Celebrity endorsements have become a common way for companies to grab attention and build trust with customers. From mobile phones to insurance plans, familiar faces are often used to promote brands. Now, the Securities and Exchange Board of India (Sebi) is considering allowing a similar approach in the securities market, but with important safeguards in place.
In a consultation paper released on Tuesday, Sebi proposed a Common Advertisement Code (CAC) for market intermediaries. The proposal would allow celebrities to endorse financial firms at the brand level, while preventing them from promoting specific investment products or services.
Sebi’s proposed CAC aims to replace the current system where different categories of regulated entities follow separate advertising rules.
The proposed framework would apply to stock brokers, depository participants, investment advisers, research analysts, portfolio managers, online bond platform providers and mutual funds, among others.
According to Sebi, a common code can help bring consistency to advertising practices across the securities market while strengthening investor protection.
Sebi noted that celebrity endorsements are widely used across industries and have become an accepted tool for brand-building.
The regulator said a complete ban on celebrity endorsements may no longer be practical. Allowing regulated entities to use celebrities for promoting their company or brand name could help improve visibility, build trust and support financial inclusion.
However, the regulator has proposed clear limits on how celebrities can be used in financial advertising.
Under the proposal, celebrities would be allowed to endorse a financial firm’s brand or company name, subject to prescribed conditions, disclaimers and prior approvals.
“It is proposed to permit all specified regulated entities to engage celebrities for promotion of their brand/entity name subject to certain prescribed conditions and appropriate disclaimers,” mentioned Sebi.
However, they would not be allowed to endorse individual products or services.
“While a brand endorsement merely reflects a general association with the entity, endorsement of a particular product or service may unduly influence investors’decisions by creating perceptions regarding its suitability or expected outcomes,” it added.
The regulator said restricting celebrities from promoting specific investment products would help prevent undue influence on investor decisions.
The proposal comes at a time when retail participation in India’s capital markets has increased significantly. Millions of investors now receive financial information through digital platforms, social media content and influencer-led campaigns.
Commenting on the proposal, Jyoti Prakash Gadia, Managing Director of Resurgent India Limited, said the move was both timely and necessary.
“The uniform Sebi code proposed for advertisements across securities market intermediaries is quite a necessary step, especially at a time when retail participation has increased and digital investing platforms and financial influencers have continuously expanded the reach of market communication,” he said.
According to Gadia, the challenge today is not a lack of information but ensuring that information is presented with transparency, clarity and balance.
Gadia said a structured advertising framework could help address several concerns that have emerged in financial marketing.
“A well-structured advertising framework will help reduce exaggerated claims, selective performance highlighting, misleading return projections and insufficient risk disclosures,” he said.
He added that entities such as brokers, mutual funds, investment advisers, research analysts and online bond platforms may now need to move away from aggressive customer-acquisition campaigns and focus more on responsible communication.
According to him, suitability-related disclosures and unbiased information should become a bigger part of financial advertisements. He added that clear disclosures relating to risks, fees, conflicts of interest, product limitations and past performance could help strengthen trust across the financial ecosystem.
In other words, Sebi’s proposal reflects an attempt to modernise financial advertising while protecting investors from potentially misleading promotional practices. By allowing celebrities to promote financial brands but not specific investment products, the regulator is seeking a middle path between effective marketing and investor safety.