A New India
Chapter 183 - 183: Blueprint of SEBI - II

Finally after working for a long time and with his good memory of past/future, he was able to create a mature blueprint.

But Rohan knew that the details would matter the most in the council meeting.

Would they accept it? Or would it be dismissed as overly ambitious?

The next morning, the members of the Economic Advisory Council began filing into the conference room

The usual faces were present, Harish Patel, the Finance Minister, Balbir Mehra, a renowned economist, Sudha Murmur, a fierce advocate for financial reform, and Dr. Arvind Sen, an expert in securities law from the Delhi School of Economics.

Rohan entered the room, carrying the thick dossier that held the blueprint for SEBI.

He placed it on the table and looked around at the assembled council members.

He could sense the skepticism in the room, but he was confident in what he had prepared.

"Good morning," Rohan began, his voice steady. "I've called you all here today to discuss something that I believe is critical for the future of our nation. Our stock markets are growing, and with that growth comes risk. We've already seen signs of market manipulation and insider trading, and if we don't act now, we could face a crisis.

That's why I've drafted a plan to create the Securities and Exchange Board of India, or SEBI, a regulatory body that will protect our markets and ensure they remain fair and transparent."

He opened the dossier and began handing out copies to the council members. "This blueprint outlines the structure, powers, and responsibilities of SEBI. It's designed to regulate our stock exchanges, protect investors, and prevent malpractice."

Harish was the first to speak, flipping through the pages of the dossier. "Sir, this is ambitious," he said, his brow furrowed. "You're proposing to give SEBI a lot of power. It will have the authority to draft regulations, investigate market manipulation, and even impose penalties. How do we ensure that SEBI doesn't become too powerful?"

Rohan anticipated this question.

He had been expecting it ever since he began drafting the plan. "SEBI will operate under checks and balances," he explained. "The SEBI board will consist of nine members, a chairman, two members from the Ministry of Finance, one from the RBI, and five experts from fields like law, finance, and the stock markets.

The chairman will be appointed by the government, but SEBI will have autonomy in its day-to-day operations. It won't function in isolation. The Finance Ministry and the Reserve Bank will ensure that SEBI operates in line with national economic goals."

Sudha leaned forward, scanning the document. "But what about its enforcement powers? You're giving SEBI the authority to investigate, penalize, and even delist companies. That's a lot of responsibility for one organization. How can we be sure SEBI won't misuse these powers?"

Rohan met her gaze. "SEBI's powers will be used strictly to protect the market. We've seen what happens when markets are left unregulated, insider trading runs rampant, small investors are cheated, and the integrity of the market collapses. SEBI's power to impose penalties and conduct investigations is necessary to ensure that our markets remain fair and free from fraud. But there will be oversight.

SEBI will be accountable to the Finance Ministry, and its decisions can be challenged in court if necessary."

Dr. Arvind Sen, who had been quietly reviewing the blueprint, spoke up. "Sir, you've outlined SEBI's quasi-legislative, quasi-judicial, and quasi-executive powers here. But how do you plan to balance these roles? A body that makes laws, enforces them, and passes judgments, isn't that too much?"

Rohan nodded. "That's a fair point, Dr. Sen. SEBI's powers will be limited and specific. For example, its quasi-legislative powers will only extend to drafting regulations related to securities markets. These regulations will still need government approval before they can be enforced.

As for its judicial powers, SEBI will act as an adjudicating body in cases of market malpractice. It won't have the authority to pass criminal judgments, but it can impose financial penalties and ban individuals from the market. The executive functions, such as market surveillance and investigations, will be carried out by specialized teams within SEBI, overseen by the full-time board members."

Harish, who had been quiet for a few moments, spoke again

"This sounds good on paper, but we've seen regulatory bodies in other countries get corrupted or politically influenced. How do we ensure that SEBI remains independent and doesn't fall under the sway of powerful corporate interests?"

"That's precisely why SEBI's full-time members will be experts," Rohan replied. "They will come from fields like law, economics, and finance. Their job will be to ensure SEBI operates without bias. And remember, SEBI will be subject to regular audits and transparency measures. Its activities will be closely monitored by both the government and independent auditors."

Sudha leaned back in her chair, her arms crossed. "You've thought this through, Sir. But I'm still concerned about the implementation. Our technology is limited, and the markets are vast. How will SEBI manage market surveillance effectively with the resources we have?"

Rohan smiled slightly. "We're starting small. SEBI's surveillance systems will initially focus on trading patterns that indicate insider trading or market manipulation. We'll use existing market data and work with the BSE to monitor trading activity. Over time, as our technology improves, SEBI's surveillance capabilities will grow.

We're laying the foundation now, but SEBI is designed to evolve with the market."

Balbir Mehra, who had been listening quietly, finally spoke. "Sir, this is a strong proposal, but it's going to require a lot of resources, both financial and manpower. How do you plan to fund SEBI, especially when we're already stretched thin with DRDO, HAL, and other initiatives?"

Rohan nodded, acknowledging the challenge. "I've thought about that, Balbir. SEBI will initially be funded by the government, using a portion of the funds raised from the LIC auction. But over time, SEBI will generate its own revenue through registration fees, penalties, and fines imposed on market violators.

It will become a self-sustaining entity, and we won't have to rely on government funding indefinitely."

Dr. Sen glanced at the blueprint again. "And what about public trust? SEBI's success will depend on whether the public believes it can protect them. How do we ensure that small investors, the everyday people trust SEBI?"

"Investor education will be a major part of SEBI's role," Rohan explained. "SEBI will run awareness campaigns to educate people about the risks and rewards of investing in the stock market. We'll also set up grievance redressal mechanisms where investors can report fraud or unethical practices. The more people understand the market, the less likely they are to fall victim to scams."