New Delhi | The Securities and Exchange Board of India (SEBI) has proposed a major overhaul of financial advertising regulations that could significantly expand the definition of a “celebrity” in the digital age. Under a draft Common Advertisement Code (CAC), social media influencers with more than 5 lakh followers on a single platform, along with AI-generated virtual personalities, may be classified as celebrities for financial advertisements.
The proposal is part of a broader effort by the market regulator to strengthen advertising standards across regulated financial sectors, including stock broking, mutual funds, investment advisory services, research analysts, portfolio management services, and other market intermediaries. SEBI has invited public comments on the draft framework until July 14.
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According to the consultation paper, the proposed definition extends beyond traditional film stars and public figures. Influencers with substantial social media reach could fall under the celebrity category due to their ability to influence public opinion and investor behaviour.
The draft framework also includes international-level sportspersons who have represented India in events such as the Olympics, Asian Games, Commonwealth Games, and other globally recognized sporting competitions. Television hosts and anchors who have appeared in at least one season or ten episodes of a program may also be covered under the proposed definition.
In another significant move, winners and runners-up of television and OTT-based reality competitions could be categorized as celebrities if the proposal is implemented.
One of the most notable aspects of the proposal is the inclusion of artificial intelligence-generated personalities. SEBI has suggested that realistic virtual influencers, digital avatars, and computer-generated characters capable of influencing audiences should be subject to the same advertising restrictions as human celebrities when promoting financial services.
The regulator has also proposed discretionary powers to classify any individual or virtual entity as a celebrity if it believes that person or character has significant influence over viewers or potential investors.
Market experts believe the move reflects the growing role of digital creators and virtual influencers in shaping financial decisions, particularly among younger audiences who increasingly consume content through social media platforms.
Under the proposed framework, celebrities, influencers, and AI avatars would be allowed to endorse only the regulated entity or its brand. They would not be permitted to recommend, endorse, or make claims about specific financial products, investment schemes, or services.
The draft code also retains prior approval requirements for advertisements featuring celebrities, while proposing a more streamlined post-publication monitoring mechanism for most other advertisements. Regulated entities may be required to upload advertisements or related links to a centralized portal within 24 hours of publication for regulatory review.
SEBI has further proposed stricter restrictions on misleading promotional practices. The draft framework seeks to prohibit guaranteed-return claims, deceptive testimonials, misleading comparisons, and incentives such as coupons, rewards, vouchers, or benefits linked to account opening, account reactivation, or increased trading activity.
Additionally, the regulator aims to curb the use of so-called “dark patterns,” including false urgency, forced actions, hidden subscription traps, and other manipulative digital marketing techniques designed to influence consumer behaviour.
Industry observers view the proposal as one of SEBI’s most comprehensive attempts to regulate influencer-driven financial advertising. If implemented, the new framework could significantly reshape how financial institutions engage with consumers, particularly on digital and social media platforms.
The proposal highlights the regulator’s growing focus on investor protection and responsible financial communication at a time when influencer marketing and AI-generated content are becoming increasingly influential in shaping investment decisions.
