Mumbai: SEBI Chairperson Tuhin Kanta Pandey has called on chartered accountants and market participants to move beyond treating forensic accounting as a mere post-crisis tool. Speaking at a prominent ICAI event, Pandey emphasized the need for early anomaly detection, proactive governance, and enhanced market vigilance to preserve the integrity of India’s capital markets.
“Forensic accounting should not just be a post-fraud solution; it must evolve into a discipline embedded within corporate controls,” Pandey asserted, urging professionals to develop the skills to identify red flags before they escalate into financial scandals.
Forensic Tools Must Evolve with Market Complexity
Pandey acknowledged that SEBI and India’s capital markets have made significant strides in disclosure standards, technological surveillance, and regulatory enforcement, but warned that regulations alone are not enough.
He stated that early detection of anomalies and collective capacity to anticipate risks would play a defining role in shaping the future of financial governance. “The regulator’s efforts need to be reinforced by the collective wisdom, competence, and professional integrity of all stakeholders,” he said.
Systemic Anti-Fraud Campaign and New Technologies Underway
Pandey announced that SEBI is preparing to launch an aggressive, systemic campaign against financial frauds, and is already working with market infrastructure institutions to implement it. The aim is to improve fraud detection before it reaches crisis levels.
He revealed that SEBI has developed its own supervisory technologies, which are now being used by stock exchanges. These tools aid in identifying unusual market behavior and transactional patterns, contributing to the regulator’s tech-enabled surveillance framework.
However, he emphasized that technology alone isn’t enough. “A tool can detect fraud patterns, but it takes a human mind to contextualize and expose them,” Pandey noted, advocating for a hybrid approach that merges automation with professional judgment.
Investor Confidence Tied to Governance Standards
Citing the increasing appetite of retail and institutional investors in India’s markets, Pandey stressed the need to safeguard investor trust. He warned that frauds could have a “tremendous negative impact” on the securities market and urged stakeholders to introspect and act responsibly.
He concluded by reiterating the need for collaboration between regulators, market entities, auditors, and investors to uphold the standards of transparency, governance, and corporate ethics. “Fraud prevention is not a one-man job. It requires a coordinated ecosystem built on trust and vigilance,” he said.