Regulatory Roundup

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Regulatory Roundup
Regulatory Roundup
Sanjeeb Baruah - 01 November 2023

Capital Markets


Change: Sebi extends timeline for verification of market rumours by listed entities.

Impact: The top 100 and top 250 listed entities by market cap must mandatorily verify, confirm, deny, or clarify market rumours, effective February 1, 2024, and August 1, 2024, respectively. Quelling of market rumours will ensure less volatility in stocks.

Change: Sebi extends timeline for compliance with enhanced qualification and experience requirements for advisers.

Impact: Investment advisers and those associated with the field can comply with the regulatory requirements by September 30, 2025, thus ensuring minimal disruption in their current activities.  Sebi is tightening advisor rules in investors’ interest.

Simplifying Rules

Change: Sebi makes it obligatory for Category 2 EOPs, which facilitate subscription, redemption and switch for MF direct plans to maintain a base minimum capital deposit.  

Impact: It will require them to provide their services directly to investors as agents and not act as an aggregator of the transactions in direct MF plans, besides following requirements applicable to stock brokers, including maintenance of deposits with the stock exchange.  

Change: To reinforce investor grievance-handling mechanism, Sebi has directed Amfi, Aibi, Apmi exchanges, depositories, to submit ATR on the SCORES platform within 21 days of receiving complaint, effective December 4, 2023.

Impact: It will make the grievance redressal process more efficient and reduce the turnaround time through processes like auto-routing and auto-escalation of complaints through SCORES.

Change: Sebi streamlines refund process and framework for credit of unclaimed amounts of investors in listed entities other than companies, REITs and InvITs to IPEF.

Impact: A uniform claim process will ensure minimal disruption for investors and facilitate utilisation and processing of such amounts in the manner prescribed.

Change: Sebi introduces  centralised mechanism for reporting demise of investor in the securities market through KRAs.

Impact: It will smoothen the process of transmission in the securities market if an investor dies; investors will be able to access KRA mechanism through RTAs.

Sebi: Securities and Exchange Board of India; EOP: Execution Only Platforms; MF: Mutual Funds; AMFI: Association of Mutual Funds in India; AIBI: Association of Investment Bankers of India; APMI: Association of Portfolio Managers in India; ATR: Action Taken Report; REITs: Real Estate Investment Trusts; InvITs: Infrastructure Investment Trusts; IPEF: Investor Protection and Education Fund; KRA: KYC Registration Agency; RTA: Registrar and Transfer Agent


Social Security

Change: PFRDA plans to take NPS to remotest parts of India through bank branches and post offices.

Impact: A large section of the populace will be able to access the social security scheme that offers pensions, tax benefits, as well as wealth creation opportunities.


Change: PFRDA introduces a default scheme for NPS Tier II accounts, previously available only to government employees.

Impact: It will allow people to invest in an NPS Tier II account without separately needing to select fund managers to manage their money, providing subscribers flexibility and convenience. The option will be available besides the existing schemes—equity (E), corporate debt (C), and government securities (G).

Change: PFRDA has made the penny drop verification mandatory for exit and withdrawal from NPS as well as for modifying the NPS subscriber’s bank account details by CRAs. It will be applicable for NPS, APY and NPS Lite.

Impact: This verification process will not only ensure that the amount is credited to the rightful beneficiary but also ensure that it is remitted within the specified timeline.

PFRDA: Pension Fund Regulatory and Development Authority; NPS: National Pension System; CRA: Central Recordkeeping Agency; APY: Atal Pension Yojana


Customer Protection

Change: Irdai asks insurers to consider amendments in Section 12A of ‘The Weapons of Mass Destruction and their Delivery Systems Act, 2005’ (WMD Act).

Impact: Life, health, and general insurers to align their underwriting guidelines, claim processes, and risk management protocols with the revised procedures of the WMD Act and ensure that the financial and insurance sectors do not get involved with unlawful activities. This will protect policyholders in the long run.

Change: Amendment to provisions of Master Guidelines on AML.

Impact: It calls for foreign branches/majority-owned subsidiaries to adopt stringent requirements in cases of variance between Irdai and host country AML/CFT standards, ensure clients’ information remains up-to-date, and file an STR with FIU-IND, etc., in case of suspicion of money laundering or terror financing.

Irdai: Insurance Regulatory and Development Authority of India; AML/CFT: Anti-money laundering/Combating the Financing of Terrorism; STR: Suspicious Transaction Report; FIU-IND: Financial Intelligence Unit-India; Source: SecureNow

*Lists are not exhaustive | Compiled by Sanjeeb Baurah

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