The Securities and Exchange Board of India (SEBI) is looking to tighten its grip on how companies manage equity capital raised from public markets. According to recent draft proposals, the regulator intends to grant more authority to monitoring agencies—typically credit rating firms—to ensure companies are held accountable for their spending. This move comes at a sensitive time for the Indian stock market, where geopolitical tensions have cooled investor enthusiasm and slowed fundraising activities. By requiring more transparency and direct reporting to stock exchanges, SEBI hopes to restore confidence and protect investors from potential misuse of funds.

Under the new framework, which draws inspiration from similar mandates in the UK, monitoring agencies would be required to flag uncooperative companies directly to the exchanges. The proposals also include a lower threshold for mandatory monitoring, dropping from Rs1 billion to Rs500 million, and the introduction of specific financial penalties for firms that obstruct the reporting process. Although the current IPO pipeline remains massive, market activity has been sluggish; regulators believe that enforcing these higher governance standards will create a more stable environment for when companies eventually return to the market in full force.