PaRRVA explained: Sebi's verification tool to check performance claims

SEBI launches PaRRVA App: Verified past returns to help investors cut through noise and make clearer choices

The market regulator has launched a new risk and return verification agency to curb mis-selling of investment products, noting many people have adequate understanding of the securities market.

 

Past Risk and Return Verification Agency (PaRRVA) is the country’s first to independently validate performance claims made by regulated intermediaries and unregistered finfluencers, according to the Securities and Exchange Board of India (Sebi). It will counter exaggerated promises of returns and give retail investors a credible source of comparable performance data.

 

Sebi’s latest investor behaviour findings underline why a verification framework was necessary:

 

• Only 36 per cent of investors report having adequate understanding of the securities market.

• About 62 per cent rely on finfluencer or peer recommendations.

• Nearly 23 per cent of first-time investors are driven by the lure of quick gains.

 

Meanwhile, registered entities such as investment advisers (IAs), research analysts (RAs) and algorithmic brokers face restrictions on referring to past performance unless it is formally certified. This created an uneven field where genuine players struggled to showcase their track record, while unregulated advisers promoted unverified or inflated numbers with ease.

 

How PaRRVA App works

The system uses a two-part structure:

 

• A Sebi-registered credit rating agency (CRA) functions as the PaRRVA verification body.

• A recognised stock exchange operates the PaRRVA Data Centre (PDC).

 

Both entities jointly examine historical performance using a standardised methodology. Intermediaries cannot cherry-pick favourable time periods, and disclosures must follow uniform reporting windows. An Oversight Committee supervises the entire framework, ensuring adherence to methodology and data privacy norms.

 

How investors can use PaRRVA App

Sebi intends PaRRVA to become a simple, accessible reference point for investors evaluating regulated service providers. Once fully operational, investors will be able to:

 

• View verified past performance of IAs, RAs and eligible stockbrokers in a single, comparable format.

• Assess returns over common time frames instead of relying on selectively presented results.

• Check disclaimers and risk metrics alongside performance numbers for clearer decision-making.

 

Sebi has stated that intermediaries cannot selectively display only high-performing periods, ensuring that what investors see is a fair representation of long-term performance. As the ecosystem evolves, PaRRVA data is expected to be integrated into intermediaries’ disclosures and potentially through exchange-led interfaces.

 

What it means for the market

 

For investors, PaRRVA brings credible, audited performance data that reduces dependency on unverifiable online claims. For regulated entities, it creates a level playing field by allowing genuine performers to demonstrate their track record. For Sebi, the tool strengthens surveillance, reduces mis-selling risks, and promotes more responsible investing behaviour.