Ravi Narain: Architect of NSE's success caught in an awkward spot

Ravi Narain
After having been an architect of the success of the National Stock Exchange (NSE), the country’s largest bourse and second-biggest globally in terms of derivatives volumes, Ravi Narain’s resignation on Thursday as vice-chairman of the NSE went against the spirit with which he had helped the organisation to grow from scratch.

Narain has stepped down to allow a fair probe by the Securities and Exchange Board of India (Sebi) into the preferential access controversy. Although the resignation came voluntarily, it would have been the least preferred circumstance Narain, 61, would have imagined.

After giving up the post of managing director (MD) and chief executive officer (CEO) in April 2013, Narain served on the NSE board in a non-executive capacity. However, his long association and influence at the NSE concerned Sebi, which last month issued show-cause notices to the exchange and 14 officials, including Narain, seeking explanation as to how certain trading members got preferential access to data feeds.

People in the know say Narain had the option of recusing himself till Sebi completed its probe. However, the decision to resign was to ensure a quick resolution of the controversy the exchange has been embroiled in since 2015. The allegations of “unfair access” against the NSE relate to the period between 2011 and 2014, when Narain and later Chitra Ramkrishna, who unexpectedly quit as managing director and chief executive officer in December last year, were at the helm.

Even though Narain has earned many laurels, including helping the NSE attain number one position within years of its launch, the Cambridge economics graduate’s priority would be getting his name cleared in the case.  Though the Deloitte forensic audit and Sebi’s technical committee have not been able to establish any mala fide or monetary gains by the NSE or its employees in giving preferential access, Narain will have a lot of explaining to do as to how the alleged lapses took place under his watch. Barring the preferential access controversy, which came to light only in 2015, Narain’s track-record at the NSE has been largely smooth.

Narain, who began his career at IDBI Bank in the early 80s, has shied away from the limelight and been highly reticent. “People should not matter more than the institution. It is silly to do aggressive in-the-face selling of yourself,” Narain had told Business Standard three years ago when asked about his reticent approach.

Those who’ve worked with him say he was a “popular boss, easily accessible and patient in problem-solving”.

“Narain’s key strengths were his handling of all the stakeholders. He had strong relations with the government, Sebi and even the shareholders. During his tenure, the exchange didn’t have any problem,” said a shareholder.

Narain was among the five employees handpicked by SH Nadkarni, then IDBI chairman, to join a team that would set up a technology-oriented exchange. After his MBA from Wharton, Narain had the option of doing a comfortable job in the US. However, he opted to come to India and a few years later join IDBI.

Narain is among the few who can take credit for breaking the dominance of the Bombay Stock Exchange (BSE) and within a quick time overtaking it in terms of volumes. He was also instrumental in setting up a clearing corporation (National Securities Clearing Corporation), which guaranteed trade settlements to buyers and sellers and depository services. Narain, who led the NSE since 2001, was among those who helped trading in derivatives become a success, which cemented the NSE’s position as a dominant exchange. It also ensured that the NSE stayed in the forefront of reforming India’s capital markets.

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