Sebi working on second surveillance system to identify 'bad elements' among listed cos: Varshney

The Securities and Exchange Board of India (Sebi) is developing a second surveillance system to detect problematic entities among listed companies, with the potential objective of delisting them, according to Kamlesh Varshney, Sebi's Whole-Time Member. During a CPAI event, Varshney highlighted that the regulator is also targeting small initial public offerings (IPOs) that may not belong in the capital market, as they could lead to losses for retail investors.

The second surveillance system aims to identify and delist such problematic entities, complementing Sebi's current system that catches manipulators through live data analysis. Varshney noted that Sebi has nearly finalized a blueprint for the second system, which will focus on identifying and removing bad elements from the capital market.

Additionally, the regulator is working on enhancing corporate governance and compliance, particularly for small and medium enterprises (SMEs) entering the capital market. SME IPO activity has surged, with 267 issues in 2025 and 156 in the first half of 2026, resulting in a cumulative fundraising of Rs 39,849 crore since 2016-2026.

Varshney emphasized Sebi's commitment to facilitating wider access to the capital market, pointing out that only 9.5% of Indian households are currently invested. To address this, Sebi has launched Project Jagrook to boost investor awareness and participation, including through state offices and partnerships with local institutions.

However, Varshney stressed that this effort must be balanced with measures to protect new investors from fraud, as initial losses could negatively impact the market's growth.