SEBI to Push Capital Market Reforms and Expand Investor Access
SEBI Chairman Tuhin Kanta Pandey announces plans for simpler rules, deeper debt markets, and expanded investor access at the BFSI Summit.
The Securities and Exchange Board of India (SEBI) is set to launch a sweeping series of capital market reforms aimed at simplifying regulatory compliance, boosting liquidity in corporate bonds, and broadening the reach of investors. Speaking at the Financial Express Modern BFSI Summit 2026 in Mumbai, SEBI Chairman Tuhin Kanta Pandey outlined a vision for a more efficient and resilient financial ecosystem.
Pandey emphasized that as India's market landscape evolves, the regulator's primary focus will shift toward "simpler rules, deeper markets, responsible innovation, and wider access."
A Massive Decade of Market Growth
The push for reform comes at a time of unprecedented scale for the Indian financial sector. According to Pandey, India's market capitalization has surged nearly fivefold over the last ten years, reaching a staggering Rs 472 lakh crore. This growth is backed by a massive participant base of more than 15 crore unique investors and mutual fund assets totaling Rs 83 lakh crore.
With such rapid expansion, Pandey noted that regulation must evolve to match the scale of activity without introducing unnecessary complexity. "We cannot add a manual check for every new transaction. Safeguards must work by design," he remarked, stressing that while rules should be streamlined, investor protection and market integrity remain non-negotiable.
Key Regulatory Shifts and Debt Market Liquidity
SEBI is currently undertaking several critical reviews to modernize the market structure:
- LODR Framework: A comprehensive review of the Listing Obligations and Disclosure Requirements is underway.
- Public Issue Monitoring: The regulator has proposed more stringent monitoring of funds raised through public issues.
- SME IPO Framework: SEBI is reviewing the Small and Medium Enterprise (SME) initial public offering framework to ensure genuine businesses can raise capital while maintaining investor safety.
To address the liquidity challenges in the debt market, SEBI is developing a new market-making framework for corporate bonds. Additionally, the regulator is working on a framework for Fixed Income Channel Partners, which aims to increase retail investor participation through regulated online bond platforms. The second phase of the Demat 2.0 pilot will also facilitate the secondary-market trading of tokenized corporate bonds.
Embracing AI and Technology-Driven Safeguards
In a move to stay ahead of technological shifts, SEBI is exploring the creation of an Artificial Intelligence (AI) sandbox. This controlled environment will allow innovators to test AI applications, enabling the regulator to assess risks and develop safeguards before these technologies are deployed widely in the market.
"The best regulation prevents risks before they become problems. Technology lets us build safeguards into market systems," Pandey stated.
The Knowledge Gap: A Call for Investor Education
Despite the surge in digital access, a significant gap remains in investor literacy. Pandey highlighted findings from the SEBI Investor Survey 2025, which revealed that only 36 per cent of investors possessed moderate to high knowledge of securities markets.
He warned that while digital tools create immense opportunity, they must be paired with robust education. The regulator's goal is to ensure that as markets expand and technology advances, investors have the necessary knowledge to navigate the system wisely and safely.