The Securities and Exchange Board of India (Sebi) is significantly enhancing its market oversight by expanding artificial intelligence (AI)-based surveillance to corporate filings, aiming to proactively detect financial misstatements and manipulation in quarterly results.
Photograph: Francis Mascarenhas/Reuters
Key Points
- Sebi plans to extend its AI-based surveillance from trading data to corporate filings to identify financial misstatements and manipulation in quarterly results.
- The market watchdog has developed a dedicated team and an AI model to fill the gap in corporate investigations, which have historically been complaint-driven.
- Existing AI tools deployed by Sebi include R(AI)DAR for reviewing misleading advertisements and Project Sudarsan for real-time fraud detection across social media.
- Sebi’s in-house application, InfoMerge, automates investigation activities, including data acquisition, analysis, and report generation, significantly reducing processing time for cases like insider trading.
- The regulator also uses Cyber-Sec Audit Compliance (C-SAC), an AI-enabled platform, to automate cybersecurity audits of regulated entities.
The Securities and Exchange Board of India (Sebi) is planning to extend artificial intelligence (AI)-based surveillance from trading data to corporate filings, a dedicated AI model akin to its existing trading-surveillance tool.
This would help flag financial misstatements and manipulation in quarterly results without waiting for investor complaints.
Enhancing Corporate Investigations
While the regulator’s internally developed AI models generate alerts based on which the bulk of enforcement action in trading-related violations are taken, corporate investigations remain largely complaint-driven.
The market watchdog has developed a team dedicated to fill this gap and work on the AI-model, Sebi whole-time member Kamlesh Chandra Varshney indicated at a recent conference on capital markets organised by the Federation of Indian Chambers of Commerce & Industry (Ficci).
With the tools, the regulator will be able to track quarterly results and identify violations such as manipulations in financial statements — without waiting for complaints, he added.
Regulatory experts said the Sebi’s pivot towards AI has helped in taking prompt action.
Existing AI Deployments and Future Plans
These plans on AI-based tighter surveillance and alerts build on tools Sebi has already deployed — from fast tracking approvals for initial public offerings (IPOs) and foreign portfolio investor (FPI) registrations to alerts on misleading social media content.
They also include AI-driven review of advertisements of asset management companies (AMCs).
The regulator also plans to extend its AI-driven review of advertisements beyond AMCs and expanding its outreach with Meta and Google to flag mis-selling and fraudulent content.
Internal Technological Advancements
Apart from these tools, Sebi also adopted an in-house application called InfoMerge for the investigation department.
The portal automates multiple investigation activities, such as data acquisitions, analysis, and report generation to reduce the processing time for the case.
According to the regulator’s latest annual report, this system is being used to examine cases of violations of the Prohibition of Insider Trading (PIT) Regulations and Prohibition of fraudulent and unfair trade practices (PFUTP) Regulation.
During the year, it was enhanced to analyse KYC and trade-log datasets to spot suspicious patterns, generate AI-written summary reports, visualise suspect connections, and auto-generate summons and case notes — cutting processing time significantly.
Among other key technology adoptions was a Cloud-based platform for exchanging data and alerts on inspection with brokers and depository participants for faster corrective actions.
Specialised AI Tools
Last year, the market watchdog also deployed tools such as Regulatory (AI) Driven Advertisement Reviewer called R(AI)DAR and Project Sudarsan — both AI-powered tools.
While R(AI)DAR is utilised for reviewing advertisements for misleading claims, Sudarsan is for fraud-detection and scanning videos and content across social media.
It has identified over 20,000 instances of fraudulent content in real time.
Further, the regulator also has an AI-enabled platform Cyber-Sec Audit Compliance (C-SAC) which automates cybersecurity audits of regulated entities.
It had processed reports for eight market infrastructure institutions and 23 mutual funds in 2025-26.
