India’s securities regulator, Sebi, has revamped its inspection framework for market intermediaries, reducing checks and adopting a risk-based model to improve efficiency without compromising oversight.
India’s markets regulator has tightened and simplified its inspection regime for brokers, depository participants, investment advisers and research analysts, while sharply trimming the number of checks it plans to carry out itself in the 2026-27 financial year.
According to Sebi, stock exchanges and depositories will now conduct joint inspections in place of overlapping separate visits, part of a wider shift towards a risk-based model that aims to cut repeated scrutiny of compliant firms. The regulator said the change is designed to make supervision more efficient without weakening oversight, while also reducing the disruption that inspections can cause to day-to-day business.
Sebi is also scaling back its own inspection target for 2026-27 to roughly one-third of the previous year’s level, after taking into account the routine checks already being carried out by market infrastructure institutions. The regulator said quarterly shortlisting of entities will now replace the earlier approach, with priority given to firms that repeatedly appear in risk parameters, receive multiple alerts or carry higher risk scores.
The revised framework will place greater weight on exchange alerts, investor complaints and social media inputs, alongside market intelligence and referrals from Sebi’s regional and local offices. Issues such as technical glitches, cyber incidents and concerns involving authorised persons of stock brokers are also expected to feed into the inspection process.
The move builds on a broader overhaul of Sebi’s supervision model over the past year. In August 2025, the regulator introduced a unified annual inspection framework for brokers and depository participants, replacing separate assessments by each market infrastructure institution. That change was intended to reduce duplicated visits and free intermediaries from repeated disruption.
Sebi’s annual report for 2024-25 showed a much tougher supervisory stance before the latest rationalisation. It and the exchanges carried out 179 inspections of 106 brokers, while exchanges on their own completed 973 inspections of 822 brokers. Joint inspections of depository participants were also stepped up, with Sebi and depositories conducting 28 checks, while depositories separately carried out 617 more.
At the same time, Sebi has been revisiting other parts of its rulebook. In April, it amended the fit-and-proper framework for market intermediaries, easing automatic disqualification rules tied to the mere filing of criminal complaints or charge sheets in certain economic offence cases. In March, it also approved a broader overhaul of conflict-of-interest, disclosure and recusal norms for its own senior officials.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
