Valuation practices under regulatory lens such as Sebi -flags worry | Einsmark news

The entire member of the Securities and Exchange Board of India, Ananth Narayan, raised a red flag around valuation practices on Friday, calling on India’s financial officers (financial officers) to form a more transparent and accountable regulatory framework. Narayan addressed the CFO at the eNCFO conference and emphasized the need for greater transparency, accountability and disclosure standards in the valuation of company assets and investments. “Let me flag one area that needs your attention – appreciation,” Narayan said in his speech at the conference. “There are some challenges around valuations such as those that previously faced credit ratings.” Concerns to quoting the most important problems, including a perceived conflict of interest – appreciated and paid by the entities whose assets they value and the risk of valuation shopping along with wide divergence in valuations due to different assumptions – often with minimal disclosure and lack of liability – especially as valuations. “Just as credit rating agencies (Cras) are now revealed and held to standards, it is perhaps time for valuers to disclose assumptions, sensitivity series and records and hold accountable for the ominous disorders,” Narayan added. The warning comes as India’s capital formation landscape scale new highlights. Narayan mentions that in FY25 a listed companies collected a record of £ 4.3 trillion in equity capital, while mutual funds mobilized more than £ 6 trillion in equity-oriented funds. Alternative Investment Funds (AIFs) reached £ 13.5 trillion commitments and deployed £ 1.3 trillion in the year alone. “Our security market ecosystem has grown dramatically – from 4.2 crore unique investors in March 2020 to 13 crore today,” Narayan said. Yet he warned against complacency and emphasized the need to guard against two types of regulatory failures – government errors, technical crashes, fraud, manipulation (type I errors) and – an extraordinary regulation of innovation or growth (type II errors). Narayan called on CFOs to embrace their developing roles as value architects. If they report on financial statements, it is not a routine formality, but a solemn promise that what is offered is a true and fair view of the financial health of the business. He also marked prior violations of trust with funds raised from listed entities, sharp accounting practices – especially around valuations and cases of insider trading, which led SEBI to tighten disclosure norms and rules around related party transactions and verification of rumors. “Regulation cannot be a one -way street,” he stressed. “Over-regulation can hinder sincere capital formation with Type II errors. We need your CFOs (and auditors) -Tom to be active partners in co-creating fair, balanced rules. To ensure optimal regulation.” He encouraged CFOs to organize for formal participation in Sebi’s public consultations and regulatory forums and offered two practical proposals for trust-building-the time running between annual results and full reports, and deeper, annual involvement in audit committees and auditors. “Our shared goal is clear: to create a regulatory framework that is optimal, robust, respond and possible,” Narayan concluded. “Confidence is the basis. Capital formation is the engine. Regulation is the handrail. And you, the CFO, are at the wheel.”