The new Chairman of the Securities and Exchange Board of India, Tuhin Kanta Pandey, has indicated that he intends to walk the talk in streamlining regulations. At Wednesday’s meeting, the SEBI Board approved 19 proposals, providing relief from stringent rules and aiding intermediaries such as merchant bankers, debenture trustees, custodians, investment advisors and research analysts.

Wednesday’s moves, while cementing trust in the stock market ecosystem, also mark an effort to deflect legacy allegations of regulatory micro-management. The board took a major decision in allowing a separate set of delisting rules for public sector undertakings where government’s stake is more than 90 per cent. Listed PSUs such as Kudremukh Iron Ore Company and State Trading Corporation are hit by bleak business outlook due to outdated products and poor financials. Yet, these stocks witnessed heightened speculation due to the low public float and low perceived risk due to the government backing. To enable easy exit, delisting regulations for these companies have been relaxed by waiving the requirement of approval of two-thirds of public shareholders for the delisting, and mandating the offer at a fixed price. This entails a 15 per cent premium over floor price and a change in the method of fixing the latter. These rules will help the government delist these companies at a good price.

The growing volatility in currency and bond markets with geopolitical uncertainty has resulted in foreign portfolio outflow of $29 billion in June so far. Easing compliance for FPIs investing in G-secs through the Fully Accessible Route can ease this pressure. Mandating less frequent KYC reviews, not requiring them to furnish details about the group they belong to and allowing NRI, OCIs and resident Indians to be part of the FPIs investing only in G-secs can help improve the flows through such FPIs. Since the G-sec market is deeper and less vulnerable to manipulation, lesser scrutiny is unlikely to cause trouble going forward.

The move to allow promoters to hold on to ESOPs issued to them a year before the public issue is likely to give a fillip to start-ups approaching the primary market. While public issuances on the SME platform and the mainboard have surged over the last two years, the existing rule that promoters should not hold share-based benefits in the company has worked as a deterrent. Similarly, the rule mandating dematerialisation of shares held by all categories of investors prior to company listing could help complete the transition from physical to demat shares. The settlement scheme proposed for brokers involved in the NSEL scam too cannot be faulted. This case has dragged on for 12 years. A temporary trading ban and a penalty payment to SEBI should settle the matter. In a recent interview with this newspaper, Pandey said he would prioritise engaging with stakeholders to relax regulations in areas where the risk was low. Now, despite the guardrails in place it may be worth reviewing these relaxations after a year.

Published on June 19, 2025