March 25, 2026 : The Securities and Exchange Board of India (SEBI) has approved a broad set of regulatory reforms at its latest board meeting, aimed at improving ease of doing business while strengthening oversight across market participants.
Chairman Tuhin Kanta Pandey outlined key changes impacting Alternative Investment Funds (AIFs), Foreign Portfolio Investors (FPIs), intermediaries, and infrastructure investment vehicles.
In a significant relief for AIFs, SEBI has allowed funds to retain liquidation proceeds beyond their tenure to meet pending tax liabilities, litigation costs, and operational expenses. This move is expected to reduce compliance pressures without diluting regulatory checks.
For FPIs, the regulator has introduced net settlement for outright cash market transactions. Currently based on gross settlement, the shift will lower funding requirements and transaction costs, particularly during index rebalancing when large buy and sell trades occur simultaneously.
SEBI has also eased operational norms for REITs and InvITs. Key measures include permitting InvITs to retain investments in Special Purpose Vehicles (SPVs) post project completion under specified conditions, expanding investment options into low-risk liquid mutual funds, allowing limited exposure to greenfield projects for privately listed InvITs, and offering greater borrowing flexibility for leveraged structures.
On governance, SEBI has approved a strengthened conflict-of-interest framework for its members and officials. The new regime mandates stricter disclosures, trading restrictions, and recusal requirements. It also introduces a digital monitoring system and establishes an Office of Ethics and Compliance. The revised framework brings the Chairman and Whole-Time Members under tighter transparency and investment norms, aligning them more closely with employee standards.
Further, SEBI has revised the ‘fit and proper person’ criteria for intermediaries. The mere filing of an FIR or charge sheet will no longer automatically trigger disqualification. Instead, cases will be assessed on a principles-based approach. At the same time, stricter provisions have been introduced by including convictions for economic offences as a ground for disqualification, while ensuring due process through a mandatory opportunity of being heard.
Overall, the reforms signal SEBI’s calibrated approach to balancing regulatory efficiency with stronger governance in India’s capital markets.
