India’s capital markets regulator has expressed concern about thousands of new investors being “hijacked by scamsters” as they enter the formal financial system.
Tuhin Kanta Pandey, chairman of the Securities and Exchange Board of India (Sebi), told Press Trust of India (PTI) the watchdog is intensifying technology-driven surveillance to curb fraud.
India has more than 140 million unique investors but the sharp rise in retail participation over the past few years has also attracted cyber fraud.
How investors are being trapped
Pandey said many individuals intending to enter the markets are being “hijacked by scamsters” even before they reach a Sebi-registered intermediary. “Someone who is intending to come is actually being trapped by promises of high returns. It doesn’t even come to Sebi or to any broker because the person has already fallen prey,” he told PTI in an interview.
Fake trading and investment apps
WhatsApp and Telegram groups promising high returns
Unregistered advisors posing as market experts
Fraudulent Unified Payments Interface handles and personal bank accounts
In many cases, investors transfer money directly to fraudsters. The funds never reach a Sebi-registered broker or intermediary.
“It doesn’t even come to Sebi or to any broker because the person has already fallen prey,” Pandey said.
Tech push and SEBI Check tool
To tackle the menace, Sebi is strengthening its use of artificial intelligence and data analytics to:
Monitor misleading online content in real time
Track unregistered investment advisories
Flag suspicious digital patterns
The regulator is also promoting tools such as SEBI Check, which allows investors to verify whether an entity soliciting funds is registered with Sebi. Pandey stressed that such tools are effective only if widely used.
Sebi is planning multilingual, multimedia investor awareness campaigns to reach new participants across the country.
Focus on disciplined investing
Pandey urged retail investors to adopt long-term strategies such as systematic investment plans and pooled vehicles like mutual funds, rather than speculative trading in complex products such as derivatives.
He also cautioned against unrealistic return claims made by unregistered “finfluencers”.
PMS rules under review
Separately, Sebi is examining aspects of Portfolio Management Services regulations introduced in 2020. One issue it is considering is portability. Currently, shifting from one portfolio manager to another requires opening a new demat account, effectively forcing investors to sell and repurchase securities. The regulator is exploring ways to make this process more efficient.
On recent technical glitches
On recent technical disruptions at Multi Commodity Exchange of India and National Securities Depository Limited, Pandey said such incidents, while occasional, are not uncommon in complex, interconnected market systems. In both cases, operations were shifted to disaster recovery sites, and root-cause analyses are being conducted under Sebi’s Technical Advisory Committee.
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