SEBI Chief Urges Independent Directors to Prioritize Accountability Over Compliance

Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey stated on April 6, 2026, that the responsibility for maintaining corporate governance standards and ensuring transparent disclosures rests primarily with company management and independent directors.

Speaking at the CII 19th Corporate Governance Summit in Mumbai, Pandey noted that while existing regulations provide the necessary structure, the actual quality of governance is determined by the diligence and capability of those overseeing the process. He emphasized that the trust of customers and shareholders fluctuates based on how a company manages its internal insights and risk management.

Pandey argued that the role of independent directors must evolve beyond mere compliance. He stated that these directors are not present simply for compliance purposes or for pointing fingers at management, but are instead tasked with supporting the organization and finding solutions to accountability.

The Sebi chief described corporate governance as the nervous system of an organisation and highlighted the critical responsibility of independent directors in protecting the interests of minority shareholders. He noted that the role is complex because directors are often held accountable for decisions without having full operational visibility.

Context of Governance Concerns

These comments follow the March 2026 resignation of Atanu Chakraborty, the part-time chairman of HDFC Bank. In his resignation, Chakraborty stated that certain practices and happenings within the bank observed over the previous two years were not in congruence with his personal values and ethics.

In the aftermath of that resignation, Pandey urged independent directors to exercise greater responsibility. On April 6, 2026, he reiterated that independent directors have a vital duty to oversee financials, risk management, and compliance, and that the board must engage in constructive discussions whenever management needs to explain specific developments.

Redefining the Role of Independent Directors

Pandey has previously advocated for a fundamental shift in how independent directors are perceived. On August 9, 2025, during the Annual Directors’ Conclave, he called for these individuals to be treated as stewards of accountability rather than honorary appointees or friendly critics.

To achieve this transformation, Pandey suggested several key areas of improvement for board composition and operation:

• Cognitive Diversity: Incorporating talent from varied sectors, younger professionals, and regional voices to avoid boards that are too aligned.
• Constructive Dissent: Encouraging divergent views rooted in purpose and mutual respect to test assumptions and enable deeper decision-making.
• Technical Proficiency: Ensuring directors are well-versed in emerging risks, including cyber threats, ESG disclosures, and AI governance.
• Continuous Learning: Moving away from one-time inductions toward ongoing orientation.

Pandey remarked on the necessity of disagreement within the boardroom, stating:

A board that never disagrees is not aligned – it’s asleep. Divergent views, when rooted in purpose and mutual respect, strengthen the board. They test assumptions, lead to deeper discussions, and enable constructive decision-making

Tuhin Kanta Pandey

Focus on Capacity Building

The Sebi chief has flagged gaps in the effectiveness of current governance and urged independent directors to move toward long-term value creation. As part of this effort, Sebi plans to focus on capacity building for independent directors to ensure they can contribute effectively once appointed to a board.

Pandey emphasized that boards should prioritize real-time insights and proactively address emerging risks, shifting the organizational culture from one of simple compliance to one of integrity and long-term stakeholder trust.