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. 

o 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: 

o 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.”

o 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• The consolidation is meant to cut duplication, remove outdated concepts, and make compliance simpler while keeping checks on market abuse and investor risks.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.