Management of Financial Services

Financial Regulation

Regulatory Bodies
Department of Economic Affairs
Department of Company Affairs
Capital/Securities Markets - SEBI
Banking RBI

SEBI

The Constitution of the SEBI is laid down in the Act

The Securities and Exchange Board of India has as its objectives

Protect the interest of the investor

Promote the development of securities market

Regulating the securities market

Powers and Functions of SEBI

Regulate business in stock and securities markets

Register/regulate the workings of brokers, sub-brokers, Share Transfer agents, merchant bankers
etc
Register/regulate the workings of investment schemes including MFs
Prohibit fraudulent and unfair trade practices in securities markets
Promote investor education and trading in securities
Prohibit insider trading in securities
Calls for information, inspect, conduct inquiries, audit of stock exchanges etc
SEBI has the power to
o Register and regulate all market intermediaries
o Penalise them in case of violations of the act, rules and regulations
SEBI conducts enquiries, audit and inspection of all intermediaries and adjudicate offences under
the act

Market Intermediaries

The intermediaries registered with the SEBI include

o Stock exchanges
o Brokers and sub-brokers
o Registrars and Share Transfer Agents
o Bankers to an Issue, Merchant Bankers
o Underwriters
o Depositories and DP
o Rating Agencies
o FIIs, MFs, Venture Capital Funds etc
The inspection of MFs is carried out by independent CA firms
SEBI issues warnings and deficiency letters to MFs based on the inspection letters

Investor Protection Measures

SEBI issues fortnightly press release giving names of AMCs against whom maximum complains
have been registered
It frames regulations for collective investment schemes
The allotment process is supervised by a SEBI official

Investor Education
A quick Reference Guide for Investors
Issues ads and public notices to caution investor regarding the risks with collective investment
schemes
Broadcast messages on popular TV Channels
Investor Grievance Redressal

Assists investors who prefer to make complaints against listed companies

Follow up with companies by SEBI
Errant companies warned of action for failure to address investor grievances
Ombudsman set up to redress grievances of investors against intermediaries/listed Cos. by
mutual agreement or by award of adjudication

Established by legislation in 1934

Nationalised in 1949
Fully owned by the Government of India
Is the central bank/monetary authority of the country

RBI

Objectives

To secure monetary stability within the country

To operate the currency and credit system to the advantage of the country
Price stability
Ensure credit availability to finance economic activity for the countrys benefit

Main Functions

To formulate, implement and monitor the monetary policy

To prescribe broad parameters of banking operations within which the countrys banking and
financial system functions
To facilitate external trade and payment and promote orderly development and maintenance of
the foreign exchange market in India
To issue and exchange or destroy currency and coins not fit for circulation
To perform a wide range of promotional functions to support national objectives
To perform merchant banking functions for the central and state governments
To maintain banking accounts of all scheduled banks

Role of the RBI

Monetary Authority of the Country

Regulator and Supervisor of the Financial System
Banker to the Government

Manager of Exchange Control

Issuer of Currency
Developmental Role
Banker to Banks
The RBI is entrusted with the management of foreign exchange reserves which include gold
holding also.
The RBI is entrusted with the responsibility of issuing currency and distributing coins