SEBI to comprehensively review short selling and SLBM frameworks: Tuhin Kanta Pandey
Nov 7, 2025
Synopsis
SEBI chief Tuhin Kanta Pandey announced a comprehensive review of short selling and the securities lending and borrowing mechanism, highlighting the need for development. He emphasised strong investor participation and ongoing reforms to streamline capital-raising processes.
Securities Exchange Board of India (SEBI) chief Tuhin Kanta Pandey has said that the capital markets regulator will comprehensively review short selling and securities lending and borrowing mechanism (SLBM), after acknowledging that the system remains underdeveloped compared with other jurisdictions.
Speaking at the CNBC TV-18 Global Leadership Summit, Pandey said, “An active SLBM scheme is critical for improving price discovery and facilitating interlinkage between the cash and derivatives segments. From a borrower’s perspective, it facilitates the settlement of securities sold short, while lenders can earn a fee on their idle securities.”
The framework for short selling was introduced in 2007 and has remained unchanged since then. Further, the SLBM was introduced in 2008 and modified a few times subsequently. However, this segment remains significantly underdeveloped,” he added. It is a regulated system in the stock market that allows investors to temporarily lend out their idle shares to other market participants for a fee.
During the Summit, he also said the health of India’s primary market remains strong, reflecting continued investor confidence and robust capital-raising activity. He noted that in FY25, around Rs 4.6 trillion was raised through the equity markets, while in the current financial year, nearly Rs 2 trillion has already been mobilised. The number of unique investors has also surged to 135 million, a sharp rise from 38 million in FY19, underscoring the growing participation of retail investors.
However, Pandey pointed out that despite this progress, challenges remain. Citing SEBI’s investor survey, he said that while 63% of households are aware of securities products, only 9.5% have actually invested, and nearly 80% remain risk-averse, primarily due to fear of losses. Therein lies both opportunity and challenge, he said, adding that there exists a vast pool of untapped domestic capital waiting to be deployed. Pandey urged the industry to seize this opportunity — to raise capital, create value for stakeholders, and contribute to shaping India’s economic future.
He emphasised that SEBI has been taking continuous steps to streamline the capital-raising process, including shortening IPO listing and rights issue timelines. Recent proposals, such as a scale-based approach for minimum public offer size and calibrated MPS timelines aligned with market absorption capacity and liquidity, are aimed at encouraging more listings. Pandey also highlighted that the governance framework for market infrastructure institutions (MIIs) has been further strengthened to ensure that public interest remains the top priority.
[The Economic Times]
