The Parliamentary Standing Committee on Finance, headed by Bhartruhari Mahtab, has backed key provisions of the Securities Markets Code Bill, 2025, including a significant expansion of Sebi's board strength from 9 to 15 members. According to reports from The Economic Times, the panel also proposed doubling the cooling-off period to two years before the chairperson and whole-time members can take up new jobs, aimed at avoiding potential conflict of interest. The committee emphasized maintaining arm's length distance between the investigation and adjudication wings to ensure regulatory independence.
The panel proposed extending the deadline for completing Sebi investigations from the proposed 180 days to one year to accommodate complex market-related investigations. As reported by The Economic Times, it also wants an outer limit of 120 days for disposal of complaints by the ombudsperson and suggested halving the time for approaching the ombudsperson to 90 days. The committee pushed for fixing a 45-day deadline for condonation of delay in appeals before the Securities Appellate Tribunal (SAT).
The committee called on the government to establish a regulatory framework for virtual digital assets such as cryptocurrency and consider introducing an interim oversight mechanism until such formal mechanism is introduced to address any regulatory vacuum. According to The Economic Times, this recommendation aims to provide clarity in the rapidly evolving digital asset space while maintaining regulatory oversight.
To bolster investor protection, the committee proposed making it compulsory for Sebi to frame an Investor Charter defining investor rights and grievance redressal timelines. As reported by The Economic Times, key safeguards for retail investors during company delisting should be incorporated directly into the proposed law instead of being left to subordinate regulations. The panel also recommended making a clear distinction between civil defaults and criminal 'market abuse' to ensure criminal liability is reserved for only serious and systemic misconduct.
The Bill was presented by finance minister Nirmala Sitharaman in the Lok Sabha in December last year, with an aim of consolidating India's securities legislation into a single law. According to The Economic Times, the finance ministry will now present a fresh Bill incorporating the panel's accepted proposals for parliamentary clearance. The committee recommended that appointments to the expanded Sebi board be routed through the Financial Sector Regulatory Appointments Search Committee to improve transparency and independence.
