Archive · 24 Sep 2026
SEBI Revamps Settlement Rules With Formula and Fast-Track Access
SEBI has approved new rules for settling securities-law cases.
The rules replace the framework introduced in 2018.
A formula will help calculate the main settlement amount.
It starts with the minimum penalty and adjusts the amount for details such as the seriousness of the violation and how far the case has progressed.
Money gained wrongly or losses caused to investors will be recovered separately.
Entities will have 60 days after a settlement notice and 90 days after a show-cause notice to apply.
Smaller specified cases with settlement amounts up to ₹10 lakh may use a faster process.
Some older cases will have one special 90-day chance to apply, usually with an extra 20% payment.
The rules will begin the day after 30 days have passed since notification.
SEBI approved regulations replacing the 2018 settlement framework, effective the day after 30 days from notification.
Settlement amounts will use a formula based on the minimum prescribed penalty, applicant type, case stage, gravity and other factors.
Wrongful gains, avoided losses and investor losses will be disgorged separately rather than included in the base settlement amount.
Applicants will receive 60 days after a settlement notice and 90 days after a show-cause notice to seek settlement.
The rules add a fast-track route, a one-time 90-day reopening window and settlement options for specified financial misstatement and fund-diversion cases.
- Who
- The Securities and Exchange Board of India (SEBI) and entities involved in securities-law proceedings.
- What
- SEBI approved revised settlement regulations introducing a formula-based settlement amount, separate disgorgement and expanded settlement access.
- When
- Approved on Thursday and published on September 24, 2026; the regulations take effect the day after 30 days from notification.
- Where
- Within SEBI’s securities-law enforcement and settlement proceedings.
- Why
- To replace the 2018 framework, standardize settlement calculations, reduce double counting and expand routes for resolving eligible cases.
Speed, Access and Efficient Resolution
Transparency, Accountability and Deterrence
Expanding settlement access
Speed, Access and Efficient Resolution
The revised deadlines, fast-track route and one-time reopening window could make settlement more efficient and reduce litigation. Makarand M. Joshi described the shift toward settlement as a welcome move toward trust-based governance.
Transparency, Accountability and Deterrence
Broader access should not weaken scrutiny of serious cases, particularly those involving financial misstatement, diversion of funds or fraud.
Handling serious violations
Speed, Access and Efficient Resolution
Allowing specified financial-misstatement and fund-diversion cases to be settled could enable faster remediation when paired with disclosures and recovery of diverted funds.
Transparency, Accountability and Deterrence
Experts called for transparency, public accountability and strong market-wide deterrence so faster settlements do not reduce consequences for serious misconduct.
- Regulator
- Securities and Exchange Board of India (SEBI)
- Previous framework
- 2018 settlement regulations
- Settlement formula
- Settlement Amount = Base Amount × (S + R + G + A - M) + Legal Costs
- Base amount
- Linked to the minimum penalty prescribed for the violation, with multipliers based partly on applicant type
- Application deadlines
- 60 days after a settlement notice; 90 days after service of a show-cause notice
- Fast-track threshold
- Settlement amount of no more than ₹10 lakh in specified cases, including certain disclosure violations
- Reopening facility
- One-time 90-day window for specified pending proceedings, with an additional 20% settlement amount
- Disgorgement interest
- Generally 9% annually in specified periods; 12% may apply after a final order in other matters until the application is filed
