India’s markets regulator, Sebi, has introduced a revised settlement framework aimed at quickening the enforcement process and improving recovery of diverted funds, while maintaining investor protection.
India’s markets regulator has moved to redesign its settlement framework in a bid to speed up enforcement cases and make it easier to recover money in matters involving financial misrepresentation and the diversion of funds, according to Sebi officials and legal experts. The changes, approved by the board last week, are intended to reduce prolonged litigation while keeping investor protection at the centre of the process.
The Securities and Exchange Board of India has signed off on the Securities and Exchange Board of India (Settlement of Administrative and Civil Proceedings) Regulations, 2026, which replace the 2018 rules. The new framework introduces a more defined formula for settlement calculations, separate treatment for wrongful gains through disgorgement, and Remedial and Regulatory Terms, or RRT, for non-monetary remedies. According to the regulator, the regulations will take effect 30 days after notification.
Sebi chairman Tuhin Kanta Pandey said investor interests would be safeguarded not only through the settlement amount, but also through disgorgement and RRT where relevant. He said that if money had been siphoned off, “it should come back first”, adding that recovery of funds with interest could be the quickest way to protect shareholders while a case is resolved. Kamlesh Chandra Varshney, a whole-time member of Sebi, said the aim was to get money back sooner, rather than leaving cases to drag on in court while the company’s condition worsened. He also said Sebi was still examining whether a settlement notice issued before a show-cause notice would need to be disclosed by listed companies.
Legal experts said the overhaul is broadly designed to widen access to settlement and streamline the process. Sumit Agrawal, founder and managing partner of Regstreet Law Advisors, said the pre-show-cause settlement notice resembled the US Wells process in spirit, though it serves a different purpose by inviting settlement before formal charges are issued. The new regime also includes a one-time 90-day window for some applicants who had previously not applied, or whose applications were rejected, withdrawn or returned under the 2018 framework, provided proceedings are still pending, with an added 20% of the settlement amount. Financial Express reported that cases involving settlement amounts below ₹10 lakh may also move through a faster route, underscoring Sebi’s push to shorten timelines in smaller matters.
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