SEBI Plans Crash Course for Top Bankers to Tackle Insider Trading Concerns

In a move aimed at curbing insider trading and improving compliance in the banking sector, the Securities and Exchange Board of India (SEBI) is planning to introduce a crash course for top executives of listed banks, including MDs, CEOs, compliance officers, and even independent directors.

The goal of this initiative is to sensitise senior leadership about handling price sensitive information, which they regularly access and could potentially be misused. A regulatory source close to the development shared, “It’s not always about intent—sometimes, there’s a lack of awareness around what qualifies as price sensitive information.” The first training session is expected to roll out as early as June, the source added.

Why is SEBI doing this?

The idea was reportedly triggered by recent and past incidents involving potential misuse of insider information. Bank executives often have early access not only to their own institutions’ confidential data but also to third-party sensitive information. This includes details about major loan sanctions, debt repayments, settlements, and developments related to the Committee of Creditors (CoC) during insolvency processes.

This kind of information, if leaked or used prematurely, could have a direct impact on share prices. According to one source, “There have been instances where stock prices of financial companies—including banks—moved sharply just before regulatory announcements were made public.”

Awareness Before Action

Instead of jumping straight into enforcement, SEBI has opted for an educational route first. The regulator received market feedback suggesting a need for stricter surveillance of listed financial companies, but decided to initiate a proactive awareness program before resorting to harsher measures.

A source further mentioned, “Most banks already have internal policies regarding insider information. However, the crash course is expected to highlight any gaps and ensure better implementation.”

What’s Next?

The success of this program will likely shape SEBI’s future course of action. If awareness and sensitisation don’t reduce insider trading risks, stricter surveillance and other regulatory tools may follow. This crash course reflects a growing emphasis on corporate governance and ethical conduct, especially in sectors like banking, where information is power—and a potential risk.