Office of Investor Assistance and Education
Securities and Exchange Board of India (SEBI) has been established with the prime mandate to protect the interest of investors in securities. It is also mandated to promote the development of, and to regulate the securities market. An investor enjoys investing, if (i) he knows how to invest; (ii) he has full knowledge of the market; (iii) the market is safe and there are no miscreants; and (iv) there are arrangements for redressal in case of grievances. Accordingly, SEBI's investor protection strategy has four elements.
First, build the capacity of investors through education and awareness to enable an investor to take informed investment decisions. SEBI endeavours to ensure that the investor learns investing, that is, he obtains and uses information required for investing, evaluates various investment options to suit his specific goals, ascertains his rights and obligations in a particular investment, deals through registered intermediaries, takes necessary precautions, seeks help in case of any grievance, etc. SEBI has been organizing investor education and awareness workshops directly, and through investor associations and market participants, and been encouraging market participants to organize similar programmes. It maintains an updated, comprehensive web site for education of
investors. It publishes various kinds of cautions through media. It responds to the queries of investors through telephone, e-mails, letters, and in person for those who visit SEBI office.
Second, make available every detail relevant for investment in public domain. SEBI has adopted disclosure based regulatory regime. Under this framework,
issuers and intermediaries disclose relevant details about themselves, the products, the market and the regulations so that the investor can take informed investment decisions based on such disclosures. SEBI has prescribed and monitors various initial and continuous disclosures.
Third, ensure that the market has systems and practices which make transactions safe. SEBI has taken various measures such as screen based
trading system, dematerialization of securities, T+2 rolling settlement, and framed various regulations to regulate intermediaries, issue and trading of securities, corporate restructuring, etc. to protect the interests of investors in securities. It also ensures that only the fit and proper persons are allowed to operate in the market, every participant has incentive to comply with the prescribed standards, and the miscreant are awarded exemplary punishment.
Fourth, facilitate redressal of investor grievances. SEBI has a comprehensive mechanism to facilitate redressal of investor grievances against intermediaries and listed companies. It follows up with the companies and intermediaries who do not redress investors' grievances, by sending reminders to them and having meetings with them. It takes appropriate enforcement actions as provided under the law (including launch of adjudication, prosecution proceedings, directions) where progress in redressal of investor grievances is not satisfactory. It has set up a comprehensive arbitration mechanism in stock exchanges and depositories for resolution disputes of the investors. The stock exchanges have investor protection funds to compensate investors when a broker is declared a defaulter.
Depository indemnifies investors for loss due to negligence of depository or depository participant.