Govt, SEBI to tighten regulatory oversight

India’s Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI) have signed a preliminary agreement to facilitate data exchange between the two regulatory organizations

June 7, 2019

The deal, signed on June 7, comes in the wake of an increasing need for surveillance in the context of corporate frauds affecting important sectors of the economy

As the private sector plays an increasingly vital role in economic growth, the need for a robust corporate governance mechanism has become the need of the hour

Besides regular exchange of data, SEBI and MCA will exchange any information available in their respective databases, for the purpose of carrying out investigation

Apart from its efforts to boost security, earlier this month, SEBI had proposed to set up an “Innovation Sandbox” to boost activity in India’s fintech industry

India’s Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI) have signed a preliminary agreement to facilitate data exchange between the two regulatory organizations. The deal, signed on June 7, comes in the wake of an increasing need for surveillance in the context of corporate frauds affecting important sectors of the economy. As the private sector plays an increasingly vital role in the nation’s economic growth, the need for a robust corporate governance mechanism has become the need of the hour, the ministry said in a statement. The agreement will facilitate the sharing of data and information between SEBI and the ministry on an automatic and regular basis.

The arrangement will enable sharing of specific information such as details of suspended firms, delisted companies, shareholding pattern from SEBI, financial statements filed with the Registrar by corporates, returns of allotment of shares, as well as audit reports relating to corporations. The deal will ensure that both the ministry and SEBI have seamless linkage for regulatory purposes. Besides the regular exchange of data, SEBI and MCA will also exchange with each other, upon request, any information available in their respective databases, for the purpose of carrying out scrutiny, inspection, investigation, and prosecution. Apart from improving regulator overview, this will help boost investor confidence.

Apart from its efforts to boost security, earlier this month, SEBI had proposed to set up an “Innovation Sandbox” to boost activity in India’s financial technology (fintech) industry. The capital market having been an early adopter of technology, SEBI believes that fintech can empower the securities market. Technology provides finance firms with real-time market data and other critical information that help fasten decision making. The Sandbox will aid fintech firms as well as financial organizations not regulated by SEBI, including individuals, to assess their new solutions in isolation from the live market. This will drive opportunities in India’s fintech market – one of the biggest and fastest growing worldwide.

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