2. Problems in Indian Capital
Markets before 1992
Multiplicity of administration
Poor disclosure in prospectus
Investors faced problems of delays (Refund,
Transfers etc.)
No concept of capital adequacy
No inspections of stock exchanges undertaken
3. Problems in Indian Capital
Markets before 1992
Stock Exchanges management dominated by
brokers
Poor disclosures by Mutual Funds (NAV not
published, No valuation Norms)
No prohibition of insider trading, or fraudulent
and unfair trade practices.
Primary markets not in the main stream of the
financial systems
5. Reforms in Indian Capital Market
Companies free to raise funds from securities
markets after filing prospectus with SEBI
SEBI introduces regulation for primary & other
secondary market intermediaries
Listed Co’s to furnish annual statement to the
exchanges
Book Building introduced for institutional
investors
SEBI introduces regulations governing
substantial acquisition of shares and takeovers.
6. Reforms in Indian Capital Market
NSE establishment as a stock exchange with
national wide electronic trading
BSE introduces screen based trading
Capital adequacy requirement for brokers
System of mark to market margins introduced
Stock Lending schemes introduced
NSCCL setup by NSE
7. Reforms in Indian Capital Market
SEBI strengthen surveillance mechanisms and
have a separate surveillance departments with
all stock exchanges
Depositories act introduces for Electronic
transfer of shares.
Permission to access in international capital
markets by Indian companies through Euro
issues
FDI allowed in stock broking ,AMC’s,
Merchant Bankers , NBFC’s.
FII’s allowed to access Indian capital markets
on registration with SEBI
8. Regulatory Framework of Indian
Capital Markets
Regulatory
Framework
SEBI
Stock
RBI DCA
Exchange
9. SEBI
Setup in 1992 , as a statutory body
Registering & regulating intermediaries
Investor protection through regulating Indian
capital markets
Boost up the development of Indian Capital
Markets
Registering & regulating service
providers, Mutual funds, collective investment
schemes, venture capital funds, takeovers etc.
Power to inspect book, records, suspend
registered entities and cancel registration
10. RBI
Regulatory involvement in Indian Capital
Markets
Limited to the Debt Management
Foreign Exchange Control
Liquidity support to market participants
Regulate primary dealers in the Government
securities markets
Securities transactions that involve foreign
exchange transaction need prior permission of
RBI
Important role in NSE debt Markets
11. DCA(Dept of Company Affairs)
Administered by Controller of capital issue(CCI)
Part of Ministry of Finance
In 1992 ,Liberalize capital issuance and pricing
Public & Private Companies were governed by
companies act 1956, which continued to be
administered by DCA.
Specify certain aspects concerning capital
issuance and securities trading.
12. Stock Exchanges
Two major exchanges (NSE,BSE) in India.
Automated Trading System developed for fast &
transparent execution of trades
Listing of securities in exchanges
Introduced risk management systems
Committees of stock exchange set up to handle
matters of discipline , default and investor-broker
disputes
13. Major crash in Indian Capital
Markets
28 April 1992
• Sensex fall by 570 points (12.77%)
• Harshad Mehta securities scam
18 May 2006
• Nifty crash by 496.50 points(8.70%)
• Heavy selling by FII’s due to
weakness in global markets
21 JAN 2008
• Sensex crash by 1408 points
• Due to recession in US
14. Major Rallies in Indian Capital
Markets
18 May 2009
• Sensex Rise by 2111 points
(20.00%)
• Victory of UPA in election