Current framework
Under the current framework, the central government is the appointing authority for the Sebi chairperson and whole-time members. The members are appointed on the recommendation of the Financial Sector Regulatory Appointments Search Committee (FSRASC)—a body headed by the cabinet secretary and comprising the additional principal secretary to the prime minister, the secretary of the Department of Economic Affairs, the Sebi chairperson (for whole-time member selections), and three external experts nominated by the central government.
The Sebi board also includes two members representing the central government and one RBI member.
The FSRASC’s recommendations, however, are not binding on the government. That gap matters because the parliamentary standing committee that reviewed the Code has recommended that the law expressly require appointments to be made on the FSRASC’s recommendation, or an equivalent institutional mechanism, to ensure a transparent, merit-based and consistent process.
The Code’s language on expertise is similarly non-binding, Agrawal said. “Clause 4(4) lists broad qualifications—law, finance, economics, technology, commodity markets, accountancy, and separately says the government ‘shall endeavour’ to appoint at least three of the 11 new members with securities market expertise. ‘Endeavour’ is aspirational, not binding. There’s no enforceable specialist quota.”
