National Financial Reporting Authority (NFRA) Chairperson Nitin Gupta on Tuesday declined to comment on claims made by Rajesh Exports regarding the submission of records to market regulator SEBI, stating that the matter falls within SEBI's jurisdiction. Speaking to reporters on the sidelines of FICCI's 2nd National Conference on Agile Governance: Navigating AI & Regulatory Landscape in Mumbai, Gupta refrained from discussing ongoing regulatory proceedings.
Gupta Refuses to Comment on Rajesh Exports' Submissions
When asked about Rajesh Exports' assertion 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." He emphasized that the review process for ongoing investigations, including accounting issues at IndusInd Bank, is being carried out systematically but 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 explained.
Systematic Investigation Process for Multiple Years and Auditors
Gupta elaborated on the nature of such investigations, stating, "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." He noted that the complexity of the cases requires thorough examination across multiple periods and entities.
Recommendations on Auditing Standards Already Public
Regarding recommendations submitted to the Ministry of Corporate Affairs (MCA) on revisions to auditing standards, Gupta confirmed that the proposals had 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, indicating that the process of updating standards is ongoing.
Regulators Focus on Systemic Safeguards After Events
Gupta explained that regulators primarily work after an event has occurred to strengthen systemic safeguards. "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 will 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 asserted.
Five Key Dimensions of AI Governance
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 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.
Opportunities and Risks of AI in Regulation
Highlighting both 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 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, emphasizing that effective human oversight depends on explainable outputs and robust system controls.
