Sebi develops advanced surveillance system to tackle 'bad elements' among listed companies

New Delhi, Oct 3 (PTI) Markets regulator Sebi is working on a second surveillance system to identify "bad elements" among listed companies, with the objective of eventually delisting such entities, its Whole-Time Member Kamlesh Varshney said on Saturday.

Speaking at an event organised by CPAI, Varshney said the regulator is also working on identifying small initial public offerings (IPOs) that may not be suitable for the capital market and could result in losses for retail investors.

He said the second surveillance system is aimed at identifying problematic entities among listed companies.

"While we have a surveillance system where, on the live data, we catch manipulators, Sebi has been doing very well in that. We have almost completed a blueprint of our second surveillance system, which will identify these bad elements in the capital market amongst the listed companies, so that they can be delisted," Varshney said.

The focus on listed entities also extends to companies seeking to enter the capital market, particularly through small IPOs, he said.

"We have seen a lot of small IPO issues, which are not really (meant) to be there in the capital market, and they create losses to retail investors. So, we have to identify those players also. So, Sebi is working on that as well," he said.

Varshney said Sebi's efforts to increase the number of listed companies need to be accompanied by greater focus on corporate governance and compliance, particularly among small and medium enterprises (SMEs) before they enter the capital market.

The SME IPO segment has expanded significantly, with 267 issues in 2025 and 156 issues in 2026 year-to-date, according to a report by the industry body Association of Investment Bankers of India (AIBI).

Cumulative SME fundraising stood at Rs 39,849 crore during 2016-2026 YTD, while the average SME issue size increased from Rs 8 crore in 2016 to Rs 45 crore in 2026 YTD, it added.

At the same time, Varshney emphasised that the regulator's objective remains to facilitate wider access to the capital market.

"We also have to make sure that more and more companies get listed," he said, adding that industry associations have an important role to play in reaching out to prospective issuers and preparing them for listing.

On the investor participation side, Varshney said there was significant scope to expand participation in the securities market, pointing to a survey which showed that only 9.5 per cent of Indian households are invested in the securities market, while 65 per cent are aware of it.

"This means there is a huge gap of 55 per cent of households who can invest if we reach out to them," he said.

He said Sebi has launched Project Jagrook to expand investor awareness and participation, including through offices across states and partnerships with local panchayati institutions.

Varshney, however, stressed that efforts to bring new investors into the market must be accompanied by measures to protect them from fraud.

"If at the very initial stage of the investment, if they are defrauded, that will be a very negative signal for the growth of capital market," he said.

Sebi has introduced measures and verification mechanisms aimed at preventing fraud and stressed the need for market participants to identify and expose bad actors, he added.

Varshney also said sustained growth in systematic investment plan (SIP) contributions and increasing participation in the capital market would support the country's economic growth. PTI SP BAL

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