Justice P S Dinesh Kumar urges Indian merchant bankers to maintain strict professional boundaries, highlighting their crucial role in safeguarding investor trust and market stability amid ongoing regulatory responsibilities.
Justice P S Dinesh Kumar, the presiding officer of India’s Securities Appellate Tribunal, has urged merchant bankers to keep a firm professional distance from the clients they advise, saying they must never blur the boundary between counsel and partisanship. Speaking at a conference organised by the Association of Investment Bankers of India, Kumar said there is a “Lakshman Rekha” between banker and client, and crossing it creates serious risk for both the intermediary and the market.
He said investment bankers are expected to do more than help a transaction reach completion. They must examine the papers, assess a company’s business strength, scrutinise its financial position and judge whether the projections presented to investors are credible before deciding to proceed. According to the tribunal, that duty matters because merchant bankers sit between companies raising capital and the investors who ultimately supply it, including retail buyers, wealthy individuals and institutions. Reuters-style reporting of the comments noted that the Securities and Exchange Board of India relies on that work to give comfort that the key facts have been checked.
Kumar also pointed out that comparatively few disputes reach the Securities Appellate Tribunal when set against the broader market and the number of listed and unlisted entities operating in India. He said that relatively small caseload reflects well on the profession, but argued that the aim should be higher still: no matter reaching the regulator or the tribunal at all. In his view, every such dispute consumes money that ultimately belongs to investors or other stakeholders, making careful due diligence not merely a compliance exercise but an ethical one.
His remarks come at a time when India’s securities framework continues to place considerable responsibility on market intermediaries to help safeguard fund-raising and investor protection. The tribunal, a statutory body that hears appeals against orders from the market regulator and other financial watchdogs, is intended to act as a check on the system. Kumar’s message was that a robust capital market depends not only on growth and activity, but also on restraint, independence and strict adherence to the law.
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