Sebi chief says regulating asset prices not regulator’s role, won’t police valuations

Sebi chief says regulating asset prices not regulator’s role, won’t police valuations

India’s capital markets regulator will stay away from interfering or commenting on asset prices, with the chairman affirming that Sebi’s role is to facilitate capital formation, not control valuations. Responding to a question by Moneycontrol on concerns about bubble risks from surging fund flows, the chairman noted that while valuations may run ahead at times, a growing supply of new listings and investment products can help balance demand and deepen the market.

India’s capital markets regulator will refrain from interfering with asset pricing or regulating them in any way, said Sebi Chairman Tuhin Kanta Pandey in an exclusive interview with Moneycontrol, arguing that the regulator’s role is to enable capital formation—not police valuations.

“If we interfere too much in the market-making process, it may not be healthier for our capital markets,” the chairman said in an interview, when asked whether Sebi sees a need to curb asset bubbles from time to time amid record levels of participation from retail investors and mutual fund flows.

Instead, the focus is on expanding market depth and product variety. “This is one of the best times to build a growing capital market in India,” he said, citing a surge in investor accounts from 45 million in 2020 to 130 million now, alongside Rs 4.5 lakh crore raised in FY24 through IPOs, FPOs and QIPs. Mutual fund inflows, he added, also touched Rs 6 lakh crore during the same period.

With India clocking over 6% economic growth, strong infrastructure spending, and a favorable shift in global supply chains, Sebi believes the ecosystem supports robust capital formation. “If supply of paper grows with demand, the risk of bubbles naturally reduces,” the chairman said.

New investment products like REITs, InvITs, SM REITs and specialised investment funds are helping channel capital into the real economy. “Eventually, everything must feed into a real market economy. And we have all the enablers in place,” he said.