What is SEBI?

Last Updated On -16 Jul 2025

The Securities and Exchange Board of India (SEBI) is the legal body that is in charge of overseeing and regulating the Indian securities market. It makes sure that the market is open, that investors are safe, and that business is done fairly. SEBI is very important for keeping your trust in the Indian financial system, whether you are a retail investor, a bank, or a corporation that is listed on the stock exchange.

On April 12, 1988, SEBI was created as a non-statutory authority. On January 30, 1992, the SEBI Act, 1992 gave it statutory powers. It has its main office in Mumbai and regional offices in Ahmedabad, Chennai, Kolkata, and New Delhi.

What does SEBI do?

The main goals of SEBI are to protect the interests of all stakeholders and regulate the market:

To look out for the rights of people who buy stocks.
To make sure that the securities market runs smoothly and fairly.
To help the growth of a strong and open capital market.
To keep an eye on and stop unethical business practices like insider trading, price fixing, and manipulation.

The powers of SEBI are so great that it can act as a quasi-legislative, quasi-judicial, and quasi-executive authority.

Powers of the legislature: It can make rules and laws about the securities market. Set rules for how intermediaries should act.
Powers of the Courts: It can give orders and punish people who try to rig the market. Settle disagreements in the stock market.
Powers of the President: SEBI can check out, look into, and audit banks and other financial institutions as well as those who trade in the market. Start inspections and enforcement measures against people or businesses that break the law.

Key Structure of SEBI's Organisation

The Securities and Exchange Board of India (SEBI) is the most important part of India's financial system. SEBI ensures that the stock market is a safe and efficient place to invest by keeping an eye on market activity, protecting investors, and encouraging ethical financial behaviour. If you want to comprehend the Indian financial system clearly and with confidence, you need to know about SEBI. This is true whether you are a student, a new investor, or a business.

The Government of India chooses the Chairperson of the SEBI Board.
Two people from the Union Ministry of Finance.
One person from the Reserve Bank of India.
Five people were chosen by the Central Government, three of whom work full-time.

Key Functions of SEBI

After six debt programs suddenly closed in 2020, SEBI fined Franklin Templeton Mutual Fund for breaking investing rules. This showed how SEBI was taking action to protect the interests of regular investors.

SEBI has three main jobs:

1. Functions of Protection

Stopping insider trading.
Financial literacy campaigns teach and inform investors.
Not allowing unfair or dishonest business practices.
Making sure that listed companies make their disclosures on schedule

2. Duties of the government

Controls stock exchanges and other middlemen.
Keeps track of and registers portfolio managers, mutual funds, and merchant bankers.
Sets rules for how underwriters, brokers, and other middlemen should act.
Controls mergers, acquisitions, and takeovers.

3. Functions for development

Encourages investors to learn more and be more aware.
Supports groups that set their own rules.
Brings forth new financial products, such as REITs and InvITs.
Updates systems for trading and settling to make them work better.

SEBI's Role in the Indian Economy

It keeps the market in check by stopping manipulation and making things clear.
By punishing fraud and making sure that ethical business practices are followed, it boosts investor confidence.
Helps the economy grow by making it easier for businesses to get money, which leads to more industrial growth.
Makes investing easier, it controls IPOs, mutual funds, and makes it easier for regular individuals to invest.

Important SEBI Rules

Some of SEBI's most notable frameworks are listed below:

SEBI (ICDR) rules are for issuing capital and making sure that information is available.
SEBI (LODR) Rules are for listed companies' disclosure and listing duties.
SEBI (SAST) Rules, about big stock purchases and takeovers.
SEBI (PIT) Rules, stop people from trading on inside information.
SEBI (Mutual Funds) Regulations are the rules that govern and run mutual fund schemes.

Investor Protection and SEBI

To protect and empower investors, SEBI has started a lot of different programs:

The SCORES Portal is a way to file complaints online.
Investor awareness campaigns that work with schools, colleges, and the news media.
The Investor Protection Fund (IPF) pays individual investors back when their stockbrokers don't do what they say they will.
Mandatory risk disclosures for complicated investment products.
SEBI's recent efforts include the T+1 settlement cycle, which made India the first country to fully use this speedier way to settle transactions.
Social Stock Exchange: A one-of-a-kind way to use stock exchanges to fund social businesses.
Online KYC and e-voting systems can make things clearer and easier for investors.

Did you know?

SEBI can stop people or companies from trading on the stock market if they are caught doing something illegal. One example is SEBI's lifetime ban on stockbroker Ketan Parekh, who was a crucial player in the 2001 stock market scam.

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Frequently Asked Questions (FAQs)

Is SEBI part of the government?

The Government of India set up SEBI as a legal regulating organisation under the SEBI Act, 1992. It works on its own, but it has to report to the Ministry of Finance.

What can SEBI do to stop fraud?

SEBI can stop trading, terminate registrations, impose fines, and keep people or companies from accessing the securities market. It also has the right to start legal action.

Who needs to sign up with SEBI?

To do business lawfully, all capital market intermediaries, including as stock brokers, mutual fund houses, merchant bankers, depository participants, and portfolio managers, must register with SEBI.