.
3. Public and Media Reaction: The public and media reaction to the controversy has been mixed. While some view the allegations as a serious breach of regulatory norms, others are skeptical of the Congress party’s motivations and the evidence presented. This divide reflects broader debates about political accountability and regulatory integrity.

Conclusion

The controversy involving SEBI Chairperson Madhabi Puri Buch and ICICI Bank represents a significant moment in India’s financial regulatory landscape. The allegations of salary payments and ESOPs raise critical questions about conflict of interest, transparency, and regulatory oversight. ICICI Bank’s robust denial and the ongoing political and public scrutiny highlight the complexities of the case. As the investigation unfolds, it will be crucial to ensure that all facts are thoroughly examined and that any breaches of regulatory norms are addressed. This situation underscores the importance of maintaining the integrity of financial institutions and regulatory bodies to uphold public trust and ensure fair and transparent financial markets.

Soumya Smruti Sahoo

Soumya Smruti Sahoo is a seasoned journalist with extensive experience in both international and Indian news writing. With a sharp analytical mind and a dedication to uncovering the truth, Soumya has built a reputation for delivering in-depth, well-researched articles that provide readers with a clear understanding of complex global and domestic issues. Her work reflects a deep commitment to journalistic integrity, making her a trusted source for accurate and insightful news coverage.