New Delhi: Sebi chief Tuhin Kanta Pandey on Saturday urged financial sector stakeholders to look beyond mere technical compliance and act with professional conscience, saying regulations alone can’t create an ethical culture or prevent collapse in corporate governance.

Corporate failures in India and across the globe, Pandey stressed, have taken place even where formal compliances existed but ethical substance was missing, “where governance failed, not because rules were absent, but because courage was.”

The Securities and Exchange Board of India (Sebi) chairman made these observations while speaking at the World Forum of Accountants 2.0, organised by the Institute of Chartered Accountants of India (ICAI) in Greater Noida.

National Financial Reporting Authority (NFRA) chief Nitin Gupta and Insolvency and Bankruptcy Board of India (IBBI) chairman Ravi Mital, too, spoke at the event.

Maintaining Principles

Mital pitched for cutting the number of compliance requirements without compromising on the effectiveness of regulations or diluting corporate governance principles.
Ethical judgement
Pandey said the growing number of initial public offerings (IPOs)-320 in 2024-25 and 311 in the first nine months of the current financial year-signals that issuers increasingly view Indian markets as capable of providing scale, efficiency, and long-term capital. The impressive growth of various components of India’s capital market also indicates increasing stakeholder trust in the market as an institution.

While watchdogs, including Sebi, have been pursuing regulatory excellence, they remain conscious that financial governance is as much shaped by culture as the compliance, Pandey said. “The real question is no longer: ‘is this technically permissible?’ It is increasingly: ‘is this fundamentally fair? is this transparent? is this in the public interest?’”

“These are not questions that regulation alone can answer. They are questions that rest squarely on professional conscience,” he added.

Many areas of the financial ecosystem today-such as management estimates, valuation subjectivity, complex group structures, ESG narratives, non-financial disclosures, and forward-looking statements-are not governed by precise formulas. “They are governed by principles, by interpretation, by judgment. In such an environment, technical compliance alone is no longer sufficient,” Pandey said.

Against this backdrop, the role of chartered accountants also extends beyond just preparing or auditing financial statements of companies; they need to act as custodians of trust in the financial system, Pandey said.

Technology and auditing
The growing adoption of new-age technology, he underscored, will transform the profession but not replace judgment.

Technology will bolster audit quality and professional efficiency.

“But technology has its limits….It cannot replace the human responsibility to stand firm when uncomfortable questions must be asked,” Pandey said, highlighting the indispensability of continuous upskilling, and reinvention of the accounting profession.

‘Lower compliance needs’
Pitching for reducing the number of compliance requirements, IBBI’s Mital said the insolvency watchdog has roped in the Indian Institute of Management, Ahmedabad (IIMA) to look at bankruptcy regulations and suggest steps to reduce them where necessary to make compliances easier.

There is no dearth of laws and regulations but what is required is their more effective implementations, he said.