Striking a Balance: SEBI's Pandey on Regulation vs. Business Flexibility

In his keynote speech at the CII Corporate Governance Summit held in Mumbai on April 17, 2025, Mr. Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (SEBI), underlined the importance of keeping a sound balance between strong market regulation and facilitating ease of doing business. He brought forth the necessity for dynamic and intelligent inclusive strategies outlined for the safety of the interests of investors and the promotion of capital raising and economic growth.

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Governance as a Strategic Imperative

"Governance isn't merely oversight; it's a strategic mandate to safeguard and keep the market clean." In that, Pandey emphasised yet another aspect of corporate governance, which is central to investor trust.

Great governance will deliver long-term sustainability in market operations by embedding it into a culture. According to him, SEBI is currently working to ensure a high board composition and internal controls with high transparency for market players.

Navigating the Compliance Burden

The rising burden of compliance is one of the most crucial challenges facing small and medium-sized enterprises in India.

Pandey agreed that one constraint, or regulatory framework, should not inhibit growth and said SEBI is in the process of actively reviewing the disclosure norms, particularly concerning environmental, social, and governance reporting.

"We are listening to the market's feedback. ESG disclosures must fulfil their purpose without being a tick-box exercise or an undue burden," he noted. The restructuring in question would make some ESG requirements more specific, considering aspects of materiality and practicality.

Ease of Doing Business Reforms

Under Pandey's leadership, SEBI has embarked on a reform agenda to reduce red tape and enhance the investment climate. A significant reform is liberalising several norms for Foreign Portfolio Investors (FPIs), market infrastructure institutions (MIIs), and merchant banks.

The disclosure threshold for FPIs has been raised from ₹25,000 crore to ₹50,000 crore, reflecting the larger and deeper equity markets in India. The intention is to facilitate compliance for large FPIs while still offering regulators the checks they require.

Further, SEBI has worked with the Reserve Bank of India and the Ministry of Finance to further simplify the process for foreign fund investments, specifically with respect to aspects that overlap between foreign direct investment and foreign portfolio investment.

"As we said, we need capital that is as fungible as possible: Whatever it is, FDI or FPI, let's facilitate the inflow of capital into the productive sectors of the economy," says Pandey.

Strengthening SEBI's Internal Governance

Pandey also addressed the aspects of SEBI's own governance mechanisms in relation to such processes. This is a first of its kind, with the regulator establishing a committee to review the provisions of conflict of interest and also improve transparency in the functioning of its board members.

An engagement by SEBI towards holding itself culpable to the same standards of accountability and ethical compliance that it expects from listed entities.

"Good governance must begin at home. As a regulator, we must lead by example," Pandey stated. This committee will also recommend a framework for timely disclosures by SEBI officials and board members on instances that may have a bearing on market credibility.

Industry and Market Reactions

Market experts and industry leaders have hailed Pandey's balanced proposition. Analysts believe that SEBI's stance supports the formation of an ecosystem that is more favourable to investors and competitive, especially when India is positioning itself to step into a role as a global economic hub.

"In Mr Pandey's message, the business sector finds a resonance," CII President R. Dinesh stated. "A predictable, balanced regulatory environment is vital to sustainable growth," he added.

Broking houses and representatives of FPIs also endorsed the easing of disclosure norms. They stated that the ease of doing business in India would thus encourage investments while, of course, instilling investor protection.

Looking Ahead

The pragmatic approach adopted by Tuhin Kanta Pandey in his role as SEBI chairman has thus far been an appreciation of the need for strong oversight and the need to appreciate the business world. 

With SEBI's recent policy overhaul, its spirit of staying available for the stakeholders, and reforms in its internal governance, the picture that emerges before us is of a regulator already morphing into a more cooperative and responsive institution. 

In its aim to ensure fair play in the accessibility of the market, such an approach can prove to be a win-win situation for bringing long-term capital into India and fast-tracking its economic development.

Conclusion

Regulatory systems must evolve with the market dynamics in India's effort to convert into a $5 trillion economy. In this regard, under the stewardship of Tuhin Kanta Pandey, SEBI advances into a timely agenda that mediates regulation against liberty or control against innovation.

How much more technical could the road ahead get? Pandey's remark was clear: "Regulation and business easement are opposite sides of the same coin in India's economic progression." 

This will be a forward-looking agenda, which, under Tuhin Kanta Pandey's leadership, would balance control with freedom and regulation with innovation in SEBI.

Setting up an atmosphere, making it easier to comply, and moving towards more efficient governance, internal and external, SEBI is drawing a picture of an investment-friendly capital market that is more resilient and transparent.