Tailoring Regulatory Frameworks For Diverse Investor Categories In India: A Proposal For Enhanced Investor Protection
- IJLLR Journal
- Jul 15
- 1 min read
Updated: Jul 16
Surbhi Gandhi, Research Scholar at Himalayan University
Dr Geeta Shrivastava, Research Guide at Himalayan University
ABSTRACT
The Indian securities market, while experiencing significant growth, faces challenges due to its uniform regulatory approach to a diverse investor base. This paper argues that SEBI's current definition of an 'investor' and its one- size-fits-all guidelines create disparities, particularly for individuals with limited financial literacy, education, or experience. These vulnerable investors are often susceptible to misinformation and struggle to navigate complex financial products, leading to uninformed decisions. The research analyzes existing SEBI regulations and investor education initiatives, identifying gaps in differentiated regulatory requirements and the limited effectiveness of outreach programs in rural and underserved areas. Drawing upon international best practices, this paper proposes a three-tiered regulatory framework for investor protection in India. This framework categorizes investors based on financial literacy, education level, investment experience, and income/wealth, and outlines corresponding tailored documentation, procedural requirements, and enhanced protective measures for each tier. Furthermore, it emphasizes the critical need for enhanced and targeted investor education programs, leveraging technology and local partnerships to empower all investors. The paper concludes with policy recommendations and a phased implementation strategy, advocating for a paradigm shift towards a more equitable, inclusive, and secure investment environment in India.
