The full form of SEBI is Securities and Exchange Board of India. It is a statutory body established in 1992 under the SEBI Act to ensure transparency, efficiency, and integrity in market operations.
SEBI is India’s main regulator for the securities and capital markets. It plays a key role in safeguarding investors from unfair trade practices and promotes orderly market growth. Additionally, SEBI also creates rules to prevent price manipulation in the stock market, insider trading, and fraud, helping build trust among investors. It was formed to restore confidence after major market scams and to create a secure environment for investment in India’s growing financial markets.
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Key Takeaways
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The Securities and Exchange Board of India (SEBI) is India's primary statutory regulator for the securities and capital markets, established to ensure transparency, efficiency, and integrity.
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SEBI's core objectives are to protect investor interests from fraud, regulate market intermediaries like brokers, and promote the orderly development of the market.
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To enforce compliance, SEBI possesses quasi-legislative (rule-making), quasi-executive (investigation), and quasi-judicial (adjudication and penalties) powers.
Latest Updates and Initiatives (2025)
Here is the list of the latest updates and initiatives by SEBI in 2025:
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SEBI extended the deadline for brokers to offer an optional same-day (T+0) settlement cycle to November 1, 2025.
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SEBI emphasised reforms for non-resident investors and digital KYC in October 2025.
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SEBI introduced new rules effective October 1, 2025, enabling investors to use UPI, NEFT, IMPS, RTGS or cheques when transacting with intermediaries to simplify investment flows.
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SEBI increased the minimum block-deal size to ₹2.5 crore and allowed trades up to 3% above/below the share price in separate windows.
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SEBI announced rationalisation of the penalty framework: 40 violations removed, 105 re-classified as “financial disincentives”.
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SEBI introduced revised norms for IPOs in September 2025: easing public-offer requirements, expanding anchor-investor definitions and relaxing promoter-ESOP conditions.
Also, read Difference Between SEBI and AMFI here.
History and Establishment of SEBI
Before SEBI was established in India, the stock market used to lack appropriate and proper regulation. This led to issues like insider trading, price manipulation, and investor exploitation. The Controller of Capital Issues (CCI), who oversaw the market at that time, had limited powers and could not prevent such malpractices, resulting in widespread mistrust among investors.
To address these challenges, the Government of India created the Securities and Exchange Board of India (SEBI) 1988 as a non-statutory body to bring order and transparency to the growing securities market. Recognising the need for stronger legal authority, the government later enacted the SEBI Act, 1992, which granted SEBI statutory powers to regulate, supervise, and enforce fair practices in the Indian capital market.
The move came after major stock market scams, including the 1992 Harshad Mehta case, which exposed systemic loopholes and emphasised the need for robust market governance. Since then, SEBI has evolved into a powerful regulatory body, ensuring investor protection, maintaining market integrity, and fostering orderly market development.
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Objectives of SEBI
The objectives of SEBI continue to evolve with technology-driven reforms and stronger investor safeguards. Key functions of SEBI and its objectives include:
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Investor protection: Safeguard the investor interests by preventing all unfair trade practices, insider trading, and fraud through strict regulatory enforcement and grievance-redressal systems like SCORES.
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Market transparency: Ensure fair disclosure by listed companies and intermediaries, strengthening public confidence through initiatives like the T+1 settlement cycle and enhanced corporate-governance norms.
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Capital-market development: Promote innovation in products such as REITs, InvITs, and ESG-linked funds, while supporting financial literacy programs to deepen retail participation.
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Regulation of intermediaries: Oversee brokers, mutual funds, and investment advisors to maintain integrity and professionalism across market participants.
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Technological advancement: Leverage artificial intelligence and data analytics for market surveillance and implement digital KYC and UPI-based transaction systems for seamless investor experience.
Functions of SEBI
The functions of SEBI are primarily categorised into: Regulatory, Protective, and Developmental. They reflect its core mission to maintain a fair, transparent, growth-oriented securities market.
SEBI’s duties ensure that intermediaries, brokers, stock exchanges, and listed companies adhere to SEBI regulations, protecting investors and promoting market integrity.
To understand SEBI’s responsibilities clearly, its core functions can be summarised in the following table:
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Duty Type |
Description |
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Regulatory |
Sets rules for brokers, stock exchanges, mutual funds, and other intermediaries. |
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Protective |
Safeguards investors by preventing insider trading, market manipulation, and fraud. |
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Developmental |
Promotes technology adoption, investor education, and new products like ESG funds, REITs, InvITs, and derivatives. |
Regulatory Functions
SEBI regulations oversee compliance and registration under updated SEBI regulations. Key examples include:
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Broker regulation: Brokers and sub-brokers must register with SEBI and follow a code of conduct.
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Stock exchange oversight: SEBI inspects and enforces bye-laws for smooth operations.
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Mutual fund regulation: SEBI (Mutual Funds) Regulations, 1996, govern mutual funds and intermediaries.
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IPO governance: Companies raising public funds must comply with SEBI regulations for disclosure.
Protective Functions
SEBI’s investor protection role builds market trust. Examples:
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Preventing insider trading: SEBI penalises trading on unpublished information.
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Curbing market manipulation: SEBI combats price rigging to ensure fairness.
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Transparent disclosures: SEBI mandates accurate information for informed investor decisions.
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Grievance redressal: The SCORES portal addresses investor complaints.
Developmental Functions
SEBI fosters market growth through:
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Technology adoption: Promotes technology adoption (T+1 settlement, API-based trading), investor education, and new products like ESG funds, REITs, InvITs, and derivatives.
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Investor education: Programs to inform small investors about risks and rights.
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New financial products: Introduction of mutual funds, REITs, InvITs, and derivatives.
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Intermediary development: Encouraging skill and system upgrades.
Powers of SEBI
The powers of SEBI enable it to regulate India’s securities markets, protect investors, and ensure fair trading. The SEBI authority is divided into three key categories:
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Quasi-legislative powers: SEBI formulates rules, regulations, and guidelines for intermediaries and listed companies.
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Quasi-executive powers: SEBI conducts inspections, audits, and investigations to enforce compliance. This includes reviewing books of accounts, demanding documents, and supervising brokers, mutual funds, and market infrastructure institutions.
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Quasi-judicial powers: SEBI judges violations, issues fines or bans, and resolves disputes. Notable examples include the Sahara case, where SEBI ordered refunds of over ₹24,000 crore with 15% interest.
SEBI’s Role in the Indian Stock Market
SEBI in stock market plays a crucial role in maintaining transparency, fairness, and investor confidence. Its key responsibilities include:
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Regulating listed companies: SEBI ensures that firms comply with listing obligations, disclosure norms, and corporate governance standards, enabling investors to access accurate and timely information.
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Oversight of brokers and intermediaries: Through continuous monitoring, registration, and compliance checks, SEBI maintains a sound and fair securities market.
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Market supervision: SEBI oversees trading practices, enforces rules against manipulations and insider trading, and strengthens settlement systems, including the T+1 settlement cycle implemented in 2025.
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Promoting market development: By encouraging participation from retail investors and supporting advanced systems such as algorithmic trading and derivatives markets, SEBI helps deepen liquidity and expand investment opportunities.
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Investor protection and grievance redressal: In 2025, SEBI launched the “SEBI Complaint Tracker Portal 2.0”, integrating SCORES with mobile alerts for faster dispute resolution.
SEBI Structure and Organisation
Here is a breakdown of the SEBI structure:
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SEBI Headquarters: They established their headquarters in Mumbai, Maharashtra, India. It has regional offices in major cities (Delhi, Kolkata, Chennai, Ahmedabad) to cover the vast Indian market.
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SEBI Board: Composition as per SEBI Act includes:
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A Chairman nominated by the Union Government
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Two members from the Ministry of Finance
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One member from the Reserve Bank of India (RBI)
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Five other members appointed by the Government.
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SEBI Chairman: As of early 2025, the Chairman is Tuhin Kanta Pandey, appointed in March 2025 for a three-year term. Within SEBI are departments like Enforcement, Legal Affairs, Market Intermediaries Regulation & Supervision, Information Technology, etc.
Key Regulations Issued by SEBI
SEBI has formulated several SEBI regulations and SEBI guidelines to ensure fair and transparent functioning of India’s securities markets. The major regulations include:
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SEBI (Listing Obligations and Disclosure Requirements) Regulations (LODR): Prescribe disclosure norms, corporate governance standards, and timely reporting by listed companies. In 2025, amendments introduced enhanced ESG reporting requirements.
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SEBI (Prohibition of Insider Trading) Regulations: Prohibit trading on unpublished price-sensitive information and enforce mandatory disclosure by insiders.
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SEBI (Mutual Funds) Regulations, 1996: Govern registration, operations, disclosures, and investor protection norms for mutual funds. In 2025, SEBI updated guidelines to strengthen transparency and investor grievance mechanisms.
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SEBI (Issue of Capital and Disclosure Requirements) Regulations (ICDR): Updated in March 2025 to simplify rights issues, enhance disclosure norms for public offers, and facilitate capital raising.
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Alternative Investment Funds (AIF) Regulations: Amended in 2025 to permit fractional ownership platforms and improve valuation transparency for unlisted assets.
Also, read SEBI Regulations for Mutual Funds here.
Importance of SEBI for Investors
Understanding the importance of SEBI is crucial for anyone investing in India’s securities markets. The role of SEBI for investors ensures transparency, fairness, and protection, building confidence in the market:
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Investor protection: In 2025, SEBI’s “Niveshak Sarthi” campaign expanded its reach to Tier-2 and Tier-3 cities, empowering new investors to understand their rights and avoid fraudulent schemes.
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Transparent disclosures: Listed companies and intermediaries must provide accurate and timely information, enabling informed investment decisions.
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Grievance redressal: Platforms like SCORES and digital complaint tracking streamline investor complaints, improving trust and accountability.
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Market integrity: Through regulation of brokers, mutual funds, and intermediaries, SEBI ensures that transactions are fair and intermediaries operate professionally.
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Market growth and participation: Initiatives like T+1 settlement, API-based trading frameworks, and financial literacy campaigns encourage more investors to participate safely, increasing liquidity and investment opportunities.
Challenges and Criticisms of SEBI
Despite its critical role, SEBI faces certain challenges and limitations that can affect its efficiency:
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Enforcement delays: Investigations and penalties can be slow, occasionally reducing real-time deterrence.
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Manpower limitations: SEBI announced plans to expand its regional offices and hire 500 new professionals by mid-2026 to address capacity constraints.
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Global and cross-border coordination: Aligning regulations with foreign authorities remains complex amid increasing international investments.
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Investor education gaps: Many retail investors still lack awareness of risks, even with ongoing financial literacy initiatives.
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Balancing regulation and innovation: Overregulation may limit new products, while leniency could expose markets to misuse.
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Resource constraints: Given India's dynamic and growing capital markets, SEBI’s workforce and analytical capabilities are stretched.
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Conclusion
The role of SEBI remains prominent in India’s capital markets, ensuring transparency, investor protection, and fair trading practices. Through key SEBI functions, it promotes trust, market stability, and innovation.
As India moves toward full digitalisation of securities settlements and cross-border participation, SEBI is poised to shape a future-ready financial ecosystem, balancing innovation with safeguards. Hence, investors should stay updated on SEBI’s circulars and announcements through trusted sources such as the SEBI website, NSE, and Ministry of Finance to make informed financial decisions.
