The Indian market regulators consists of the following entites.
What is the role of the Indian market Regulators?
The Indian market regulators creates a fair, impratial and transparent playing field for all participants. Firstly, if we look at the markets there are three components of any market. They are buyer, seller and regulator.
SEBI – Securities and Exchange board of India
Firstly, SEBI is the name we often hear on the news channels in India. Secondly, SEBI regulates the market through the Securities, Contracts Regulation act of 1956. Securities includes – shares both listed and unlisted, bonds, debentures, commercial papers etc. The purpose of SEBI is to
- Offers investor protection
- Establishing quality institutions
- Create a mechanism of redressal – SCORES
SEBI was established via the Securities and Exchange Board of India Act 1992
Reserve Bank of India RBI
The Reserve Bank of India is the apex central bank of the country. In order to operate in India any bank has to take the permission from the Reserve Bank of India. There following are the functions of Reserve Bank of India or RBI
- Granting of Banking Licenses
- Issuer of government securities
- Issuer of Currency notes in India
- Banker to the government of India
- Issuing Monetary policy
- Lender to central and state government
There are many functions that are undertaken by RBI but our focus is only on those that are relevant. Firstly, a person cannot participate in the market without having a bank account. Secondly, a pan card issued by NSDL is necessary for depository account opening in India. Therefore we can conclude that every action of RBI affects the stock markets.
Ministry of Finance
The Ministry of Finance – Government of India regulates the Indian markets through the Department of Economic Affairs. However the Ministry does not play an active role in dealing with the regulations pertaining to securities in the market. Much of this power is bestowed in the hands of SEBI.
Sector Specific Indian Market Regulators
There are many sector specific regulators in the securities markets.
- IRDAI – Insurance Regulatory Development Authority of India
- PFRDA – Pension Fund Regulatory Development Authority of India
- AMFI – Association of Mutual funds of India
- CDSCO – Central Drugs Standard Control Organisation
- DGCA – Directorate General of Civil Aviation
and so on for every sector there is a regulator in India. There is no central clearances and therefore India ranks low in the ease of doing business.
Ministry of Corporate Affairs
Firstly, the Ministry of Corporate Affairs has nothing to do with markets but then if we observe closely it has everything to do with markets. The formation of companies is governed by the companies act of 2013. Secondly, companies are the essence of markets. Therefore the MCA is also an important ministry in deciding the category, definitions and domain of fuctions of a company in India.
- Financial Planner