I am currently finishing a book on personal and institutional silence in India. Just as I was looking for examples of regulatory muteness, I was gifted one; first-hand. The experience was instructive, if not inspiring. In India’s regulatory maze, silence is not an absence of communication; it is a policy instrument.

A ‘smart’ beginning

When my investment was made, SmartOwner had made no reference to the Securities and Exchange Board of India (Sebi) as its regulator. The claim of being under Sebi’s jurisdiction began appearing on its website only around 2019, well after funds had been collected. That it could mobilise public money without oversight in 2016 raises serious questions.

Investors were invited to purchase fractional shares in a North Bengaluru development called “BLR-NOA-HIL.” Given its proximity and the approach through a respected contact, many took the plunge. The sums weren’t trivial – typically Rs 10–30 lakh each. Nine years later, the projects remain suspended in mid-air: no approvals, no exits, only polite promises fading into static.

I was one of the investors; an ordinary participant, but also a former member of Sebi’s Primary Market Advisory Board and of the BSE’s Derivatives Board.

The regulatory bermuda triangle

When the project went nowhere, I approached Sebi through its much-touted SCORES portal. A prompt automated reply assured me my complaint would be examined by “the appropriate authority.” The phrase had a comforting bureaucratic ring. Unfortunately, it turned out to be fiction.

SmartOwner replied that my investment wasn’t a Portfolio Management Scheme (PMS). Sebi seemed to concur – despite SmartOwner being a Sebi-registered PMS. The Real Estate (Regulation and Development) Act, 2016 (Rera), too, wasn’t “appropriate,” since I hadn’t invested directly with a builder. Thus, the grievance disappeared between jurisdictions, like a regulation mislaid in transit.

When Sebi forwarded my complaint to the Association of Portfolio Managers in India (APMI), it confirmed receiving similar complaints from many others and urged Sebi to investigate SmartOwner, of which I again heard nothing despite reminders. Meanwhile, the SCORES portal unilaterally declared my case “resolved,” having exhausted its two permitted reviews. The helpline politely advised escalation to SmartODR – Sebi’s new online dispute-resolution portal.

I dutifully complied. SmartODR (operated by Central Depository Services Limited (CDSL) for Sebi) began posting updates that read, “We tried to reach the respondent over a call; the respondent has disconnected the call.” The irony seemed lost on Sebi: if the regulator itself cannot reach an errant company, what hope do investors have? After a few such meaningless entries, the case was closed – unilaterally – with the majestic pronouncement: “MATTER DISMISSED.” When I followed up with the CDSL official, I was advised to approach the “appropriate authority” – whose identity, despite repeated queries, seems to be guarded in the interest of national security. At times, it felt like standing in a well, asking questions, and hearing only my own voice echoing back.

The institutional art of silence

This isn’t a personal grievance; it’s a case study in how the system responds – even to those who know it well. If someone like me, reasonably informed and empowered, can be stonewalled so completely, what hope do ordinary investors have? The irony deepens when Sebi warns the public about unregulated e-gold schemes, as it did this morning, yet maintains a sphinx-like silence on SmartOwner – a Sebi-registered PMS facing similar complaints.

In India, there is a peculiar dignity to bureaucratic silence. It conveys neither assent nor dissent – only a steady hum of procedural indifference. When regulators fall silent, confidence falters. And confidence, not compliance, is the true currency of capital markets.

Anatomy of unaccountability

To its credit, Sebi has made significant strides in modernising India’s markets – disciplining errant mutual funds, tightening insider-trading norms, and enhancing disclosure standards. However, in investor grievance redressal, its machinery appears to be permanently tuned to “out of office.”

SCORES, conceived as a model of transparency, has become an automated labyrinth – an algorithmic shrug. SmartODR, launched with fanfare, has evolved into an additional layer of polite futility. Between portals, redirects, and canned replies, an investor’s complaint simply ages into oblivion. Unfortunately, a regulator’s silence is never neutral. It signals that accountability is optional, and that the system exists more to manage optics than outcomes.

Silence as policy

There’s an old joke in corporate circles: when in doubt, form a committee; when cornered, form a portal. Sebi seems to have done both. Each layer of grievance resolution may appear impressive in PowerPoint presentations and policy briefs. But without responsiveness, they are just ornate filing cabinets in the cloud. A good regulator does not merely punish wrongdoing – it listens. Silence may be decorous, but when it shields wrongdoing, it becomes complicity dressed as procedure.

India now boasts over ten crore retail investor accounts. Regulators often cite this as evidence of growing financial maturity. Yet maturity without protection, especially when the entity involved is registered under their aegis, is merely vulnerability in formal attire.

What investors deserve

Investors do not expect regulators to guarantee profits. They expect clarity, responsiveness, and accountability. A simple query – Who exactly is the appropriate authority? – should not require months of digital archaeology and clerical persistence. Regulators derive legitimacy not from omniscience but from fairness and accessibility. Each unanswered complaint erodes that legitimacy.

As for me, I still await a response – not about my personal case, but about what the silence signifies. At what point does “professional restraint” become institutional neglect? Why would Sebi shy away from probing an errant market operator? If the mission is investor protection, then silence is not an option. It is a verdict. 

V. Raghunathan is an academic and author of several books, including The Lion, the Admiral and a Cat Called B. Uma Vijaylakshmi: Learnings from Life and Management (Westland, 2024).

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