Markets in India safe, people shouldn't panic: Sebi chairman Tuhin Kanta Pandey

Will bring in four elements of trust, transparency, technology and teamwork under triple mandate of investment protection, development of markets and regulation of markets: Tuhin Kanta Pandey

Sebi chairman Tuhin Kanta Pandey is a little over a month into his job and has undertaken several measures to ensure more trust in the stock market regulator. In an interview to TOI’s Surojit Gupta & Sidhartha, Pandey talks about a range of issues and assures investors that the Indian markets are safe against the backdrop of volatility triggered by global events. Excerpts...

What are your priority areas?

We have got three mandates, which are investment protection, development of markets and regulation of markets. Four elements that we will bring in are trust, transparency, technology and teamwork. On trust, it will be people’s trust in Sebi and Sebi’s trust of its ecosystem, both need to be promoted. Conflict of interest norms also need to be updated, for which we have set up a committee and that will give us a lot of guidance on how we put our framework. Another issue on trust is how we are going to make our regulations.

Regulations should be optimum, which are risk-based. If you have a higher amount of risk, there should be a higher scrutiny, if there is low amount of risk or something which need not be micromanaged, in that case, we should not get into that. So that balancing is required. We also need to look at some of the past regulations. Whether in a particular context they may have been necessary, but now context may have changed, or technology has worked out, or the system has improved and therefore that kind of micromanagement may not be contextually necessary. In that case, we should eliminate them. Every department is being asked to look at their regulations and work with stakeholders to identify what are the points that can be simplified.

In a sense, you are promoting ease of doing business?

Yes, ease of doing business combined with ensuring that market integrity is maintained at all times, and investors are duly protected. With the development of the market, there are new products, the Indian capital market is growing rapidly. It has to have all elements. It has to have different types of risks. There are different diversifications, which are already there. There are different possibilities in the futures market, such as energy futures.

Markets are very volatile now. How do you assure the investor community that Indian markets are safe?

Our payment and settlement systems are very robust. The possibil ity of any default is not there. The contracts will be honoured. People can enter and exit without difficulty. When we are interacting with other market participants, FIIs and other investors, they have a lot of trust in our institutions, in our ability to handle. Indian systems are some of the most modern in the world, most secure in the world. From 2019 to 2024, the CAGR in India was 8.5% in dollar terms. In this period it was zero for emerging market and minus 3% for China.

From the 1990s, when FIIs were allowed, the markets have consistently given double-digit returns in dollar terms. These markets have developed over a period of time. We are estimating 6.5% GDP growth and the fundamentals are strong. The budget has offered incentives, which will boost domestic consumption and RBI ’s policy has been supportive and accommodative. Headwinds are there, no doubt. But India may offer some opportunities too, relatively speaking.

Have you increased surveillance in the market, amid what’s happening around the globe?

We are always on 24x7 surveillance. Sebi in coordination with exchanges is constantly watching the situation. And, we had, even the worst days when you had a sharp fall, we did have an impact. Relative to the rest of the world, India was much less affected.

What is the state of play on IPOs? Do you see some slowing down because of the volatility?

There were some concerns around some of the small IPOs seeing massive subscriptions.
On the SME IPO issue, there have been changes by Sebi and certain regulatory measures have been brought in. On the main board, IPOs have gone up. India had the largest number of IPOs. In contrast, there are markets where IPOs have not been possible for the whole year.

What is the progress on a common KYC across the financial sector?

There is good progress there. Both Sebi and RBI have to work together and there are certain points that need to be ironed out, which we should be able to do soon.

What is the position on allowing foreign individuals to invest directly in Indian stock markets?

There is some discussion happening. The department of economic affairs is undertaking a review of Fema rules. One of them relates to NRIs and there is a limit of 5% that they are thinking of raising it to 10% and the overall to 24%. Then, there is the idea that investors could be directly asked to do that. But we still have to examine and deliberate. There is discussion on how the KYC will be done, what the implications will be and so on. Right now, individuals can come, but they have to come through FIIs or through a fund.

What is your view on overseas listing of Indian companies?

On the contrary, there are a lot of companies that want to list in India and we should welcome that. We will facilitate it. We are here to develop our capital market. Reverse flipping is taking place.

Does Sebi need to do more on communication with the market?

We have been communicating. We put a lot of things on the website and Sebi has very good practices. We must appreciate that they have been developed over a period of time and successive leadership in Sebi has honed up this place, they have nurtured it. The institution has come up, faced many challenges and also improved. Obviously, we have to constantly be on the move because no complacency is acceptable. One piece which was missing, we didn’t have a very active social media presence and we have recently unveiled it.

There is also a lot of misinformation. Are you planning a fact check?

We immediately get into areas where some false online platform is there and there are attempts to swindle the money in the name of investment, including through cyber frauds. Then, there is also the issue of fin-fluencers. We have taken down something like 70,000 fin-fluencers from YouTube with the help of Meta and Google. At the same time, we also want more of the industry to develop and have registered entities.

Are you looking at promoting new kinds of futures such as energy futures? Agricultural futures have been a no-go area. Will you review that?

We will be making progress around that (energy futures) because a lot of things have been developed and a lot of regulatory hurdles have been crossed. Soon you should be seeing that. About agriculture, some of the important products are not available. That is something which is hampering the industry. But that’s a policy call, which has to be taken by govt.

India has moved forward and introduced a T+0 for a select number of stocks. What is the roadmap?

If you ask me, T+1 is good enough.

How much of a challenge do you think the new technology, such AI, is for capital markets?

AI has to be looked at from both sides. It has enormous potential. For example, Sebi itself uses a lot of AI tools and going forward, we would like to use this in all areas of our work. But AI also has certain other points, which are risks. So, we also need to evolve a risk mitigation strategy.

One of the irritants for people is the IEPF (Investor Education and Protection Fund) guidelines. There are a lot of complaints that people are not able to get their genuine claims settled…

Proactive efforts should be made so that it doesn’t have to go to IEPF. Sebi will really explore. We will facilitate use of registered transfer agents by IEPF for processing. We will help them to process any claim. Then in next two months we will conduct Niveshak Shivirs in Mumbai and Gujarat jointly with ministry of corporate affairs, where we will get top corporate RTAs where we have a large IEPF outstanding. They have ledgers and the companies are making efforts.

What are the other measures that the regulator is contemplating to make the market more secure for a new retrail investor?

We need to increase investor awareness. People coming to the stock market is a welcome thing. After all, you have to deploy your savings. The most important thing is that people should not be borrowing to invest. This is an issue where sometimes you do learn by some sagacious advice from your friends and relatives. Sometimes, you get lured into some riskier ventures on the advice of some of your sagacious peers. Then sometimes you lose money.

The point is that it’s like a behavioural issue. And in behaviour, you can have an awareness element. We would like to up that awareness element. Mutual fund industry is doing its own awareness drives. So, everybody doesn’t get into very risky things. Because some of the people can get attracted to very abnormal gains, which some listed companies might show. On the awareness part, we would like to upscale our efforts more together as an ecosystem. Ideally, we should also collaborate with other regulators and work together for financial awareness of a higher order.