Securities And Exchange Board Of India (SEBI)

The Securities and Exchange Board of India (SEBI) is the most important regulatory body of the securities market in the Republic of India.

The Securities and Exchange Board of India was established as a non-statutory regulatory body in the year 1988, but it was not given statutory powers until January 30, 1992, when the Securities and Exchange Board of India Act was passed by the Parliament of India. Its headquarters is at the business district at the Bandra Kurla Complex in Mumbai, but it also possesses Northern, Eastern, Southern and Western regional branch offices in the cities of New Delhi, Kolkata, Chennai and Ahmedabad, respectively. It also has small local branch offices in Bangalore, Jaipur, Guwahati, Bubaneshwar, Patna, Kochi, and Chandigarh.

The Securities and Exchange Board of India (SEBI) supplanted the Controller of Capital Issues, which hitherto had regulated the securities market in India, as per the Capital Issues (Control) Act of 1947, one of the first acts passed by the Parliament of India following its independence from the British Empire. It is run by its own members, which consist of the Chairman, who is elected by the Parliament of India, two officers from the Union Finance Ministry, one member from the Reserve Bank of India, and five members who are elected by the Parliament with the Chairman.

SEBI in India is similar to the Securities and Exchange Commission (SEC) in the U.S.

The Securities and Exchange Board of India’s stated objective is “to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto.” According to its charter, it is expected to be responsible to three main groups: the issuers of securities, investors, and market intermediaries. The body has somewhat nebulous powers, as it drafts regulations and statutes in its legislative capacity, passes rulings and orders in its judicial capacity, and conducts investigations and enforcement actions in its executive capacity.

Many criticize the regulatory body because it is insulated from direct accountability to the public. The only mechanisms to check its power are a Securities Appellate Tribunal, which consists of a panel of three judges, and a direct appeal to the Supreme Court of India. Fortunately for the people of India, the SEBI has been mostly benevolent in its use of its authority, issuing strong systematic reforms rapidly and aggressively with its unchecked power. For example, after the Great Recession of 2008 and the Satyam Fiasco, the SEBI was able to quickly take regulatory steps to mitigate the effects of these problems, stabilize the economy and take drastic steps to make sure such situations never occurred again.