Summary of this article
SEBI plans net settlement and direct plans for mutual funds.
The regulator will revamp mainboard and SME IPO frameworks soon.
New AI tools will monitor early corporate debt default risks.
The Securities and Exchange Board of India (Sebi) is set to undertake a regulatory overhaul of certain norms to modernise capital access. Speaking at the NDTV Profit IGNITE summit in Mumbai on October 28, 2026, Sebi Chairman Tuhin Kanta Pandey outlined the market regulator’s strategy and plans to overhaul rules across mutual funds, IPOs and AI surveillance.
In his speech, Pandey mentioned that India now has more than 150 million unique investors. However, he emphasised that simply increasing access to the financial system does not translate to financial literacy and highlighted the need for investor awareness.
"Investing must be a choice made with open eyes: knowing what you buy, what it costs and what you risk," Pandey said.
Here’s a look at some of the key reforms announced by the Sebi Chairman:
Mutual Fund Settlement and Disclosures
Pandey mentioned that Sebi is examining the introduction of net settlement for mutual fund transactions. This move is expected to streamline fund flows and improve operational efficiency for the broader asset management industry. In a bid to increase transparency, Sebi will also mandate that direct plans become the default option on digital platforms of asset management companies starting November 1. Additionally investors choosing regular plans will be explicitly informed about their higher expense ratio.
REITs and InvITs
Sebi also plans to align the listing timelines for Real Estate Investment Trusts and Infrastructure (REITs) Investment Trusts (InvITs) with the current schedules used for standard equity listings. This alignment aims to bring parity and speed to the process of raising capital through these alternative investment vehicles.
Revamping Public Offering Frameworks
To support businesses across different stages of development, the regulator will also revisit the rules governing mainboard initial public offerings (IPOs) and follow on public offers (FPOs). Additionally the regulator also plans to undertake a parallel review for the SME IPO framework and the Innovators Growth Platform, which seek to improve public capital access for growing and emerging enterprises.
"A growing economy needs financing options for businesses of different sizes and at different stages of development," Pandey said.
Bond Markets
The regulator is also consulting on the introduction of Fixed Income Channel Partners to widen the distribution of corporate bonds through regulated online bond platforms beyond major cities. According to Pandey, the market regulator is also engaging directly with bond issuers to understand the hurdles they face in the debt markets. Furthermore, the framework for Debenture Trustees is under review with a focus on stronger oversight for safeguarding investor interests.
Corporate Governance and Issue Proceeds
The regulator has also proposed stronger monitoring of issue proceeds to ensure greater transparency regarding how raised funds are utilized.
"Public capital brings public responsibility. Companies must be accountable for how they use investors' money," Pandey said.
Additionally, Sebi is reviewing the framework for ESG Rating Providers to shift from prescriptive rules to a principles based framework, allowing greater flexibility while ensuring accountability.
Simplifying Foreign Portfolio Investment
Sebi is collaborating with the Reserve Bank of India (RBI) to harmonise Society for Worldwide Interbank Financial Telecommunication (SWIFT) based certification of Know Your Customer documents to ease the process of investing in the domestic market for foreign portfolio investors. Additionally, the regulator is also exploring modernised KYC review cycles for eligible foreign investors to cut down on repetitive compliance burdens.
Expanding Artificial Intelligence and Surveillance
On the technology front, Sebi is piloting an AI tool to monitor disclosures from debenture trustees, stock exchanges, depositories and credit rating agencies to help flag early signs of corporate debt defaults. The regulator is also developing a dedicated in-house AI system to analyse compliance reports submitted by portfolio managers and asset management companies. Furthermore, Sebi is exploring a domestically governed artificial intelligence model tailored for the securities market.
"Our objective is to make AI accessible, affordable and secure, particularly for smaller regulated entities," Pandey said.
