Independent directors must be stewards of accountability: Sebi chief
New Delhi, Aug 8, 2025
Sebi chief Tuhin Kanta Pandey underlined the need for broader diversity in board composition, drawing talent from varied sectors, younger professionals, and individuals outside familiar networks
Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey on Friday called for redefining the role of independent directors, stressing that they should be recognised and treated as stewards of accountability, news agency PTI reported.
"We cannot continue to view them as honorary appointees or friendly critics. They must be viewed and treated as stewards of accountability," Pandey said while addressing the 2025 Annual Directors’ Conclave.
He stated that this transformation would require changes across multiple areas. Independent directors should feel free to express dissent and be well-versed in emerging risks such as artificial intelligence (AI) governance, cyber threats, and environmental, social, and governance (ESG) disclosures.
Need for diversity
Pandey underlined the importance of greater diversity in board composition by bringing in talent from diverse sectors outside established networks. "A board that never disagrees is not aligned - it's asleep. Divergent views, when rooted in purpose and mutual respect, strengthen the board. They test assumptions, lead to deeper discussions, and enable constructive decision-making," he stated.
He outlined his vision for "shaping tomorrow’s board", which includes leveraging technology for smarter governance.
Embracing technology for governance
On technology adoption, Pandey urged boards not to perceive digital tools as burdens or threats. Instead, they should request real-time dashboards that offer meaningful insights. These could track indicators such as red-flag employee exits, whistle-blower complaints, ESG trends, or vendor concentration risks, alerting the board before such matters escalate into public issues.
"Governance intelligence must become as routine as financial intelligence," he asserted.
Pandey also emphasised cognitive diversity, asking: "Do we have enough contrarian thinkers in the room? Do we have people who see risk differently -- not more fearfully, but more perceptively?"
Guardrails against fraud
Earlier, the Sebi chief had stated that corporate misgovernance incidents, such as the fraud at Gensol Engineering or front running by a mutual fund manager, were not systemic problems demanding a regulatory overhaul. Rather, they were cases of greed and egregious conduct requiring more proactive intervention from independent directors, boards, and auditors to prevent them.
Sebi's proposals for Market Infrastructure Institutions
In January, Sebi proposed restructuring the governing boards of market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories. The regulator suggested appointing two executive directors (EDs) on the governing board for critical operations, regulatory compliance, and investor grievances. It is also considering clear definitions for the roles and responsibilities of the MD, the proposed EDs, and other key managerial personnel (KMPs) such as the chief technology officer (CTO).
[The Business Standard]
