GS3 · 15 marks · 250 words

Securities and Exchange Board of India (SEBI) plays an important role in the regulation of the share market and safeguarding the interests of investors. In the light of given statement, highlight the challenges faced by the SEBI and suggest reforms in this regard.

Answered by 12 toppers · CSE 2022–2025

Banking and FinancePlanning and Resource MobilisationMacroeconomic IndicatorsTrade and Foreign Investment

Syllabus: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

How toppers approached it

From 12 of the 13 answers · about 200 words · 50% drew a diagram.

Opening

  • No separate opening33%
  • A date or context25%
  • A definition25%
  • A constitutional or legal provision8%

Body

  • Points58%
  • Points and prose42%

Close

  • A summary67%
  • A way forward25%
  • No separate close8%

The toppers’ answers

RuhaniAIR 5 · CSE 2023 · 100 wordsTheir whole copy

Opening · a restatement

SEBI regulates the share market and protects the interests of investors. It does so by:

Body · points and prose

SEBI regulates the share market and protects the interests of investors. It does so by:

  • ensuring transparent disclosures by companies regarding the risks they have taken in their businesses,
  • ensuring the company hires independent directors,
  • company avoids insider trading.

However, recently, the Hindenberg Report highlighted the lapses in disclosures by the ADANI group.

The report showed that the ADANI shares are oversubscribed i.e. trading at more than their fair value. Thus, SEBI had to intervene to prevent capital outflows from Indian stock market.

Diagram
Challenges faced by SEBI: - Inadequate risk disclosures by the company - Round tripping, still exists - Voice of independent directors is not heard - Appointment of independent directors is not transparent and merit-based Reforms: - SEBI must ensure transparent risk disclosures - Appointment of independent directors should be made transparent - Their voice should be heard

This will make Indian stock market more reliable and ensure capital inflows by investors.

Close · a summary

However, recently, the Hindenberg Report highlighted the lapses in disclosures by the ADANI group.

The report showed that the ADANI shares are oversubscribed i.e. trading at more than their fair value. Thus, SEBI had to intervene to prevent capital outflows from Indian stock market. This will make Indian stock market more reliable and ensure capital inflows by investors.

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