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FINANCIAL
REGULATION
HISTORY
• It was officially established by The Government of India in the year
1988 and given statutory powers in 1992 with SEBI Act 1992 being
passed by the Indian Parliament. SEBI has its Headquarters are at the
business district of Bandra Kurla Complex in Mumbai, and has
Northern, Eastern, Southern and Western Regional Offices in New
Delhi, Kolkata, Chennai and Ahmadabad respectively.
• Controller of Capital Issues was the regulatory authority before SEBI
came into existence; it derived authority from the Capital Issues
(Control) Act, 1947.
• Initially SEBI was a non statutory body without any statutory power.
However in the year of 1995, the SEBI was given additional
statutory power by the Government of India through an amendment
to the Securities and Exchange Board of India Act 1992. In April,
1988 the SEBI was constituted as the regulator of capital markets in
India under a resolution of the Government of India.
• The SEBI is managed by its members, which consists of
following: a) The chairman who is nominated by Union
Government of India. b) Two members, i.e. Officers from Union
Finance Ministry. c) One member from The Reserve Bank of
India. d) The remaining 5 members are nominated by Union
Government of India, out of them at least 3 shall be whole-time
members.
• The office of SEBI is situated at SEBI Bhavan, Bandra Kurla
Complex, Bandra East, Mumbai- 400051, with its regional offices
at Kolkata, Delhi,Chennai & Ahmadabad. It has recently opened
local offices at Jaipur and Bangalore and is planning to open
offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh
in Financial Year 2013 - 2014.
CONT..
DEFINITION OF 'SECURITIES AND EXCHANGE
BOARD OF INDIA - SEBI
• The Securities and Exchange Board of India was
established on April 12, 1992 in accordance with
the provisions of the Securities and Exchange
Board of India Act, 1992.
• 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"
The regulatory body for the investment market in India. The
purpose of this board is to maintain stable and efficient markets by
creating and enforcing regulations in the marketplace.
Name Designation
Upendra Kumar Sinha Chairman
Prashant Saran Whole Time Member
Rajeev Kumar Agarwal Whole Time Member
S Raman Whole Time Member
Prakash Chandra
Joint Secretary, Ministry
of Finance
V. K. Jairath magya Member Appointed
Anand Sinha
Deputy Governor, Reserve
Bank of India
Naved Masood
Secretary, Ministry of
Corporate Affairs
Raje Kumar Part Time Member
• The cabinet on last july approved a proposal to bring
an ordinance to give more powers to the Securities
and Exchange Board of India (Sebi) to protect the
interests of investors.
• The capital market regulator will have powers to
search and seize assets of defaulting firms, seek
information from entities, and access call data records
in insider trading investigations.
POWERS OF SEBI
• Power to call periodical returns from
recognized stock exchanges.
• Power to compel listing of securities by
public companies.
• Power to levy fees or other charges for
carrying out the purposes of regulation.
• Power to call information or explanation
from recognized stock exchanges or their
members
• Power to grant approval to byelaws of
recognized stock exchanges
• Power to control and regulate stock
exchanges
• Power to direct enquiries to be made in
relation to affairs of stock exchanges or
their members.
POWERS OF SEBI(CONT...)
The SEBI act 1992, has entrusted with two functions
they are…..
• Regulatory function
• Developmental function
FUNCTIONS OF SEBI
• Regulation of stock exchange and self
regulatory organization
• Registration and regulation of stock brokers,
sub brokers, registrar's of all issues, merchant
bankers, under writers, portfolio managers etc.
• Registration and regulation of the working of
collective investment schemes including mutual
funds
• Prohibition of inside traders
REGULATORY FUNCTION
• Promoting investors promotion
• Training of intermediaries
• Conducting research and publishing information useful
to all market participants
• Promotion of fair practices
• Promotion of self regulatory organization.
• Prohibition of fraudulent and unfair trade practices
relating to security market
• Regulating substantial acquisition of share and take over
of company.
DEVELOPMENTAL FUNCTION
• Established on 1 April 1935 during the British Rule in accordance
with the provisions of the Reserve Bank of India Act, 1934 to
respond to economic troubles after the First World War.
• It began according to the guidelines laid down by Dr. Ambedkar.
• The general superintendence and direction of the RBI is entrusted
with the 21-strong Central Board of Directors(members)—
the Governor (currently Raghuram Rajan), four Deputy Governors,
two Finance Ministry representative, ten government-nominated
directors and four directors to represent local boards headquartered
at Mumbai, Kolkata, Chennai and New Delhi.
ORIGIN OF RBI
 The first RBI notes were issued in the year 1938.
 Life history of RBI is 'nationalisation' in the year 1949. In the same year
the Banking Companies Act(later Banking Regulation Act) was passed.
 To meet the expanding currency requirements, the system of note issue was
changed in the year 1956.
 In the sixties the Reserve Bank, in many ways, pioneered the concept and
practice of using finance to catalyse development.
 The early 1970s witnessed double-digit inflation and a recession, which
were well managed by RBI.
 The Foreign Exchange Regulation Act, 1973 came into force to conserve
foreign exchange. Its administration was entrusted to RBI.
 setting up of Regional Rural Banks in 1975 as alternative agencies to
provide credit to rural people.
 The seeds of liberalisation were sown in the year 1980 with the setting up
of S Chakravarty Committee to review the working of monetary system.
TIME LINE OF RBI
 Certificates of Deposit (CDs) and Commercial Paper (CPs) introduced in
India in 1989 to widen the monetary instruments and give investors greater
flexibility.
 The same year Banking, Public Financial Institution and Negotiable
Instruments Laws (Amendment) Act was enacted to encourage the culture
of use of cheques in India.
 With liberalisation, the bank's focus has shifted back to core central
banking functions like monetary policy, bank supervision and regulation,
and overseeing the payments system and to developing the financial
markets.
 In 1991, with the external payments crisis, rupee was devalued in two
stages. Unified exchange rate was introduced in 1993.
 The National Stock Exchange of India took the trade on in June 1994 and
the RBI allowed nationalized banks in July to interact with the capital
market to reinforce their capital base.
 The central bank founded a subsidiary company—the Bharatiya Reserve
Bank Note Mudran Limited—in February 1995 to produce banknotes
 To maintain the foreign exchange market in India, Foreign Exchange
Management Act was introduced in 1999.
CONT..
STRUCTURE OF RBI
Central Board of Directors
• The Central Board of Directors is the main committee of the
central bank. The Government of India appoints the directors
for a four-year term. The Board consists of a governor, four
deputy governors, fifteen directors to represent the regional
boards, one from the Ministry of Finance and ten other
directors from various fields.
Governors
• The current Governor of RBI is Raghuram Rajan. There are
four deputy governors, Deputy Governor K C Chakrabarty,
Anand Sinha, H R Khan and Urjit Patel. Deputy Governor
K C Chakrabarty's term has been extended further by 2
years. Subir Gokarn was replaced by Urjit Patel in January
2013.
Supportive bodies
• The Reserve Bank of India has ten regional representations:
• North in New Delhi,
• South in Chennai,
• East in Kolkata and
• West in Mumbai.
• The representations are formed by five members, appointed for
four years by the central government . The institution has 22
regional offices.
• Ex. The Tarapore committee, customer service department.
CONT…
Offices and branches
• The Reserve Bank of India has four zonal offices.
• It has 19 regional offices at most state capitals and at a few major
cities in India.
• Few of them are located in Ahmedabad, Bangalore, Bhopal,
Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad,
Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur,
Patna, and Thiruvananthapuram.
• It also has 9 sub-offices located in Agartala, Dehradun, Gangtok,
Kochi, Panaji, Raipur, Ranchi, Shillong, Shimla and Srinagar.
• The bank has also two training colleges for its officers, viz.
Reserve Bank Staff College at Chennai and College of Agricultural
Banking at Pune. There are also four Zonal Training Centres at
Mumbai, Chennai, Kolkata and New Delhi.
LEGAL FRAMEWORK
Umbrella Acts
• Reserve Bank of India Act, 1934
• Banking Regulation Act, 1949
Acts governing specific functions
• Public Debt Act, 1944/Government Securities Act
(Proposed)
• Securities Contract (Regulation) Act, 1956
• Indian Coinage Act, 1906
• Foreign Exchange Regulation Act, 1973/Foreign
Exchange Management Act, 1999
Acts governing Banking Operations
• Companies Act, 1956
• Banking Companies (Acquisition and Transfer of Undertakings) Act,
1970/1980
• Bankers' Books Evidence Act
• Banking Secrecy Act
• Negotiable Instruments Act, 1881
Acts governing Individual Institutions
• State Bank of India Act, 1954
• The Industrial Development Bank Act, 2003
• The Industrial Finance Corporation Act, 1993
• National Bank for Agriculture and Rural Development Act
• National Housing Bank Act
• Deposit Insurance and Credit Guarantee Corporation Act
• To manage the monetary and credit system of the country.
• To stabilizes internal and external value of rupee.
• For balanced and systematic development of banking in the country.
• For the development of organized money market in the country.
• For proper arrangement of agriculture finance.
• For proper arrangement of industrial finance.
• For proper management of public debts.
• To establish monetary relations with other countries of the world and
international financial institutions.
• For centralization of cash reserves of commercial banks.
• To maintain balance between the demand and supply of currency.
MAIN OBJECTIVES OF RBI
• Bank of Issue
• Banker to Government
• Bankers' Bank and Lender of
the Last Resort
• Controller of Credit
• Custodian of Foreign Reserves
• Supervisory functions
• Promotional functions
• Classification of RBIs functions
FUNCTIONS OF RBI
Financial regulations

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Financial regulations

  • 2.
  • 3. HISTORY • It was officially established by The Government of India in the year 1988 and given statutory powers in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI has its Headquarters are at the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmadabad respectively. • Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947. • Initially SEBI was a non statutory body without any statutory power. However in the year of 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act 1992. In April, 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.
  • 4. • The SEBI is managed by its members, which consists of following: a) The chairman who is nominated by Union Government of India. b) Two members, i.e. Officers from Union Finance Ministry. c) One member from The Reserve Bank of India. d) The remaining 5 members are nominated by Union Government of India, out of them at least 3 shall be whole-time members. • The office of SEBI is situated at SEBI Bhavan, Bandra Kurla Complex, Bandra East, Mumbai- 400051, with its regional offices at Kolkata, Delhi,Chennai & Ahmadabad. It has recently opened local offices at Jaipur and Bangalore and is planning to open offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 - 2014. CONT..
  • 5. DEFINITION OF 'SECURITIES AND EXCHANGE BOARD OF INDIA - SEBI • The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. • 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" The regulatory body for the investment market in India. The purpose of this board is to maintain stable and efficient markets by creating and enforcing regulations in the marketplace.
  • 6. Name Designation Upendra Kumar Sinha Chairman Prashant Saran Whole Time Member Rajeev Kumar Agarwal Whole Time Member S Raman Whole Time Member Prakash Chandra Joint Secretary, Ministry of Finance V. K. Jairath magya Member Appointed Anand Sinha Deputy Governor, Reserve Bank of India Naved Masood Secretary, Ministry of Corporate Affairs Raje Kumar Part Time Member
  • 7. • The cabinet on last july approved a proposal to bring an ordinance to give more powers to the Securities and Exchange Board of India (Sebi) to protect the interests of investors. • The capital market regulator will have powers to search and seize assets of defaulting firms, seek information from entities, and access call data records in insider trading investigations. POWERS OF SEBI
  • 8. • Power to call periodical returns from recognized stock exchanges. • Power to compel listing of securities by public companies. • Power to levy fees or other charges for carrying out the purposes of regulation. • Power to call information or explanation from recognized stock exchanges or their members • Power to grant approval to byelaws of recognized stock exchanges • Power to control and regulate stock exchanges • Power to direct enquiries to be made in relation to affairs of stock exchanges or their members. POWERS OF SEBI(CONT...)
  • 9. The SEBI act 1992, has entrusted with two functions they are….. • Regulatory function • Developmental function FUNCTIONS OF SEBI
  • 10. • Regulation of stock exchange and self regulatory organization • Registration and regulation of stock brokers, sub brokers, registrar's of all issues, merchant bankers, under writers, portfolio managers etc. • Registration and regulation of the working of collective investment schemes including mutual funds • Prohibition of inside traders REGULATORY FUNCTION
  • 11. • Promoting investors promotion • Training of intermediaries • Conducting research and publishing information useful to all market participants • Promotion of fair practices • Promotion of self regulatory organization. • Prohibition of fraudulent and unfair trade practices relating to security market • Regulating substantial acquisition of share and take over of company. DEVELOPMENTAL FUNCTION
  • 12.
  • 13. • Established on 1 April 1935 during the British Rule in accordance with the provisions of the Reserve Bank of India Act, 1934 to respond to economic troubles after the First World War. • It began according to the guidelines laid down by Dr. Ambedkar. • The general superintendence and direction of the RBI is entrusted with the 21-strong Central Board of Directors(members)— the Governor (currently Raghuram Rajan), four Deputy Governors, two Finance Ministry representative, ten government-nominated directors and four directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and New Delhi. ORIGIN OF RBI
  • 14.  The first RBI notes were issued in the year 1938.  Life history of RBI is 'nationalisation' in the year 1949. In the same year the Banking Companies Act(later Banking Regulation Act) was passed.  To meet the expanding currency requirements, the system of note issue was changed in the year 1956.  In the sixties the Reserve Bank, in many ways, pioneered the concept and practice of using finance to catalyse development.  The early 1970s witnessed double-digit inflation and a recession, which were well managed by RBI.  The Foreign Exchange Regulation Act, 1973 came into force to conserve foreign exchange. Its administration was entrusted to RBI.  setting up of Regional Rural Banks in 1975 as alternative agencies to provide credit to rural people.  The seeds of liberalisation were sown in the year 1980 with the setting up of S Chakravarty Committee to review the working of monetary system. TIME LINE OF RBI
  • 15.  Certificates of Deposit (CDs) and Commercial Paper (CPs) introduced in India in 1989 to widen the monetary instruments and give investors greater flexibility.  The same year Banking, Public Financial Institution and Negotiable Instruments Laws (Amendment) Act was enacted to encourage the culture of use of cheques in India.  With liberalisation, the bank's focus has shifted back to core central banking functions like monetary policy, bank supervision and regulation, and overseeing the payments system and to developing the financial markets.  In 1991, with the external payments crisis, rupee was devalued in two stages. Unified exchange rate was introduced in 1993.  The National Stock Exchange of India took the trade on in June 1994 and the RBI allowed nationalized banks in July to interact with the capital market to reinforce their capital base.  The central bank founded a subsidiary company—the Bharatiya Reserve Bank Note Mudran Limited—in February 1995 to produce banknotes  To maintain the foreign exchange market in India, Foreign Exchange Management Act was introduced in 1999. CONT..
  • 16. STRUCTURE OF RBI Central Board of Directors • The Central Board of Directors is the main committee of the central bank. The Government of India appoints the directors for a four-year term. The Board consists of a governor, four deputy governors, fifteen directors to represent the regional boards, one from the Ministry of Finance and ten other directors from various fields. Governors • The current Governor of RBI is Raghuram Rajan. There are four deputy governors, Deputy Governor K C Chakrabarty, Anand Sinha, H R Khan and Urjit Patel. Deputy Governor K C Chakrabarty's term has been extended further by 2 years. Subir Gokarn was replaced by Urjit Patel in January 2013.
  • 17. Supportive bodies • The Reserve Bank of India has ten regional representations: • North in New Delhi, • South in Chennai, • East in Kolkata and • West in Mumbai. • The representations are formed by five members, appointed for four years by the central government . The institution has 22 regional offices. • Ex. The Tarapore committee, customer service department. CONT…
  • 18. Offices and branches • The Reserve Bank of India has four zonal offices. • It has 19 regional offices at most state capitals and at a few major cities in India. • Few of them are located in Ahmedabad, Bangalore, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, Patna, and Thiruvananthapuram. • It also has 9 sub-offices located in Agartala, Dehradun, Gangtok, Kochi, Panaji, Raipur, Ranchi, Shillong, Shimla and Srinagar. • The bank has also two training colleges for its officers, viz. Reserve Bank Staff College at Chennai and College of Agricultural Banking at Pune. There are also four Zonal Training Centres at Mumbai, Chennai, Kolkata and New Delhi.
  • 19. LEGAL FRAMEWORK Umbrella Acts • Reserve Bank of India Act, 1934 • Banking Regulation Act, 1949 Acts governing specific functions • Public Debt Act, 1944/Government Securities Act (Proposed) • Securities Contract (Regulation) Act, 1956 • Indian Coinage Act, 1906 • Foreign Exchange Regulation Act, 1973/Foreign Exchange Management Act, 1999
  • 20. Acts governing Banking Operations • Companies Act, 1956 • Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980 • Bankers' Books Evidence Act • Banking Secrecy Act • Negotiable Instruments Act, 1881 Acts governing Individual Institutions • State Bank of India Act, 1954 • The Industrial Development Bank Act, 2003 • The Industrial Finance Corporation Act, 1993 • National Bank for Agriculture and Rural Development Act • National Housing Bank Act • Deposit Insurance and Credit Guarantee Corporation Act
  • 21. • To manage the monetary and credit system of the country. • To stabilizes internal and external value of rupee. • For balanced and systematic development of banking in the country. • For the development of organized money market in the country. • For proper arrangement of agriculture finance. • For proper arrangement of industrial finance. • For proper management of public debts. • To establish monetary relations with other countries of the world and international financial institutions. • For centralization of cash reserves of commercial banks. • To maintain balance between the demand and supply of currency. MAIN OBJECTIVES OF RBI
  • 22. • Bank of Issue • Banker to Government • Bankers' Bank and Lender of the Last Resort • Controller of Credit • Custodian of Foreign Reserves • Supervisory functions • Promotional functions • Classification of RBIs functions FUNCTIONS OF RBI