SEBI Chairman Tuhin Kanta Pandey has called on managing directors and chief executives of listed banks to strengthen compliance mechanisms against insider trading, stressing that weak controls, unclear processes, and inconsistent oversight create room for violations.
Recent Case Against IndusInd Bank
The remarks follow SEBI’s interim order in June against senior executives of IndusInd Bank, where the regulator alleged that the MD & CEO and deputy CEO traded in the bank’s shares while in possession of unpublished price-sensitive information (UPSI) linked to discrepancies in its derivatives portfolio.
Framework for UPSI Management
Pandey emphasised the need for a robust internal control framework, ensuring accountability for every piece of UPSI. He said that policies, codes of conduct, and periodic staff training are critical, and even informal sharing of sensitive information during meetings or over email should be treated as a compliance breach.
Role of Compliance Officers
Highlighting the importance of the Compliance Officer under PIT regulations, the SEBI chief said boards must provide adequate authority, tools, and leadership support for the role. He cautioned that the position should not be symbolic or easily bypassed.
Use of Technology
Banks were urged to deploy technology-driven compliance tools such as automated trading window management, centralised pre-clearance systems, and digital certification platforms. SEBI also recommended tracking trades during closed trading windows to plug potential gaps.
Crash Course for Senior Bankers
Starting September 3, 2025, SEBI is conducting a crash course in Mumbai for senior bankers on insider trading rules and compliance. The program will later expand to Delhi and Chennai, aiming to enhance awareness, monitoring, and institutional accountability.
Summary
SEBI chief Tuhin Kanta Pandey has urged banks to strengthen insider trading safeguards, pointing to gaps in oversight and accountability. With recent regulatory action against top IndusInd Bank executives, SEBI is rolling out training programs and urging adoption of technology tools to improve compliance across the banking sector.
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