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Informist, Wednesday, Aug. 19, 2026

 

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--SEBI chief: AI norms will require kill switch, human intervention 
--SEBI chief: To issue guidelines on responsible use of AI, machine learning 
--SEBI chief: Mulling allowing MF schemes-only funds for portfolio mgmt svc 
--SEBI chief:Vital how we use AI responsibly while preserving investor trust 
--SEBI chief: Significant headroom remains for broader financialisation 
--CONTEXT: SEBI Chairman Tuhin Pandey's comments at capital mkt conference 
--SEBI chief: See INR 2 trln of fund raise via equity rest of FY27

 

MUMBAI – Upcoming artificial intelligence integration rules in India's capital markets will mandate "kill-switch" mechanisms and human-in-the-loop oversight to manage technological risks and prevent operational mishaps, the Securities and Exchange Board of India's Chairman Tuhin Kanta Pandey said on Wednesday.

 

Speaking at the FICCI 23rd Annual Capital Markets Conference, Pandey outlined the regulator's upcoming policy interventions, stressing that accountability and risk controls must keep pace with technological adoption. "We will shortly be issuing guidelines for responsible use of AI and ML (Machine learning) in our markets," the SEBI chief said, emphasising that market adoption must prioritise safety. "The framework shall require kill-switch and humans-in-the-loop controls... the aim is to balance innovation with investor protection."

 

Highlighting the delicate balance between technological efficiency and trust, Pandey noted that while AI can strengthen surveillance, risk assessment, fraud detection, and investor servicing, it introduces unique vulnerabilities regarding data opacity, bias, cybersecurity, and data protection. "The question is not whether markets will use AI. The question is how we use it responsibly, while preserving trust," he added.

 

The regulator reiterated that every SEBI-regulated entity will remain fully responsible for any AI or machine learning models it deploys, regardless of whether the systems are developed in-house or sourced from third-party vendors.

 

Beyond technology oversight, the regulator is evaluating targeted product expansions to support retail and institutional investors alike. Pandey revealed that SEBI is mulling allowing mutual fund schemes-only funds within the portfolio management services framework, specifically aiming to serve mass-affluent investors.

 

On broader market participation, the SEBI chief underlined that significant headroom remains for broader financialisation across the country. While mutual funds, systematic investment plans, and digital onboarding platforms have expanded the reach of market instruments, participation must expand into new geographies, demographics, and investor segments, Pandey said. 

 

Addressing primary market trends and fund-raising momentum, Pandey expressed optimism over capital formation, noting that SEBI expects around INR 2 trillion of fund raising via equity issuances through the remainder of the current financial year. 

 

Pandey also said the regulator wants to bring a framework to support global fund management activity for India. "Please note, we want to support global fund management activity for India," he said.  End

 

Reported by Kabir Sharma and Rajesh Gajra

Edited by Deepshikha Bhardwaj

 

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