Sebi working on ways to protect small investor interests: Sinha

To ensure that interests of small investors are protected, marker regulator Securities and Exchange Board of India (Sebi) is in discussions with other regulators to encourage institutional investors keeping a check on corporate governance practices in listed companies.

"Sebi has already asked mutual funds, which come under its jurisdiction, to lend their voices to small investors and it is talking to other regulators for similar roles by other institutional investors," Sebi chairman U K Sinha said in Delhi on Monday.

Different kinds of institutional investors include mutual funds, insurance companies, banks, NBFCs, among others. While banks and NBFCs are regulated by the Reserve Bank of India, insurance companies are governed by IRDA.

While Sebi has asked mutual funds to disclose their voting rights on company proposals, similar practices should be followed by other institutional investors as well, Mr Sinha said.

"Institutional investors must lend their voice to small shareholders or act as counter-voices to promoters," Mr Sinha said.

Delivering the Subir Raha memorial lecture on corporate governance, organised by UN Global Compact Network, the Sebi chief said that India is a country where the promoters hold a big sway and it is very important for small investors to "have a voice".

According to him, Sebi wants to encourage the proxy advisory firms (those which advice shareholders about shareholding patterns) to lend their voice to small investors.

Noting that Sebi would like the regulations on governance in stock exchanges to be emulated by all the companies, Mr Sinha said, "This is our thinking as a regulator, obviously we would not want companies to rush to that but gradually reach that destination".