Financial regulators in India have had a lot to chew on the past year. First, there was the financial crisis that prompted concerns about regulatory oversight. Then came the Satyam fraud that forced a rethink on corporate governance. All this has made it imperative for our regulators to achieve the right balance between promoting transparency, but not overreaching.

We hope the Securities and Exchange Board of India (Sebi) can walk such a tightrope if it enacts the recommendations of its committee on disclosures and accounting standards, announced on Monday. Among other suggestions, listed firms would now publish their audited balance sheets twice a year, instead of just once.

Illustration: Jayachandran / Mint

So far, Sebi has walked this tightrope well. In January, company promoters were required to disclose shares pledged as collateral for loans—addressing concerns that a lender could liquidate that stock and drive down share prices, without investors knowing what hit them. But Sebi thankfully hasn’t gone down the US path post-Enron, when the stringent Sarbanes-Oxley legislation proved too expensive for companies.

Transparency is a winner in the committee’s recommendations this week. Quarterly results obfuscate, say, a firm’s cash flow or debt. For instance, thanks to the suspension of Accounting Standard 11 in March, losses through foreign currency liabilities are only shown in annual balance sheets.

But transparency isn’t a free lunch. Though not of the Sarbanes-Oxley scale, companies will still have to spend more time and money with accountants. Larger firms may manage fine—they can afford auditing services and better technology that eases information flow. But what of smaller ones? Sebi has to balance these considerations.

What’s more, transparency isn’t a magic bullet either. Thanks to its New York listing, Satyam disclosed detailed financial information every quarter. That didn’t prevent B. Ramalinga Raju from siphoning off crores.

This is where the idea of checks comes in. Rotating partners in the audit firm periodically, as the committee recommends, may help. As can better enforcement and investigation, something that already looks promising at Sebi. After the Satyam saga, Sebi has detected fraud in at least two cases. Sebi chairman C.B. Bhave, in a July interview with Mint, took note of the improvement in investigation, attributing it to better personnel.

It’s certainly preferable to err towards transparency. But it’s also worth remembering that averting Satyams and putting Bernie Madoffs behind bars can take much more.

How should Sebi ensure transparency without overreaching? Tell us at