SEBI (Securities and Exchange Board of India)

SEBI regulates India’s stock markets today. But it did not start with real power. It began as a watchdog with no teeth. A scandal in 1992 showed how badly it needed them. This lesson tells that story, and then covers what SEBI can do, whom it regulates, and what changed in 2025–26.

1Chapter 1: What SEBI Is

Must Know

Job and growth

• SEBI is the Securities and Exchange Board of India.
• Its job is threefold: protect investors, regulate the market and help it grow.
• It was set up in 1988 as a non-statutory body with very limited power.
• The SEBI Act, 1992 gave it statutory status and real powers.

Board and appeals

• The board has a Chairman, two officials from the Finance Ministry and one from the RBI.
• It also has five other members, of whom at least three are whole-time.
• Appeals against SEBI orders go to the Securities Appellate Tribunal (SAT).
• SAT was set up in 1995. It sits in Mumbai, with a Presiding Officer and two other Members.
• Read more: Delegated Legislation and Administrative Tribunals.

2Chapter 2: The Harshad Mehta Scam

Must Know

How the scam worked

• The scam broke in 1992. It involved an estimated ₹4,000 crore.
• Banks traded government securities through “ready forward” deals.
• These were short-term repo agreements settled with paper Bank Receipts (BRs), not the actual securities.
• Harshad Mehta got some banks to issue BRs not backed by any real securities.
• He used the cash to buy shares directly.
• He pushed shares like ACC from around ₹200 to nearly ₹9,000 within months.

The fall

• Journalist Sucheta Dalal exposed the fraud in April 1992.
• The market crashed at once.
• Parliament passed the SEBI Act, 1992.
• SEBI could now investigate and punish.

3Chapter 3: What SEBI Can Do

Good to Know

Powers

• It registers and regulates brokers, mutual funds, credit rating agencies and other market players.
• It can investigate fraud, issue orders and impose penalties, without going to court first.

How enforcement works

• SEBI appoints an Adjudicating Officer, who acts like a judge.
• The process usually starts with a Show Cause Notice.
• The accused replies. SEBI may hold a hearing.
• The Adjudicating Officer then issues a final order.
• SEBI also allows Consent Orders. A party settles by paying, without admitting or denying guilt.
• Final orders can include fines, disgorgement of illegal gains, a market ban or loss of licence.

Whom it regulates

• Both big exchanges: National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
• Credit rating agencies such as CRISIL, ICRA, CARE and Brickwork Ratings.
• This is under the SEBI (Credit Rating Agencies) Regulations, 1999.
• It is SEBI, not the RBI, that regulates them.

The BRSR mandate

• SEBI requires the Business Responsibility and Sustainability Report (BRSR) from the top 1,000 listed companies by market value.
• Its disclosures are mostly non-financial.
• They cover environmental, social and governance matters.

4Chapter 4: SEBI in the News

Great to Know

New mutual fund rules, 2026

• The SEBI (Mutual Funds) Regulations, 2026 were published on 16 January 2026. They replace the 1996 framework after three decades. (Source: SEBI.)
• They took effect on 1 April 2026.
• They introduce a base expense ratio, which shows the fund manager’s own fee.
• Costs like brokerage and taxes are shown separately.
• Fund categories must match what their names promise.
• Funds have until around August 2026 to align their names with their investments.
• They must file regular portfolio-overlap reports from then on.

The Adani–Hindenburg matter

• In January 2023 US short-seller Hindenburg Research alleged stock manipulation and accounting fraud at the Adani Group. The group denied it.
• By March 2024 SEBI had completed 23 of 24 planned investigations.
• In September 2025 SEBI issued orders finding the core allegations “not established”.
• It said the flagged deals did not meet the legal definition of related-party dealings. (Source: The Week.)
• Hindenburg also alleged a conflict of interest involving SEBI’s then Chairperson. She denied it. That claim was handled separately.

Antariksh Venture Capital Fund

• SEBI registers and regulates the Antariksh Venture Capital Fund (AVCF).
• It is a Category II Alternative Investment Fund that gives equity capital to space-tech startups.
• SEBI approved it on 31 October 2025.
• IN-SPACe’s total contribution reached ₹188.93 crore by 24 July 2026.
• Read more: Antariksh Venture Capital Fund.

Who leads SEBI

• As of August 2026 the Chairman is Tuhin Kanta Pandey, SEBI’s 11th Chairman. (Source: SEBI.)
• He took charge on 1 March 2025 and serves a three-year term.
• He succeeded Madhabi Puri Buch. (Source: Business Standard.)

5Chapter 5: Exam Traps and a Pattern

Great to Know

Traps

• SEBI, not the RBI, regulates rating agencies and mandates BRSR.
• BRSR is mostly non-financial.
• ICRA, CRISIL, CARE and Brickwork Ratings are all real rating agencies.

A common regulatory pattern

• SEBI’s story is a pattern: a weak watchdog, a crisis, then a stronger law.
• TRAI followed a similar arc later. Its adjudicatory power split off to TDSAT. Read: TRAI: Telecom Regulatory Authority of India.
• SEBI instead gained power directly because of one scandal.

6Previous Year Questions

Exam angle: real questions on this topic.

Quick Q&A

• SEBI set up? 1988.
• SEBI Act year? 1992.
• SAT set up? 1995, Mumbai.
• Rating agency regulator? SEBI.
• BRSR applies to? Top 1,000 listed companies.