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SEBI presses banks, other regulators for stricter insider trading enforcement, says chief

March 02, 2026 5 min read Economics Polity & Governance GS Paper 3 (Securities Markets Regulatory Architecture)
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What Happened

  • SEBI Chairperson Tuhin Kanta Pandey has pressed banks, the Reserve Bank of India (RBI), and other financial regulators to adopt stricter norms for preventing insider trading and improving information-sharing mechanisms
  • SEBI highlighted that "insiders may lie not only in companies" — the regulator's concern extends to financial sector employees in banks, regulatory bodies, and consulting firms who may access Unpublished Price Sensitive Information (UPSI)
  • SEBI investigated 287 cases of alleged insider trading in FY2024-25, up sharply from 175 cases in the previous year, signalling a significant surge in enforcement activity
  • SEBI has already taken action against officials from India's electricity regulator (CERC) and executives at IndusInd Bank, and sent notices to Bank of America and partners at PwC and EY under insider trading rules
  • The regulator is pushing for better Structured Digital Database (SDD) compliance and cross-regulator information sharing, particularly to safeguard UPSI that flows through banking channels

Static Topic Bridges

SEBI's Prohibition of Insider Trading Regulations, 2015

The SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) form the primary legal framework governing insider trading in India's securities markets. These regulations replaced the earlier SEBI (Insider Trading) Regulations, 1992, and were significantly overhauled based on the recommendations of the N.K. Sodhi Committee (2014). The regulations are framed under Section 12A of the SEBI Act, 1992.

  • Enacted: 2015, replacing the 1992 regulations; last amended March 2025
  • Key concept: UPSI (Unpublished Price Sensitive Information) — information not in public domain that, if published, could materially affect security prices (e.g., financial results, dividends, mergers, KMP changes)
  • Structured Digital Database (SDD): Mandated since April 1, 2019, all listed companies must maintain an SDD recording every instance of UPSI sharing, including who shared it, with whom, and the nature of UPSI
  • Trading Window: Companies must close the trading window (prohibit insider trades) when in possession of UPSI
  • Insider: Defined broadly — includes any person connected to the company directly or through family/professional relationships who may access UPSI
  • Amendments in 2025 expanded the definition of UPSI to align with LODR Regulation 30 material event disclosures

Connection to this news: SEBI's push to extend insider trading norms beyond companies to banks and regulators reflects the regulatory gap — currently, PIT Regulations apply to "connected persons" of listed companies, but employees of banks or regulators who access UPSI through their official roles may fall outside direct SEBI jurisdiction, requiring inter-regulator coordination.

SEBI's Regulatory Mandate and Enforcement Powers

SEBI was established as a statutory body under the SEBI Act, 1992 (replacing a 1988 non-statutory body). Its mandate under Section 11 of the SEBI Act is to protect investors, promote securities market development, and regulate the market. SEBI derives its investigative and enforcement powers from Section 11C and 11D of the SEBI Act.

  • SEBI Act, 1992: Confers powers to investigate, adjudicate, and impose penalties
  • Penalties for insider trading: Up to ₹25 crore or three times the profit made (whichever is higher), under Section 15G of SEBI Act
  • SEBI also has powers to: Bar individuals from securities markets, seize and recover proceeds of violation, initiate criminal prosecution
  • SEBI investigated 287 insider trading cases in FY25 (vs. 175 in FY24) — a 64% jump
  • Cases span corporates, banks (IndusInd Bank executives), professional firms (PwC, EY), and regulatory bodies (electricity regulator officials)
  • SEBI shares jurisdiction with RBI (for debt/forex markets) and IRDAI (for insurance-linked securities)

Connection to this news: The 64% surge in insider trading investigations reflects SEBI's expanding surveillance net using technology and AI-based market monitoring. The push for banks and RBI to tighten norms recognises that UPSI can leak through the credit assessment, M&A advisory, or regulatory processes handled by banks — which fall under RBI's jurisdiction, not SEBI's.

Financial Stability and Development Council (FSDC) and Inter-Regulator Coordination

India's financial regulatory landscape is multi-layered, with SEBI (securities), RBI (banking and monetary), IRDAI (insurance), PFRDA (pensions), and IFSCA (international finance centre) operating in overlapping zones. The Financial Stability and Development Council (FSDC), established in 2010, serves as the apex body for macro-prudential supervision and regulatory coordination.

  • FSDC: Established 2010 under the Finance Ministry; chaired by the Finance Minister; members include heads of RBI, SEBI, IRDAI, PFRDA, MCA
  • Purpose: Macro-prudential regulation, systemic risk monitoring, inter-regulator coordination
  • FSDC Sub-Committee: Chaired by RBI Governor; handles operational coordination
  • Existing coordination mechanisms between SEBI and RBI: Memorandums of Understanding (MoUs) on data sharing, joint inspections for credit rating agencies, coordination on government securities markets
  • SEBI's ask: Formalise UPSI-related information sharing so that bankers who access material non-public information (e.g., loan restructuring, IPO due diligence) are covered under stricter norms

Connection to this news: SEBI's push for cross-regulator cooperation on insider trading norms could lead to formal FSDC-level agreements on UPSI information sharing between SEBI and RBI, potentially expanding the SDD mandate to banking institutions handling sensitive corporate information.

Key Facts & Data

  • SEBI insider trading cases investigated: 287 in FY2024-25 (vs. 175 in FY2023-24, a 64% increase)
  • SEBI final orders passed: 15 cases in FY25
  • Primary regulation: SEBI (Prohibition of Insider Trading) Regulations, 2015 (last amended March 2025)
  • SDD (Structured Digital Database): Mandatory for listed companies since April 1, 2019
  • Penalty for insider trading: Up to ₹25 crore or 3× profit made (whichever is higher)
  • SEBI established as statutory body: SEBI Act, 1992 (non-statutory body since 1988)
  • FSDC established: 2010, chaired by Finance Minister
  • SEBI Chairperson: Tuhin Kanta Pandey (as of 2026)
  • Key provision: UPSI defined under Regulation 2(1)(n) of PIT Regulations 2015
  • Bodies urged to act: RBI, banks, IRDAI, and other financial sector regulators
  • Earlier action: Notices sent to executives of IndusInd Bank, Bank of America, PwC, EY for insider trading violations