The Securities and Exchange Board of India (SEBI) has approved a series of significant reforms aimed at enhancing the investment
framework and regulatory landscape. The board meeting, held on Monday, saw the introduction of a new asset class for high-risk profile investors, relaxed regulations for mutual funds, and streamlined processes for handling intermediary violations. However, the meeting was notably silent on the ongoing controversy surrounding SEBI Chairperson Madhabi Puri Buch.
The board’s decision to introduce a new asset class is seen as a move to bridge the gap between mutual funds and portfolio management
services, offering greater flexibility in asset construction for high-risk investors. This new asset class is expected to attract a segment of investors looking for more tailored investment options, thereby boosting market participation and liquidity.
In addition to the new asset class, SEBI has relaxed certain regulations for mutual funds. These changes are aimed at making mutual funds
more accessible and attractive to retail investors. The board has also approved measures to streamline the process for handling violations by intermediaries, ensuring quicker resolution and enforcement of regulatory norms.
Despite these significant developments, the board did not address the allegations against Chairperson Madhabi Puri Buch. The controversy
stems from accusations of conflict of interest and improper conduct, which have been a point of contention in the financial community. Critics argue that SEBI’s silence on the matter undermines its commitment to transparency and accountability.
The allegations against Buch include claims that she and her husband had investments in offshore funds controlled by Vinod Adani, the
brother of Adani Group Chairman Gautam Adani. These funds were allegedly used to manipulate stock prices of Adani Group’s listed entities in India.
Additionally, it is alleged that SEBI amended rules related to real estate investment trusts (REITs) in a manner that benefited Blackstone, where Buch’s husband was a senior advisor.
Further complicating the situation, the Congress party has accused Buch of trading in listed securities and selling employee stock options
from her previous employer, ICICI Bank, during her term at SEBI. They also allege that she made money through her advisory firm, which offered consultancy services to listed companies, thereby breaching SEBI’s conflict of interest policy.
The controversy has sparked a debate within the financial community about the need for greater oversight and transparency in regulatory
bodies. Some experts argue that SEBI’s failure to address the allegations against its chairperson could erode investor confidence and harm the regulator’s credibility.
While the board’s silence on the Buch controversy was notable, the meeting did result in several other important decisions. SEBI
approved 17 proposals aimed at enhancing the investment framework and regulatory landscape. These include measures to reduce the time for IPO listings from six days to three, making additional disclosures mandatory for certain foreign portfolio investors (FPIs), and providing board representation for retail investors in REITs and infrastructure investment trusts (InvITs).
The board also approved changes to the rules governing primary and secondary markets, mutual funds, and FPIs. These changes are
expected to improve market efficiency and investor protection. However, there was no announcement related to the derivatives segment, which had been keenly awaited by market participants.
The SEBI board meeting has thus resulted in a mix of significant regulatory reforms and lingering controversy. While the approved
measures are expected to enhance the investment landscape, the unresolved allegations against Chairperson Madhabi Puri Buch continue to cast a shadow over the regulator’s commitment to transparency and accountability.
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