R egulatory framework_of_fin._servcs in india

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R egulatory framework_of_fin._servcs in india

  1. 1. Regulatory Agencies  RESERVE BANK OF INDIA  SEBI  FORWARDS MARKETS COMMISSION  INSURANCE REGULATORY DEVELOPMENT AUTHORITY  PENSION FUND REGULATORY & DEVELOPMENT AUTHORITY
  2. 2. Regulatory framework Broad classification of the regulatory framework relating to financial service sector in India is as: 1. Institutional regulations: Also known as structural regulations which call for a clear demarcation of activities of Financial institutions. Apex agencies like SEBI to regulate the MB, Stock Broking Co. and RBI another structural entity prescribing the activities of commercial banking. 2. Prudential regulations: Related to internal management of financial institutions and other financial services org, regarding capital adequacy, liquidity and solvency etc. Aims at preventing the entry of firms without adequate resources. (ex. Minimum net worth requirement for various financial service firms is fixed by the SEBI and RBI`s regulations relating to the NBFC`s)
  3. 3. Regulatory framework 3. Investors regulations: The role of SEBI is highlighted with periodic guidelines on investor protection. 4. Legislative Regulations: Brought out by Govt. for all round development of financial services industry. They are, Banking Regulation Act, Securities Contract Regulation Act, meant for evolving rules, guidelines and regulations that govern the micro aspect and operational issues. 5. Self-regulations: This is addition to the above regulations that are self imposed regulations such as, Foreign Exchange Dealers association, and Merchant Bankers association in addition to SEBI regulation that governs their members.
  4. 4. Reserve Bank of India: Central Board for Financial supervision  Objective Primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies.
  5. 5. Functions Some of the initiatives taken by BFS include:  restructuring of the system of bank inspections  introduction of off-site surveillance,  strengthening of the role of statutory auditors and  strengthening of the internal defences of supervised institutions.
  6. 6. Framework for Banking and Financial services  Regulated by the central government and RBI.  RBI through RBI ACT and the Banking regulation Act ensure the orderly functioning of the institutions.  Regulations relating to banking institutions are about sanction of new branch, minimum capital, reserves, maintenance of minimum capital reserves and other liquid assets.  Appointment of Chairman, CEO, and nominating of member to BOD.  Drawing and implementing the monetary and credit policies to effectively regulate the credit flows, CRR, SLR, and REPOS.  Implementing various credit control measures (qualitative and quantitative)  Regulating factoring, bill discounting and credit card services, etc.
  7. 7. Regulations relating to the non-banking financial companies (NBFC`s)  Regulated by RBI thru a host of measures such as Banking Laws Act, 1963, powers of regulation are exercised by RBI under the directives such as the NBFC`s Directions, 1997, 1987,etc.  The regulation of NBFC`s is in relation to reports, periodical statements for the functioning.  Prescribing eligibility to raise funds from the public its terms and conditions.  Norms related to investing a % of the deposits in the approved securities and maintain funds, capital adequacy norms, accounting standards, formulation of policy in relation to deployment of funds.  Punishing the NBFC`s by imposing penalties, canceling the license or registration, and initiating appropriate actions against the management of NBFC`s.
  8. 8. SEBI - Functions and responsibilities The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto". SEBI has to be responsive to the needs of three groups, which constitute the market:  the issuers of securities  the investors  the market intermediaries.
  9. 9. Powers  To approve by−laws of stock exchanges  To require the stock exchange to amend their by−laws.  Inspect the books of accounts and call for periodical returns from recognized stock exchanges.  Inspect the books of accounts of a financial intermediaries.  Compel certain companies to list their shares in one or more stock exchanges.  Registration of brokers.
  10. 10. Forward Markets Commission (India)  The Forward Markets Commission (FMC) is the chief regulator of Forwards and futures markets in India.  It is headquartered in Mumbai and this financial regulatory agency is overseen by the Ministry of Finance.
  11. 11. Functions & Responsibilities  To advise the Central Government in any matter arising out of the administration of the Forward Contracts (Regulation) Act 1952.  To keep forward markets under observation and to take such action in relation to them.  To collect and whenever the Commission thinks it necessary, to publish information regarding the trading conditions.  To make recommendations generally with a view to improving the organization and working of forward markets;  To undertake the inspection of the accounts and other documents of any recognized association.
  12. 12. IRDA Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..  Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, -  issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;  protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;  specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents
  13. 13.  specifying the code of conduct for surveyors and loss assessors;  promoting efficiency in the conduct of insurance business;  promoting and regulating professional organizations connected with the insurance and re-insurance business;  levying fees and other charges for carrying out the purposes of this Act;  calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries
  14. 14.  control and regulation of the rates, advantages, terms and conditions that may be offered by insurers  specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;  Regulating investment of funds by insurance companies;  regulating maintenance of margin of solvency;  adjudication of disputes between insurers and intermediaries or insurance intermediaries;  supervising the functioning of the Tariff Advisory Committee;  exercising such other powers as may be prescribed
  15. 15. PFRDA  Pension Fund Regulatory and Development Authority was established by the Government of India on 23rd August 2003 to promote old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers to schemes of pension funds and for matters connected therewith or incidental thereto.
  16. 16. THANK YOU

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