NFRA Chief Gupta Sidesteps Rajesh Exports Probe Comments, Says Process Systematic

NFRA chief declines comment on Rajesh Exports' SEBI submission, says probe process is systematic

Mumbai, July 7

Speaking to reporters on the sidelines of the Federation of Indian Chambers of Commerce & Industry's (FICCI) 2nd National Conference on Agile Governance: Navigating AI & Regulatory Landscape, Gupta refrained from commenting on ongoing regulatory proceedings.

When asked about Rajesh Exports' claim that it had submitted a substantial volume of records to SEBI, Gupta said, "I don't know what he has given to SEBI, I can't comment on that."

Responding to questions on the progress of other ongoing investigations, including the accounting issues at IndusInd Bank, Gupta said the review process is being carried out systematically and declined to share observations or timelines.

"Observations I can't say anything because it's not with me, it is with the team which is doing that," he said.

Explaining the nature of such investigations, Gupta said, "It's not one year, there are multiple years involved, multiple auditors are involved, so it's not a thing where you put an X and it is done. It has to be done in a systematic manner, and we are doing that."

On recommendations submitted to the Ministry of Corporate Affairs (MCA) regarding revisions to auditing standards, Gupta said the proposals had already been placed in the public domain.

"It's on our website that it was done, I believe, in November or December 2024. It's a long time back," he said.

Gupta said regulators primarily focus on strengthening systemic safeguards after an event has occurred.

"Any regulator has to work when the event has already occurred--happened. So, we can put guardrails to check it, and that's the way things move," he said.

He added that regulatory action would be taken wherever wrongdoing is established.

"Whatever is within the regulatory remit, whatever one can do... so, the actions will be taken against the culprit or whatever misdoings are there, wrongdoings are there," Gupta said.

Earlier, addressing the FICCI conference, Gupta outlined five key dimensions of governance in an AI-driven regulatory environment.

He said rapid advances in artificial intelligence (AI), Large Language Models (LLMs), and data analytics are reshaping corporate governance, shifting the focus from traditional compliance frameworks to algorithm-driven decision-making.

"The velocity of change is extraordinary and we have to embrace it and we have to work in it," he said.

Highlighting both the opportunities and risks posed by AI, Gupta said technology enables analysis of complete datasets instead of limited samples but also increases the risk of reduced human scrutiny.

"Promise and risk travel together and maybe that is travelling faster than the promise," he said, adding that automated systems can compress "days of professional skepticism into a single click of 'accept'."

He also cautioned against the "illusion of correctness" created by AI-generated outputs, saying polished responses should not replace critical evaluation.

"Fluency can be mistaken for correctness," Gupta said, adding that effective human oversight depends on explainable outputs and robust system controls.

— ANI