RESERVE BANK OF INDIA
FORWARDS MARKETS COMMISSION
INSURANCE REGULATORY DEVELOPMENT
PENSION FUND REGULATORY & DEVELOPMENT
Broad classification of the regulatory framework relating to financial service sector
in India is as:
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.
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
Investors regulations: The role of SEBI is highlighted with periodic
guidelines on investor protection.
Legislative Regulations: Brought out by Govt. for all round
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
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.
Reserve Bank of India:
Central Board for Financial supervision
Primary objective of BFS is to undertake consolidated
supervision of the financial sector comprising commercial
banks, financial institutions and non-banking finance
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
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.
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
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.
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 market intermediaries.
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
Registration of brokers.
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.
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
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
specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents
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
calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of the insurers,
intermediaries, insurance intermediaries
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
supervising the functioning of the Tariff Advisory Committee;
exercising such other powers as may be prescribed
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.