Sebi to Unveil Major Reforms for Market Participants

The Securities and Exchange Board of India (Sebi) is set to introduce a series of regulatory reforms and relaxations at its upcoming board meeting. These changes aim to streamline compliance, enhance investment opportunities, and improve market efficiency.

SebiRegulatory ReformsMarket ParticipantsFpisSme ListingsReal EstateJun 16, 2025

Sebi to Unveil Major Reforms for Market Participants
Real Estate:The market regulator, the Securities and Exchange Board of India (Sebi), is poised to introduce a range of reforms and relaxations for market participants at its board meeting this Wednesday. This is the second board meeting under the chairmanship of Tuhin Kanta Pandey, who took over on February 28. Pandey is steering the regulatory body, which faced several challenges under the previous chair, Madhabi Puri Buch.

Among the key regulatory changes, Sebi is expected to align its Know Your Customer (KYC) norms with those of the Reserve Bank of India (RBI). This move aims to simplify the KYC process for investors, making it easier for foreign funds and retail investors, including residents and Non-Resident Indians (NRIs), to invest in government securities. Additionally, the board is likely to facilitate co-investments in alternative investment funds (AIFs) through a separate co-investment vehicle.

The regulator is also expected to introduce a new category for foreign portfolio investors (FPIs) called Government of India Bonds (IGB-FPIs). This category will allow FPIs to invest in government securities through the voluntary retention route and fully accessible route, with eased KYC norms aligned with the RBI’s standards. Another significant move is the removal of investment caps for overseas citizens of India, NRIs, and local residents, making it easier for them to invest in government securities.

Sebi is also expected to discuss the demerger or ownership cap for clearing corporations by stock exchanges. This proposal aims to make clearing corporations independent, reducing the need for exchanges to infuse capital. However, exchanges have a different view and prefer the existing structure to continue.

The board meeting is also likely to address tighter regulations for Small and Medium Enterprises (SME) listings. Sebi may extend the promoter’s lock-in period, raise operational profit thresholds, and enhance disclosure norms. These changes are designed to raise the bar for SME listings, ensuring that only credible and sustainable businesses access public markets. This move comes in response to the numerous issues that have plagued SME listings in recent years.

Another significant proposal on the agenda is the reclassification of real estate investment trusts (Reits) and infrastructure investment trusts (Invits) as equity. This reclassification, coupled with a higher investment limit for mutual funds in Reits and Invits, is expected to boost the real estate and infrastructure sectors by attracting more investment.

Sebi is also considering a separate delisting mechanism for public sector units (PSUs). This mechanism would include a fixed premium over the floor price and relaxation of the two-thirds public shareholder approval requirement. This change could expedite the delisting process for government companies, which often have low public shareholding and face financial burdens when delisting.

Amendments to employee stock options (Esops) are also on the table. These changes aim to help the founders of startups retain Esops even after an Initial Public Offering (IPO), thereby ensuring continuity and stability in these companies.

The proposal for a separate delisting mechanism for voluntary delisting of government companies is another key point of discussion. Many state-run companies have low public shareholding, outdated business models, or weak future outlooks, making it financially burdensome for the government to delist them. Sebi’s proposal for a separate carve-out for voluntary delisting aims to address these issues and facilitate the delisting process for such companies.

Overall, these reforms and relaxations are expected to enhance market efficiency, simplify compliance, and foster a more robust and transparent investment environment in India.

Frequently Asked Questions

What are some key regulatory changes expected from Sebi's upcoming board meeting?

Sebi is expected to introduce reforms such as aligning KYC norms with the RBI, easing investment in government securities, and tightening SME listing norms. Other changes include reclassifying Reits and Invits as equity and introducing a new category for FPIs called IGB-FPIs.

How will the new KYC norms benefit investors?

The new KYC norms, aligned with the RBI’s standards, will simplify the process for investors, making it easier for foreign funds, retail investors, residents, and NRIs to invest in government securities.

What is the proposed change for SME listings?

Sebi is expected to extend the promoter’s lock-in period, raise operational profit thresholds, and enhance disclosure norms for SME listings. These changes aim to ensure only credible and sustainable businesses access public markets.

What is the significance of reclassifying Reits and Invits as equity?

Reclassifying Reits and Invits as equity, along with a higher investment limit for mutual funds, is expected to boost the real estate and infrastructure sectors by attracting more investment.

What is the proposed delisting mechanism for public sector units?

Sebi is considering a separate delisting mechanism for PSUs with a fixed premium over the floor price and relaxation of the two-thirds public shareholder approval requirement. This could expedite the delisting process for government companies.

Related News Articles

Trophy Projects: Kalpesh Mehta of Tribeca Developers on Trump's Real Estate Vision in India
real estate news

Trophy Projects: Kalpesh Mehta of Tribeca Developers on Trump's Real Estate Vision in India

Kalpesh Mehta, founder of Tribeca Developers, the licensed partner of the Trump Organization in India, shares his vision for six new Trump Tower projects in major Indian cities.

November 6, 2024
Read Article
India Witnessed Extreme Weather on 93% of Days in First Nine Months of 2024
Real Estate Maharashtra

India Witnessed Extreme Weather on 93% of Days in First Nine Months of 2024

Andhra Pradesh faced the highest property damage, with 85,806 houses destroyed. Maharashtra, which experienced extreme weather for 142 days, accounted for a significant portion of the total damage.

November 8, 2024
Read Article
Maharashtra Elections 2024: Candidate Wins by a Marginal 162 Votes
Real Estate Maharashtra

Maharashtra Elections 2024: Candidate Wins by a Marginal 162 Votes

The Maha Vikas Aghadi won 11 out of the 36 narrow-margin seats, while the Mahayuti won 24. However, it was AIMIM candidate Mohammed Ismail Abdul who secured a crucial victory by a margin of just 162 votes.

November 24, 2024
Read Article
K Raheja Corp Launches New Residential Project in Kandivali, Mumbai
Real Estate Mumbai

K Raheja Corp Launches New Residential Project in Kandivali, Mumbai

Mumbai-based property developer K Raheja Corp has acquired 5.75 acres of land in Kandivali East, Mumbai for Rs 466 crore. The company plans to develop a high-end residential project on the acquired land, further expanding its portfolio in the bustling cit

January 16, 2025
Read Article
CIL's CSR Expenditure Surges by 37% in April-January 2023
Real Estate Mumbai

CIL's CSR Expenditure Surges by 37% in April-January 2023

In a significant move, Coal India Limited (CIL) has reported a 37% increase in its Corporate Social Responsibility (CSR) expenditure during the April-January period of 2023. This surge underscores the company's commitment to social welfare and sustainable

February 9, 2025
Read Article
MAG Showcases Premium Developments at Blackburn Dubai Property Expo
Real Estate Mumbai

MAG Showcases Premium Developments at Blackburn Dubai Property Expo

MAG, a leading real estate developer, participated in the Blackburn Dubai Property Expo, offering homebuyers a unique opportunity to explore a variety of premium properties. The expo provided a platform for top-tier developers, including Godrej, to showca

February 13, 2025
Read Article