1. Regulators in India and
Government Security Markets
By:-
Akanksha Nischal
Harsimran Singh
Gitanjali Singh
Saksham Sharma
Sakshi Arora
2. Table of Contents
• Introduction to Indian Financial System
• Regulators :
Reserve Bank of India
SEBI
Ministry of Finance
Ministry of Corporate Affairs
PFRADA
IRDA
3. IntroductionIntroduction
• It intermediates between the flow of funds
belonging to those who save a part of their
income and those who invest in productive
assets.
• A financial system is a complex , well
integrated set of sub systems of financial
institutions, markets, instruments & services
which facilitates the transfer and allocation of
funds efficiently & effectively.
4.
5. Reserve Bank of India
(RBI)
• Commenced operations on April 1, 1935.The
share capital was divided into shares of 100
each fully paid, which were initially owned
entirely by private shareholders
• Headquarters – Shahid Bhagat Singh
Marg Mumbai, Maharashtra
• Established-April 1, 1935 (79 years ago)
• Governer - Raghuram Rajan
• Reserves-US$295.45 billion
6. Main Functions
• Monetary Authority:
Formulates, implements and monitors the
monetary policy.
Objective: maintaining price stability and
ensuring adequate flow of credit to productive
sectors.
• Manager of Foreign Exchange:
Manages the Foreign Exchange Management
Act, 1999.
Objective: to facilitate external trade and
payment and promote orderly development
and maintenance of foreign exchange market
in India.
7. • Issuer of currency:
Issues and exchanges or destroys currency and
coins not fit for circulation.
Objective: to give the public adequate
quantity of supplies of currency notes and
coins and in good quality.
• Related Functions:
Banker to the Government: performs
merchant banking function for the central and
the state governments; also acts as their
banker.
Banker to banks: maintains banking accounts
of all scheduled banks.
8. • Regulator and supervisor of the financial
system:
Prescribes broad parameters of banking
operations
Objective: maintain public confidence in the
system, protect depositors' interest and
provide cost-effective banking services to the
public.
• Developmental role
Performs a wide range of promotional
functions to support national objectives.
9. • Financial Supervision
The Reserve Bank of India performs this
function under the guidance of the Board for
Financial Supervision (BFS).
The Board was constituted in November 1994
as a committee of the Central Board of
Directors of the Reserve Bank of India.
Objective :Primary objective of BFS is to
undertake consolidated supervision of the
financial sector comprising commercial banks,
financial institutions and non-banking finance
companies.
10. SEBI & STOCK EXCHANGES
• 1988= SEBI was established through an
executive resolution.
• 1992= Subsequently upgraded as a fully
autonomous body (a statutory body) with the
passing of SEBI act on 30th
January 1992.
• SEBI head quartered= Mumbai
11. Amendments
• Issue commission= for the examinations of
witness of documents.
• Power to regulate or prohibit= issue of
Prospectus.
• Power to prohibit= manipulative and
deceptive devices.
• Penalties levied= under the act have been
enhanced.
12. Objectives of SEBI
The PRIMARY OBJECTIVE is to promote
healthy and orderly growth of the securities
market and secure investor protection.
The objective of SEBI are as follows:-
• To Protect The Interest of investors, so that ,
there is a steady flow of savings into to the
capital market.
• To Regulate the securities market and ensure
fair practices.
• To Promote Efficient Services by brokers ,
merchant bankers and financial
intermediaries, so that, they become
competitive and professional.
13. Functions of SEBI
The SEBI act 1992 has entrusted with two
functions they are:
1. Regulatory functions.
2. Developmental functions.
14. Regulatory functions
• Regulation of Stock Exchanges And Self
Regulatory Organizations.
• Registration and regulation of stock brokers ,
sub-brokers , registrars of all issues, merchant
bankers, underwriters, portfolio managers etc
• Registration and regulation of the working of
collective investment schemes including
mutual funds.
15. • Prohibition of Fraudulent And Unfair Trade
Practices relating to securities market.
• Prohibiting of Insider Trading.
• Regulating substantial Acquisition Of Shares
And Takeovers of the company.
16. Developmental functions.
• Promote investors education.
• Training of intermediaries.
• Conduct research & provide information to
market participants.
• Promoting self regulatory organizations.
17. Powers of SEBI
• Power to compel Listing Of Securities by
public companies.
• Power to Direct Enquiries to be made in
relation to affairs of stock exchanges or their
members.
• Power to Levy Fees Or Other Changes For
Carrying Out the purposes of regulation.
• Power to Grant Registration to market
intermediaries.
• Power to Control And Regulate stock
exchanges.
18. RIGHTS OF INVESTOR AS PER
SEBI
• To participate and to vote in annual general
meetings and right to receive a notice for
them or their proxy to attend the meeting
• To receive dividend, right shares , bonus offers
,from the company ,after there approval of
the board.
• To receive and inspect minutes of the
meeting.
• To receive balance sheet , P&L account ,
auditors report , and directors report.
19. Cont…
• To receive allotment letters and share
certificates.
• To requisition an extra ordinary general
meeting.
• To apply for winding up of the company.
• To proceed in civil or criminal proceedings
against the company.
20. STRUCTURE OF SEBI
1. Chairman
2. Two members, one from amongst the
officials of the central government dealing
with finance and another from the
administration of companies act of 1956.
3. One members from amongst the officials of
the Reserve Bank Of India.
4. Five other members of whom atleast three
shall be the whole-time members to be
appointed by the central government.
21. Ministry Of Finance
The Ministry of Finance is an important
ministry within the Government of India.
It concerns itself with :-
- Taxation
- Financial legislation
- Financial institutions
- Capital markets
- Centre and state finances
- The Union Budget.
23. Ministry of finance comprises of five
departments in its organizational :-
• - Department of Economic Affairs
• - Department of Expenditure
• - Department of Revenue
• - Department of Financial services
• - Department of Disinvestment
24. • The Department of Economic Affairs (DEA) is
the nodal agency of the Union Government to
formulate and monitor country's economic
policies and programs
• Its principle responsibilities are:-
Formulation and monitoring of
macroeconomic policies.
Inflation,
Public debt management
The functioning of Capital Market including
Stock Exchanges.
Production of bank notes and coins of various
denominations.
Department of Economic Affairs
25. Department of Expenditure
• The Department of Expenditure is the nodal
Department for overseeing the public financial
management system in the Central
Government.
• The principal activities of the Department
include:-
- Pre-sanction appraisal of major
schemes/projects (both Plan and non-Plan
expenditure)
- Overseeing the expenditure management in
the Central Ministries/Departments.
- Preparation of Central Government Accounts.
26. Department of Revenue
• The Department of Revenue functions under
the overall direction and control of the
Revenue.
• It exercises control in relation to all the Direct
and Indirect Union Taxes
• It does it through two statutory Boards
namely,
- Central Board of Direct taxes (CBDT) and
- the Central Board of Excise & Customs (CBEC).
- Each Board is headed by a Chairman.
27. Department of Financial
Services
The Department of Financial Services covers
• Banks
• Insurance and
• Financial Services (provided by various
government agencies and private
corporations)
It also covers :-
• Pension reforms and
• Industrial Finance for Micro, Small and
Medium Enterprise.
28. Department of Disinvestments
Initially set up as an independent ministry (The
Ministry of Disinvestment) in Dec 1999.
- The department took up all the functions
responsible for :-
- Systematic policy approach to disinvestment
and
- Privatization of Public Sector Units (PSUs).
29. Ministry of Corporate
Affairs
• Indian Government Ministry
• Earlier known as Department of Corporate
Affairs
• Current minister of corporate affairs
is Mr.Sachin Pilot.
• Key initiator of the Companies Act, 2013.
30. Mission
“To facilitate corporate growth with
enlightened regulation”
Vision
“To be responsive and sensitive to changes
in the business environment and suitably
formulate and modify corporate laws and
regulations from time-to-time”
31. Goals
• Establishing a legal framework that would
foster a positive environment for investment
and growth
• Ensuring that the Indian Corporate sector is
able to operate in an environment of globally
competitive international practices.
• Partner with all stakeholders for this purpose
increase its capability for catering to the
emerging needs of the corporates for their
regulation, growth and development.
32. Functions
1. Primarily concerned with administration
of :-
• The Companies Act, 1956 and 2013
• The Monopolies and Restrictive Trade
Practices Act, 1969
• The Indian Partnership Act, 1932
• The Companies Amendment Act, 2006
• The Limited Liability Partnership Act,
2008
33. 2. Also responsible for administering the
Competition Act, 2002
3. Exercises supervision over the three
professional bodies, namely, ICAI,ICSI and
ICWAI
4. Also has the responsibility of carrying out
the functions of the Central Government
relating to administration of Partnership Act,
1932, the Companies (Donations to National
Funds) Act, 1951 and Societies Registration
Act, 1980
Cont…
34. 5. Convergence of Indian Accounting Standards
with IFRS.
6. e-Governance in MCA.
7. Build systems for early detection of
irregularities in corporate functioning.
8. Undertaking investor education and awareness
programmes.
9. To undertake investigation of serious frauds
through the Serious Fraud Investigation Office.
10. Cadre administration of the Indian Corporate
Law Service.
35. Companies Act, 2013
• Replace India’s 57-year-old corporate
legislation
• Bill will appeal to foreign investors, and kick-
start India’s economic growth
• Depends on new committees and rules that
have yet to be drafted
• A step in the right direction.
• Tough sanctions for embezzlement, including
mandatory jail time and hefty fines for
offenders
36. • introduces protections for whistle-blowers,
class-action suits, and provisions to prevent
conflicts of interest and insider trading.
• new measure allows for greater flexibility in
cross-border mergers and acquisitions, but it
also requires companies to employ at least
one resident director, creating a problem for
many foreign-owned companies.
• Stock buybacks, a favored strategy to bolster
share prices that is currently permitted every
six months, will be restricted to once a year.
• Larger enterprises - like those with net profits
of at least 50 million rupees, to donate 2
percent of their net profits to corporate social
responsibility programs.
37. • A new committee, the National Financial
Reporting Authority, will be created to
prescribe and monitor accounting and
auditing standards for the first time.
• The Serious Fraud Investigation Office, will be
empowered to start investigations and frame
charges.
• A new judiciary, the National Company Law
Tribunal, will be created to allow swifter
justice, removing corporate cases from high
courts
38. PFRADA (PENSION FUND
REGULATORY AND
DEVELOPMENT AUTHORITY)
Established
By:- Government of India
On:- 23rd
august 2003
Chairman
Yogesh Aggarwal
.
39. PURPOSE
• 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.
40. Insurance regulatory and
development authority
(IRDA)
• IRDA was setup in 1996.
• It was formally constituted as a regulator of
insurance industry in April 2000.
• The regulatory was initially known as the
Insurance Regulatory Authority.
• Renamed as IRDA as it was provided that it
had a broader role to perform in the Indian
insurance market.
• Head-quarter: Hyderabad, Andhra Pradesh.
42. COMPOSITION OF AUTHORITY
As per the section 4 of IRDA ACT’ 1999,
Insurance Regulatory & Development Authority
which was constituted by an act of parliament
specify the composition of authority
The Authority is a ten member team consisting
of :-
A)Chairman
B)Five whole time members
C)Four part time members
(all are appointed by the Indian government)
43. OBJECTIVES
• To protect the interest Of and secure fair
treatment to policy holders.
• To bring about speedy and orderly growth of
the insurance industry for the benefit of the
common man, and to provide long-term funds
for accelerating growth of the economy.
• To set promote, monitor and enforce high
standards of integrity, financial soundness,
fair dealing, and competence of those it
regulates.
44. • To ensure that insurance customer receive
precise, clear, and correct information about
products and services and make them aware
of their responsibilities and duties in this
regard.
• To ensure speedy settlement of genuine
claims to prevent insurance frauds, and other
malpractices.
45. • To promote fairness, transparency and
orderly conduct in financial markets dealing
with insurance and build a reliable
management information system to enforce
high standards of financial soundness amongst
market players.
• To take action where such standards are
inadequate or in effectively enforced.
46. Duties Powers and Functions
of the IRDA
• Issuing to the applicant a certificate of
registration, renew, modify, withdraw,
suspend or cancel such registration.
• 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.
47. • Promoting efficiency in the conduct of
insurance business.
• Promoting and regulating professional
organizations connected with the insurance
and reinsurance business.
• Regulating investment of funds by insurance
companies.
• Specifying the percentage of life insurance
business and general insurance business to be
undertaken by the insurer in the rural or social
sector, and exercising such order power as may
be prescribed.
48. • 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
• Adjudication of disputes between insurers
and intermediaries or insurance
intermediaries. Supervising the functioning of
the tariff advisory committee.
• Specifying the percentage of premium
income of the insurer to finance schemes for
promoting and regulating professional
organization referred in clause (f)
