Regulatory capture
Topic: Statutory, Regulatory and Quasi-judicial Bodies · NCERT: Beyond NCERT
Meaning
Regulatory capture happens when a regulator ends up serving the industry it is supposed to control instead of the public. This can happen through "revolving doors", where people move back and forth between jobs in the regulator and jobs in the industry. It can also happen when the regulator depends on data supplied by the industry itself. It matters because a captured regulator looks independent but protects the companies, not the citizens. It is a key point in the debate on independent regulators in India.
Example
In 2024 there were conflict-of-interest allegations against a chair of the Securities and Exchange Board of India (SEBI). Critics pointed to them as a possible case of capture in the securities market. Whether the charges were true is still disputed.
Don't confuse with
- Executive control of a regulator: here the government weakens the regulator, for example through ministry control of appointments or funds. In capture, it is the regulated industry that bends the regulator.
Related concepts
- Regulatory body
- Securities and Exchange Board of India
- Telecom Regulatory Authority of India
- Competition Commission of India
- Insurance Regulatory and Development Authority of India
- Pension Fund Regulatory and Development Authority
- Central Electricity Regulatory Commission