SYLLABUS
GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Context: The Bill referred to the Standing Committee on Finance for review, emphasis on stronger oversight, quicker enforcement and clearer rules for investors and market intermediaries.
Key provisions of the Bill
- Objective: aims to rationalise and consolidate the existing provisions, and provides a modern regulatory framework for investor protection and capital mobilisation at a scale.
- Unified Code: The Bill proposes to consolidate the Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India (SEBI) Act, 1992, and the Depositories Act, 1996.
- Expansion of SEBI board: proposes to increase the number of members in SEBI to 15 from the current nine, including the Chairperson.
- This will include the Chairperson, two officers appointed by the Central Government and one from the RBI as ex-officio members, and 11 others, of whom at least five will be whole-time members. Currently there are three whole-time members.
- Better adjudication: On enforcement, the Bill moves towards a single adjudication route for quasi-judicial matters. All such proceedings will pass through one streamlined mechanism, with set timelines for investigations and interim directions.
- Grievance redressal: The draft introduces an Ombudsperson mechanism to handle complaints, with the objective of giving investors a clearer, structured path for grievance redressal.
- ease of doing business rationalization:
- proposed to decriminalise violations of “minor, procedural and technical nature” into civil penalties to “facilitate the ease of doing business and to reduce the compliance burden.”
- In the case of contravention of any rules or provisions of the code, no inspection can be done if eight years had passed from the date of contravention.
- Eliminate conflict of interest: mandates the members of the board to disclose any direct or indirect interests before making a decision.
Significance of the Bill
- The changes are made in keeping with extant requirements balancing faster adjudication processes with need for better deterrence.
- The consolidation is meant to cut duplication, remove outdated concepts, and make compliance simpler while keeping checks on market abuse and investor risks.
- The proposal refines SEBI’s mandate, clarifies decision-making powers, and attempts to reduce ambiguity around who regulates which activities in the securities ecosystem.
- The Bill endeavours to build a principle-based legislative framework to reduce the compliance burden, improve regulatory governance, and enhance the dynamism of technology-driven securities markets.