Capital market must lower friction and compliance cost: SEBI Chief

Mumbai [Maharashtra], August 21 : Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Thursday underlined the urgent need for innovation in capital markets that not only widens opportunities but also reduces compliance costs, making the system safer and more accessible for both issuers and investors. He was speaking at the 22nd Annual Capital Markets Conference (CAPAM2025), organised by FICCI.

Pandey stressed that reforms must actively support faster capital formation while ensuring long-term investor engagement. "Innovation in the capital market must lower friction and compliance cost for issuers, investors and intermediaries, while managing the risk. It should also provide a diverse range of opportunities depending upon the risk appetite," he said.

Highlighting SEBI's regulatory initiatives, Pandey pointed to the shortening of IPO timelines, adoption of digital processes, and safeguards such as blocking of funds and direct payouts, which, he said, have cut costs and improved efficiency. He added that a verified payment channel for SEBI-registered intermediaries through UPI will come into effect on October 1, 2025. This move, according to him, will protect investors from cyber frauds, a growing concern in the era of digital finance.

The SEBI Chairman also noted that technology should be viewed as a trust multiplier rather than a showpiece, especially at a time when instances of fake apps and unregistered intermediaries continue to surface. SEBI, he said, is working with social media platforms to curb such fraudulent activities.

Reflecting on the changing landscape, Pandey said innovative regulations have helped create new asset classes and instruments. "AIFs, REITs, INWITs, SIPs, SIFs, PMS, these acronyms now occupy an important place in the Indian capital market"

He also pointed out that India's securities market has expanded significantly, with 13 crore unique investors, 7 crore mutual fund investors, and a capital pipeline worth 1.4 trillion rupees. "Transparency attracts long-term capital," he remarked, calling for stronger disclosures, better controls, and aligned incentives to meet the aspiration of building a larger and deeper capital market.

Addressing emerging challenges, Pandey said that while artificial intelligence is an asset, it should not be seen as a substitute. "Adopt AI, but with safeguard," he emphasised. He reiterated that unnecessary processes must be eliminated, and the focus should be on developing new product classes and strengthening sustainable domestic capital formation amid global uncertainties.

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