The Securities and Exchange Board of India (Sebi) has proposed comprehensive rules for celebrity endorsements by financial entities, as reported by Business Standard. The regulator has released a consultation paper outlining specific guidelines for how financial institutions can use celebrity endorsements while maintaining investor protection standards. The proposal is part of a Common Advertisement Code (CAC) for specified Sebi-regulated entities aimed at harmonising advertising norms, reducing compliance burdens and strengthening investor protection. According to the latest consultation paper, the regulator is planning a common advertisement code (CAC) to facilitate common applicability and standards across its regulated entities in contrast to the current practice of different frameworks for each category of intermediary.
According to the consultation paper, Sebi will allow celebrity endorsements only at the brand or entity level and not for endorsing specific products or services. As reported by Business Standard, the regulator stated that endorsement of particular products or services may unduly influence investors' decisions by creating perceptions regarding suitability or expected outcomes. The restriction aims to balance legitimate marketing objectives with investor protection requirements. The regulator noted that "While a brand endorsement merely reflects a general association with the entity, endorsement of a particular product or service may unduly influence investors' decisions by creating perceptions regarding its suitability or expected outcomes." The restriction will strike a balance between legitimate marketing objectives like visibility and financial inclusion with investor protection. However, The Economic Times reports that Sebi has acknowledged that "in today's time, a complete prohibition on celebrity endorsements may not be appropriate, considering such endorsements are a legitimate and widely used means of brand-building in various industries, including those in the financial sector."
Sebi has proposed replacing the existing requirement of prior approval for advertisements by stock brokers, Online Bond Platform Providers (OBPPs), investment advisers (IAs) and research analysts (RAs) with a post-issuance reporting mechanism. As per the consultation paper, "Instead of prior approval, the Board or Sebi-recognised supervisory bodies shall conduct post-issuance monitoring of advertisements reported by the specified regulated entities." The regulator noted that "Subjecting each item to prior approval is neither efficient nor effective. Delays associated with obtaining prior approval may also erode the topical relevance of advertisement with time sensitive content and may render them ineffective." The proposed system requires reporting within 24 hours of advertisement issuance, addressing the practical challenges of prior approval in today's digital environment.
The proposed Common Advertisement Code (CAC) will be adopted as a chapter in the Sebi (Intermediaries) Regulations, 2008, as reported by Business Standard. The code specifies metrics for determining who qualifies as a celebrity and prohibits the use of dark patterns as specified by the Central Consumer Protection Authority. It also bans false claims, misleading testimonials, promises of fixed returns, product comparisons, and usage of regulator or stock exchange logos. Under the proposal, Sebi has further permitted specified regulated entities to use ratings or rankings in advertisements, provided such ratings are assigned by a Past Risk and Return Verification Agency (PaRRVA). The code specifies the definition of advertisement, celebrity, supervisory body along with clarification on mandatory disclosures, and communications different from advertisements. Any recognised PaRRVA would define methodology standards in consultation with industry bodies, ensuring comparability and objectivity across market participants.
The requirement for prior approval from exchanges for stock brokers and online bond platform providers (OBPPs), and from supervisory bodies for investment advisers and research analysts, is proposed to be removed, according to Business Standard. Sebi has also proposed allowing abbreviated disclosures in SMSes, push notifications and pop-ups, provided they include hyperlinks to full risk disclosures. The regulator has clarified that purely educational content without promotional intent will be excluded from the advertisement code. The proposed CAC seeks to replace multiple existing entity-specific and exchange-specific rules with a single unified framework covering brokers, depository participants, investment advisers, research analysts, OBPPs, portfolio managers, mutual funds and asset management companies. The regulator has noted that the current codes require comprehensive disclaimers in every advertisement—which may not be practical for short format messaging forms or content such as SMS, pop-ups, push notifications. It has proposed allowing usage of abbreviated disclosures and hyperlink for detailed disclaimers. Sebi has proposed a transition period of six months from the date of notification for the CAC to be applicable.
As reported by Business Standard, the proposal follows long-pending demands by industry players who have sought relaxations at several intervals. Such consultation papers are open to public comments, following which they are typically taken up in board meetings before being notified once approved by the regulator. The proposal represents a significant shift toward technology-driven compliance and streamlined regulatory framework for India's financial services sector. The regulator emphasized that the current practice of different frameworks for each category of intermediary is inefficient and may not serve the evolving needs of the market. Sebi has invited public and stakeholder comments on the consultation paper by July 14, 2026, providing stakeholders with adequate time to provide feedback on the proposed framework.
