SEBI’s Investor Protection Guidelines: All You Need To Know

This is a look into investor protection measures by the Securities and Exchange Board of India (SEBI).

Investors, both retail and institutional, are fundamental to the economic and sustainable growth of a country’s stock market economy. They are the drivers of informed investments, and with their numerous transactions, the marketplace runs the show. If their money does not enter the market, everything, including stocks, bonds, and securities, is void. Investors are, without doubt, a key support system of the market and economic growth. 

Therefore, it is all the more necessary to protect the rights and activities of investors. Investor protection involves various measures that protect the interests of investors from malpractices, both visible and underlying. 

Securities and Exchange Board of India 

The Securities and Exchange Board of India – SEBI – is the primary market regulator in India set up on the 12th of April, 1992. The main objective of SEBI is to regulate and oversee India’s securities and commodity market while forming guidelines and rules. Investor protection measures by SEBI are in place to preserve the investors from malpractices in shares, the stock market, Mutual Fund, etc.


SEBI is responsible for overseeing and protecting commercial investment funds and all securities-related activities in the country.

Investor interests’ safety and protection

Monetary investments in stock markets are undoubtedly one of the riskiest things to do with your money. But unlike other financial risks, stock markets give an excellent probability for your wealth to grow if you make intelligent decisions. Nevertheless, insurance and assurances on investors’ money are favourable to avert some of that risk element. The investor’s insurance money is a symbol of commitment. 

Put simply, investor protection is equivalent to returning the money to the investor when a brokering merchant reduces it or uses it for malicious activity. Insurance policies are essential to look for when opening a Trading Account or a record with an online dealer. When you open an exchange account at a brokerage, you are usually financially secure.

What does SEBI do?

SEBI’s general role consists of doing the following tasks:

Making sure that the financial backers are instructed on the mediators of protected markets.

Filtering the most popular acquisitions and take-over of organisations.

Preventing local securities trading like fake and preposterous trading moves in the insurance market.

Controlling vaulted assets, unfamiliar portfolio financial backers, FICO assessment agencies, and caretakers of protections.

SEBI’s role in investor protection

Over the years, SEBI has developed various methods and procedures to protect investors’ interests. It has published several guidelines, launched many enterprise awareness programs and established an Investor Protection Fund (IPF) to remunerate investors.


SEBI has developed a solid financial support system to provide a fallback plan to investors. The goal is to ensure that more and more people participate in Indian markets.

SEBI engages investors and collects and uses the information they need to evaluate different financial options according to their goals. It assists investors to explain their privileges and responsibilities in a given project. The educational and training concept of financial aid by SEBI is crucial to protecting investors’ rights through financial aid relations with market participants.

Investor protection measures by SEBI

SEBI’s Investor Protection Act was enacted following Section 11(2) of the SEBI Act. Proceedings under it include the following measures:

Registering and regulating financial market participants like brokers, transfer agents, bankers, instructors, registrars, portfolio managers, investment advisors, commercial bankers, etc.

Eliminating false and unfair trading in the stock market

Knowledge development and educational issues.

Conducting training for business brokers.

Auditing and controlling of exchanges and intermediaries.

Estimating the costs, fees and other charges.

Recording and monitoring the work of market observers, foreign investors, shareholders, institutional assessors, etc.

Linking and attracting investment projects such as mutual and venture capital funds.

Encouraging and controlling mainstream self-regulatory companies.

Investor Protection Guidelines by SEBI: All You Need To Know

Investor Education and Protection Fund (IEPF)

As part of SEBI investor protection measures, the Indian government set up the Investor Education and Protection Fund (IEPF) under the Companies Act 1956. According to the act, a business that has completed seven years should hand over all the unclaimed fund dividends, matured deposits, debentures, share application money etc., to the government through integrated programmes.

Investor Awareness Program

SEBI’s investor protection measures follow the motto of “Informed investors are safe investors”. SEBI regularly manages awareness and advertising campaigns in the stock market to raise awareness and attract investors. It does so by conducting seminars on derivatives, stock trading, Sensex, etc.

The Investor Awareness Program covers essential market areas such as portfolio management, mutual funds, tax rules, investor protection funds and the SEBI investor complaint system. 

Undoubtedly, investor protection is one of the most critical topics in the stock market. Thus, protecting the interests of investors is one of the fundamental tasks of market regulators and participants on the managing side. SEBI’s numerous strict measures to protect investors is a culmination of this mantra.

In conclusion, safety guidelines and measures ensure that all aspects of investor interests are protected. The investor awareness program and other such initiatives have certainly helped and will continue to be effective – these steps go toward clear and transparent transactions.

Aakash Sharma
Aakash Sharma
Aakash writes on Startup Ecosystem, Policies, Legal and Regulatory aspects of business planning. An alumnus of Delhi University, he is assistant editor at Dutch Uncles.

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