The Finance Minister Nirmala Sitharaman asked the Securities and Exchange Board of India (SEBI) to put in place the reforms for ease of doing business and be ready to face an unstable market due to the tightening measures taken by the US Federal Reserve in its monetary policy.
She also asked the Board to promote the corporate bond market and focus on the ”green bond” market in a bid to boost the ESG (Environment, Social and Governance) outreach program of the Central Government.
US Federal Reserve hike
Sitharaman said that “SEBI has to initiate next generation of reforms to improve ease of doing business and be prepared for the possible market turbulence on account of US Fed actions”.
The US Federal System is the Central Banking System of the United States of America. It is perhaps the most powerful economic institution in the world and its decisions have far-reaching implications on the global economy and world markets.
Just like RBI in India, the US Federal Reserve is responsible for setting up interest rates, managing the money supply and regulating financial markets (like SEBI in India).
Recently, the US Federal Reserve tightened its regulation on the Monetary Policy which could affect the flow of capital in emerging markets such as India. The US central bank is expected to hike the interest rates in March this year.
The Finance Minister also took note of the steps taken by the market regulator SEBI and asked them to take further initiatives to help decrease the compliance difficulties, the cost of market intermediaries and strengthen the protection of market investors.
Sitharaman was addressing the SEBI Board for the first time since her Budget speech on February 1, 2022. It is a customary practice for the Finance Minister to address RBI and SEBI after the announcements in the Budget.
SEBI chairperson Mr. Ajay Tyagi also apprised the Minister about the major trends and outlook for the Securities market in India, including raising of funds and rising investor participation. He also informed the Minister regarding the status of implementation of the proposals of the 2021 Union Budget applicable to the Indian capital market.
Decision of separating Chairperson and Managing Director posts voluntary: SEBI
In a recent announcement, SEBI also made the separation of posts of chairperson-cum-Managing Director (CMD) voluntary in the top 500 listed companies in India. The splitting of posts had been made mandatory for these companies before. The decision came soon after Sitharaman had asked the financial watchdog to hear concerns of the Indian corporates regarding the separation of these posts. Nirmala Sitharamn also holds the position of the Minister of Corporate Affairs in the Government of India.
The decision had been called a “regulatory overreach” by SEBI according to many Corporate Moguls. The deadline for the separation of these posts was April 1, 2022.
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