Lessons from the East VI: Is Regulator a Devil or an Angel?

What is the real role of a Regulator or Regulations?

How do appropriate regulations change the landscape & the size of the opportunity?

How can the marginalized, vulnerable, and the last man all benefit from reasonable regulation?


Is that the case? Is it real? Is it true?

Today & Now

Two wars are going on – the Syrian War, Russian – Ukraine War and another is standing on the door knocking at – Potential conflict between China & Taiwan Conflict.

Yet Indian investors are confident about their country, their investments, and their future.

The Past & the Antecedent

This wasn’t always the case. Seventy-five years ago, when India got its independence, India’s GDP growth was down to 3.2% from 20%+ that existed for ~ two millennia from 300 BC till about 1700 AD.

A couple of centuries of subjugation, plundering, and imperial rule, brought the thriving culture to its knees. Post-independence, the capital was scarce, the population was largely uneducated (Britishers systematically decimated the Indian education system), and power lay in few hands within the coterie or extended just to the corridors.
Savings of Independent India for the next four decades moved to land and gold. These savings were rather of the rich, whilst the poor or lower middle class struggled for subsistence. Education & then government jobs were their only hope to cut the cycle of Poverty & Poor Health.

The Change, led by Necessity

Then came the era of Liberalization, Privatization, and globalization which enabled India to open up and find its true potential. The body that was created as a non-statutory entity – SEBI – Securities & Exchange Board of India in 1988, got its teeth (regulatory & punitive powers) in 1992.

It changed the landscape, the opportunity, the outlook on savings, and thus the investments. Series of Preventive, protective and curative regulations were brought in. Today the same has created an environment so conducive, that from a blue-collared worker to a rag-picker to a construction worker all can participate in India’s growth feeling safe and comfortable through a mutual fund SIP (Systematic Investment Plan) of an amount as low as 500 rupees a month. The richest of rich and poorest of poor are enjoying the benefit of the same regulation, the same research process, and the similar wisdom of the fund management team.

During this era of regulation, the Mutual Fund Industry grew at a compounding of 21.5% from 6700 Crore at the end of 1988 to 37.5 lac Crores to the present day. Also, Portfolio Management Service (PMS) & Alternate Investment Funds (AIFs) witnessed handsome growth post regulator came into existence.

The Authority, the Responsibility & the accountability

This begs the question, what did the regulator do, and what it’s supposed to do?

A regulator is like a father, first providing safety to the children in this case savers and investors, and then protecting their interests. Scared children, who are worried, who are fearful, guiding them, educating them, and undertaking various Investor education initiatives directly or indirectly.

The regulator also looks at things wholesomely ensuring all market participants play fair and with the highest levels of ethics and integrity. The human tendency generally tilts towards short-term as well as quick wins and thus greed to grab others’ pound of flesh always emerges and takes precedence. The regulator as a father warns multiple times and then after multiple warnings, if the behavior is still not corrected, it punishes the wrong-doer irrespective of the size, the stature, or the seat one has with an unbiased approach as a remedial action.

The unfortunate scenario in the 21st century remains, that despite the information, ease in access to knowledge, of effortless execution, one falls under the trap and promises of the Ponzi schemes in various geographies of India, run by unscrupulous, deceitful, and crooked individuals.

Today, When India is celebrating its seventy-five year of self-rule, self-governance, Self –determination, We as Indians should pledge that We, the ones who have little or profound know-how of financial markets & investing will enable our eco-system to provide financial freedom to ~ 30 Crore households comprising of 140 Crore Indians by pursuing the Principle of “Each One, Teach One”, so that every Indian work hard and remains assured that one's money is working even harder.


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The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official view or position of any company or sister concerns or Group Company where the Author is presently employed.