By Shriram Subramanian, Founder, InGovern Research Services
Any robust capital market is built on investor confidence, corporate transparency, and regulatory agility. As financial instruments, investor profiles, and technologies evolve, the regulatory framework governing them must do so as well. Overly prescriptive rules stifle innovation and deter market participation. Flexible and adaptive regulations help market participants respond quickly to change. Regulations must keep pace with market innovations and global best practices to sustain a competitive capital markets ecosystem.
Recent steps by the Securities and Exchange Board of India (Sebi), the Reserve Bank of India (RBI), and the ministry of corporate affairs (MCA) reflect this shift. Sebi has introduced streamlined disclosure norms, eased fundraising rules for start-ups and real estate investment trusts/infrastructure investment trusts, and enabled faster settlement cycles to deepen market efficiency. The RBI, meanwhile, has focused on strengthening the regulatory framework for fintechs and non-bank lenders.
Both Sebi and the RBI are encouraging innovation through mechanisms like regulatory sandboxes. These measures signal a coordinated move toward a more responsive and forward-looking regulatory environment. Our capital markets have moved to T+0 settlements. The RBI has introduced faster cheque processing that enables quicker payments, and enabled bank funding for mergers and acquisitions. At its last board meeting, Sebi announced a slew of positive changes: easing foreign portfolio investment disclosure norms, rights issue process simplified with tighter timelines, tweaks to shareholder disclosure norms, optional T+0 settlement, and extended timelines for algo trading.
Sebi has also introduced frameworks that enhance promoter accountability while safeguarding minority shareholder interests. Mandatory disclosures on related-party transactions, reporting on pledged shares, and independent oversight in strategic decisions establish a transparent and enforceable framework for promoter actions. These measures ensure that minority shareholders benefit from the promoter’s engagement rather than being exposed to unchecked risk.
In addition to regulatory changes, an active regulatory response has enabled many long-pending matters to be resolved. For example, the open offer approval for the Burman family’s entry into Religare Enterprises Ltd. has stabilised governance, strengthened investor confidence, and helped reposition the company for growth.
In another example, Sebi recently approved IHH Healthcare’s open offer for Fortis Healthcare and Fortis Malar Hospitals. Although the approval took nearly seven years, it brings closure to the backing of one of Asia’s largest healthcare providers to Fortis at a moment when competition in the sector has intensified. Beyond capital infusion, IHH has enabled Fortis in both organic expansion and acquisition-led growth, enhancing the latter’s market positioning and operational capabilities. For minority shareholders, such a development signals a long-term, credible commitment as the Indian healthcare sector is still growing and underpenetrated.
On the other hand, the RBI has recently enabled deposit tokenisation, provided a self-regulatory status for the non-banking financial company sector, rationalised how banks and regulated entities lend to related parties, and allowed for foreign currency settlements via Gujarat International Finance Tech (GIFT) City.
Another dimension is where the National Company Law Tribunal (NCLT) gets involved—mergers, demergers, acquisitions, schemes of arrangement, delistings, and bankruptcies. These are critical levers for growth, efficiency, and stakeholder value creation. The Indian legal and regulatory framework between Sebi, the RBI, the NCLT, etc. needs to adapt to changing market requirements with faster approvals.
While the above are positive developments, clarity and consistency in regulations will help in a continuous flow of long-term foreign capital. A good regulatory system is one that turns a country’s potential into real and lasting results. When rules are clear, flexible, and fair, they help businesses grow while keeping markets honest and stable. Good regulations don’t slow innovation, but actually make it easier for new ideas and market participants to thrive.
When there’s the right balance between supervision and freedom—like in the “comply or explain” principle—investors gain confidence, more people join the markets, and the overall system becomes stronger. Regulators worldwide, including Sebi and the RBI, are using data analytics and artificial intelligence to monitor markets in real time. India could deepen such tools to detect risks early and improve compliance efficiency.
For both companies and investors, how well rules are made and enforced often decides how well they can grow. Just having strict laws isn’t enough, quick and timely enforcement matters. When disclosure rules are simple, enforcement is predictable, and new technology is welcomed, market participants feel more secure and willing to invest for the long term. Time and again when regulators’ goals and actions match, markets respond with greater trust, efficiency, and value.
Timing matters too. As financial products and investor behaviours change, the rules need to keep up. Reforms like Sebi’s move toward faster settlements, the RBI’s approach to regulating fintechs, and the MCA’s push for digital compliance show that good governance can be quick and smart without losing accountability. In the end, an effective regulatory system should make it easier for investors and businesses to follow rules with integrity while helping the economy grow. The global aspirations of India will only be realised when companies and investors, both domestic and global, are able to trust a stable yet nimble regulatory regime.