Finance Minister Nirmala Sitharaman on Saturday asked the Securities and Exchange Board of India (Sebi) to take the lead in simplifying and standardising know-your-customer (KYC) processes across the financial system.
Sitharaman called for a seamless, secure, and portable KYC architecture, in coordination with the Financial Stability and Development Council (FSDC) and other regulators.
“No citizen should have to repeat the same verification journey across multiple platforms,” she said, stressing urgency in implementation.
What did the FM say on anticipatory regulation and emerging risks?
Speaking at Sebi’s 38th foundation day event, the FM said regulation must move “from reactive to anticipatory”, with a sharper focus on emerging risks such as artificial intelligence-led market abuse, cross-border fraud, and cybersecurity threats.
At the same event, Sebi Chairman Tuhin Kanta Pandey highlighted the regulator’s evolution from overseeing opaque, floor-based markets to enabling a technology-driven, globally integrated ecosystem, while outlining a roadmap focused on ease of doing business, investor protection, and innovation.
The FM emphasised that the next phase of regulatory evolution should rely more on principles-based frameworks and structured public consultation rather than overly prescriptive rules.
Why is cybersecurity a key concern for capital markets?
Cybersecurity emerged as a major concern, with the FM cautioning that a single large-scale cyberattack on critical market infrastructure could have systemic consequences. While acknowledging Sebi’s 2025 cyber resilience framework, she urged continuous upgrades as threats become more sophisticated, including AI-driven attacks and deepfake-enabled frauds.
How can India deepen its corporate bond market?
The minister also pushed for structural reforms to deepen India’s corporate bond market. She urged Sebi to build on its consultation initiatives to expand retail participation, improve secondary market liquidity, and standardise issuance frameworks.
“Size without integrity is fragile; growth without governance is unsustainable; volume without investor protection is exploitation,” she said, underlining that ensuring this is a shared responsibility.
The FM highlighted the need for stronger credit enhancement mechanisms to enable lower-rated but viable firms to access bond markets. She also called for a renewed push towards municipal bonds to finance urban infrastructure, noting that public finances alone would be insufficient to meet India’s growth ambitions.
What did the FM say on global regulatory coordination?
On global integration, Sitharaman said Indian regulation must remain in “sustained dialogue” with international counterparts, even while retaining its domestic context.
She also called for periodic consultations with global regulators and market participants on issues such as sustainable finance, AI in markets, and settlement interoperability — steps she said would boost global investor confidence and enhance Sebi’s influence in international rule-making.
How should investor protection evolve in India?
Investor protection, she added, must evolve from a defensive function to a developmental one. While retail participation has surged, she warned against risks from uninformed investing and unregulated financial advice, particularly via social media. She called for stronger enforcement against misconduct, expansion of investor awareness campaigns in regional languages, and faster grievance redressal systems.
Sitharaman also underscored the importance of strengthening surveillance systems using advanced analytics and machine learning, alongside scaling up tools like “Sebi Check” to curb fraudulent intermediaries and payment scams.
Framing capital markets as central to India’s long-term growth, she said financing the country’s infrastructure, energy transition, and innovation ambitions would require deep, well-regulated markets rather than reliance on bank balance sheets alone.
