"It's spring cleaning": SEBI Chief Tuhin Kanta Pandey on working on optimal regulations

SEBI Chairman Tuhin Kanta Pandey said that the regulator needs to strike a balance between regulating too much and regulating too little

The market regulator is reviewing certain regulations to make it more optimal, that is retain its effectiveness while reducing the cost of compliance, said the SEBI chief in an exclusive interview given to Moneycontrol.

The Chairman of the Securities and Exchange Board of India (SEBI) Tuhin Kanta Pandey compared it to spring cleaning or the cleaning done for Diwali.

In this context, to illustrate his point, he cited 24 (B) of Mutual Fund Regulations as one of the provisions that is under review. This provision deals with the activities mutual funds are allowed to undertake and restricts these largely to managing pooled funds.

On SEBI's current approach to regulations, Pandey said, "We are looking for optimum regulation keeping in view the cost of compliance and cost of doing business."

"We need to look whether this regulation can be done better... Any regulation will add compliance (therefore) we will look at what are the least cost options and also if we can do away with certain microregulations. Then we can concentrate on regulations that can truly mitigate risks."

Earlier in the conversation, Pandey had said that the regulator needs to strike a balance between regulating too much and regulating too little. He said that SEBI needs more engagement and co-creation with the industry, and maintain a pace of change in regulations that is conducive to the development of the market.

He said that every department of SEBI is now focused on this. "They are working in their own respective regulatory area, and have already started engaging with industry associations," he said.

He said that optimum regulations could mean retaining the effectiveness of regulations, or even making them more effective, while reducing the cost of compliance.

Pandey compared it to spring cleaning done of homes. "When you are organising your place, there are some things you will dispose and somethings that will be rearranged, and your room will look better, clearner and brighter," he said.

"This is exactly what we need to do also," he added.

Pandey said that this is a continuous process at SEBI but now there is an increased focus on optimization.

"Everyone is doing it, like in Diwali," he said, with a laugh.