SEBI Chief Pushes Banks to Boost Compliance Against Insider Trading

SEBI Chairman Tuhin Kanta Pandey, on September 3, 2025, Wednesday, told managing directors and chief executives of listed banks that insider trading risks thrive where controls are weak. As per news reports, he said unclear processes, undefined responsibilities, and inconsistent oversight remain among the main causes of violations.

Recent Action Against IndusInd Bank Executives

As per news reports, the remarks come after SEBI issued an interim order in June against the senior management of IndusInd Bank. The regulator found that the MD & CEO and deputy CEO had allegedly traded in the bank’s shares while in possession of unpublished price-sensitive information (UPSI) linked to discrepancies in its derivative portfolio.

Framework for Handling UPSI

Pandey said a strong internal control framework is necessary to ensure accountability for every piece of UPSI. He added that policies, codes of conduct, and periodic training are essential for staff to understand their responsibilities. Informal sharing of sensitive information during meetings or over email should be treated as a breach, he cautioned.

Compliance Officer’s Role

The SEBI chief underlined the role of the Compliance Officer under the Prohibition of Insider Trading (PIT) regulations. Boards must ensure that Compliance Officers have adequate authority, tools, and support from leadership to carry out their responsibilities. Pandey said this role should not be symbolic and should not be bypassed.

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Use of Technology

Banks were advised to adopt technology solutions such as automated trading window management, centralised pre-clearance systems, and digital certification platforms. Sebi also suggested monitoring trades during periods when trading windows are closed but may not yet be tracked by automated systems.

Crash Course for Bankers

From September 3, 2025, SEBI is introducing a crash course in Mumbai for senior bankers on insider trading rules and compliance. The sessions will later expand to Delhi and Chennai. The training aims to familiarise bankers with risks and improve monitoring within institutions.

Conclusion

With banks dealing with loan sanctions, restructuring, and corporate actions, SEBI has emphasised that protecting sensitive information must remain a priority.

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