Securities and Exchange Board of India’s Chief Madhabi Puri Buch on Wednesday speaking at Global Fintech Fest 2022 said that easy entry but exit barriers for customers shall not be acceptable, which is creating hurdles for exit and claiming of hefty returns on financial products.
“If your business model suggests that once the customer is in, then there is no exit for them. We do not like it,” said Buch, She added, the regulator does not want ‘Abhimanyus’ in the market.
Customers should be able to exit as easily as they enter an ecosystem, the Sebi chief said.
“If your business model relies on building barriers (for customers) to exit, it is unlikely to find a favour with the regulator. It is an important principle that we follow. We believe that whenever a customer has ease of entering then he also has the right to exit,” she said.
“Private innovation should be built on top of it. If someone has a business and they assume that they will own the infrastructure, you are setting yourself up for a rude shock subsequently,” Buch said.
“If the regulator senses that there are inadequate disclosures then the question is, is the investor being misled or if he is being conned? If your business model is woven around a black box which is not open to sunlight or is not capable of being validated or audited it cannot be permitted,” said Buch.
Buch added, “We are now actively engaged in looking at the ASBA-like secondary market. If it can be done for the primary market why can’t it be done for the secondary market? If you are buying shares and you must settle, the money should not leave your account. It needs to be settled with T+1, following which money will be appropriately taken.”