The Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs 50 lakh on the National Stock Exchange (NSE) for making changes in compensation policy for senior management level people without taking prior approval from the markets regulator.
The change in the policy resulted in encashment of accumulated ordinary leaves for NSE's former managing directors and chief executive officers, Ravi Narain and Chitra Ramkrishna, above the limit of 360 days granted by the exchange without taking SEBI's prior nod, an order said.
According to SEBI, this led to non-compliance with the provisions of the SECC or Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations.
"The noticee (National Stock Exchange), being the leading regulated stock exchange in India, should have set higher standards of compliance which is found missing in the present case," Sebi said.
"Further, the material brought on record shows that the failure of taking prior approval from Sebi before making a change in its policy which was approved by the Compensation Committee/ NSE Board of NSE on November 26, 2012 may be a single instance but, it has led to violation on repeated instances...," the order said.
However, on comparing the approved compensation and actual gross compensation paid for the period of eight months and two days to Ramkrishna for the financial year 2016-2017, SEBI observed that the NSE board on the basis of the recommendation of its Nomination and Remuneration Committee permitted additional encashment of 168 days.