'SEBI needs more power to preempt crisis': Parliamentary panel backs stronger regulator in Securities Market Code 2025

New Delhi [India], June 11 : The Parliamentary Standing Committee on Finance said Thursday that SEBI needs more powers to preempt crises as India's securities market evolves rapidly, with BJP MP and Chairman Bhartruhari Mahtab stressing that a rule-based system is key to making the regulator more accountable under the proposed Securities Market Code, 2025.
Speaking to ANI after the day-long deliberations, Mahtab said, "One thing which we have to keep in mind is that this is a very swift and fast-developing economy. In that respect, to preempt a crisis, we have to give SEBI more power. So, the board is there. And what type of tribunals can go into all those issues - that is also another aspect which we are looking into."
On calls to make SEBI more robust following issues last year, Mahtab said the Bill envisages a rule-based, less subjective decision-making process to increase accountability. "The system that we are going to build up... is to make SEBI more accountable. A less subjective decision-making process is better. So, it has to be a rule-based system that is in place," he added after the panel convened two meetings.
Mahtab said the Bill was introduced in the Lok Sabha last December and referred to the committee. Since then, the panel has held extensive discussions and received 1,055 suggestions from various bodies, which were forwarded to the government for comments.
"The way our securities market has been evolving in the country since 1992, after the SEBI Act was formed, it is still evolving today. There are also new challenges emerging in the securities market. Furthermore, more and more middle-class people are investing. In this regard, to protect the... to make the system more investor-friendly, it is necessary that we have a robust law," Mahtab said.
"Keeping this in mind, this bill has been brought forward by the government. Combining the three acts, this bill is now before us. This bill was introduced in the Lok Sabha last December and was referred to our committee. Since then, we have held discussions with quite a few people, and representations were received as well. It is a matter of satisfaction that 1,055 suggestions were received from different bodies, which we then forwarded to the government for their comments."Mahtab added.
He added that the Legislative Department had raised certain concerns and proposed amendments. "We are putting efforts into finding ways to make it even more simplified and ensuring it is easily accessible and understandable for the public's awareness," he said.
The panel will continue discussions with the Secretary of Economic Affairs on Friday.
Mahtab said the panel aims to finalise its report by next month and submit it to Parliament during the first week of the monsoon session.
"Our effort is to have our report ready by next month, and we will submit it in Parliament during the first week of the monsoon session," he concluded.
The first meeting began at 11 am. The panel recorded oral evidence from representatives of the Ministry of Law and Justice, including the Department of Legal Affairs and the Legislative Department, on the proposed Bill.
The committee reconvened for a post-lunch session at 2 pm for a clause-by-clause examination of the legislation. Representatives of the Ministry of Finance, specifically the Department of Economic Affairs, deposed before the panel during this meeting.
The Securities Markets Code seeks to establish a principle-based legislative framework aimed at reducing compliance burdens, strengthening regulatory governance, and supporting the growth of technology-driven securities markets, thereby promoting ease of doing business.
The Bill proposes to strengthen SEBI's regulatory capacity by expanding the Board from nine to up to fifteen members, while mandating a transparent and consultative approach for issuing subordinate legislation. To enhance credibility and integrity in decision-making, the Code introduces strict conflict-of-interest norms, requiring Board members to disclose any direct or indirect interests and to recuse themselves where conflicts arise.