REGULATORY BODIES
Economics
INTRODUCTION
Regulatory bodies are statutory or quasi-statutory institutions established by the government to regulate, supervise and develop specific sectors of the economy. In India’s financial system, regulatory bodies play a crucial role in ensuring transparency, protecting consumer interests, maintaining market stability and promoting orderly growth of financial markets.
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
Background and Establishment
The Securities and Exchange Board of India (SEBI) was initially established in 1988 as a non-statutory body through a resolution of the Government of India. In order to give it greater powers and autonomy, SEBI was accorded statutory status through the SEBI Act, 1992.
Headquarters and Offices
SEBI is headquartered in Mumbai. It has regional offices at Ahmedabad, Kolkata, Chennai and New Delhi to ensure effective supervision of capital markets across the country.
STRUCTURE AND COMPOSITION OF SEBI
SEBI is governed by a Board which consists of nine members.
Composition of SEBI Board:
- One Chairman appointed by the Central Government
- One member nominated by the Reserve Bank of India
- Two members from the Union Ministry of Finance
- Five members appointed by the Central Government
The Chairman and members are appointed for a fixed tenure as prescribed by the Government of India.
SECURITIES APPELLATE TRIBUNAL (SAT)
The Securities Appellate Tribunal is a statutory body established under the SEBI Act, 1992.
Composition:
- One Presiding Officer appointed by the Central Government in consultation with the Chief Justice of India
- Two other members
Functions and Powers:
- Hears appeals against orders passed by SEBI
- Also hears appeals against orders of adjudicating officers under SEBI Act, PFRDA Act and IRDAI Act
- Enjoys powers similar to a civil court
- Appeals against SAT decisions can be made to the Supreme Court of India
POWERS AND FUNCTIONS OF SEBI
SEBI acts as a regulator, developer and protector of the securities market.
Major Functions:
- Protecting the interests of investors in securities
- Promoting and regulating the securities market
- Regulating stock exchanges and their functioning
- Registration and regulation of market intermediaries such as merchant bankers, portfolio managers and brokers
- Regulation and supervision of mutual funds and venture capital funds
- Prohibiting unfair trade practices in securities markets
- Preventing insider trading
Nature of SEBI:
- SEBI is a quasi-legislative body as it frames regulations
- SEBI is a quasi-judicial body as it conducts inquiries and imposes penalties
Securities Laws (Amendment) Act, 2014:
- Empowered SEBI to regulate collective investment and money pooling schemes exceeding Rs 100 crore
- Enabled attachment of assets in case of non-compliance
RECENT INITIATIVES OF SEBI
SaaRthi App:
- Mobile application launched by SEBI to promote investor awareness
- Provides information on securities markets, KYC norms, trading and settlement, mutual funds and grievance redressal
- Available in English and Hindi
Independent Directors Norms:
- Appointment, reappointment and removal only through special resolution of shareholders
- One-year cooling-off period before transition to whole-time director in the same or promoter group company
Usha Thorat Committee:
- Advisory committee on mutual fund regulations
- Focus on transparency, simplification and legal reforms in mutual fund sector
T+1 Settlement System:
- SEBI allowed stock exchanges to adopt T+1 settlement cycle
- Reduces settlement risk and enhances liquidity
- Improves efficiency of capital markets
NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)
Background and Establishment
NABARD was established in 1982 on the recommendations of the B. Sivaraman Committee under the National Bank for Agriculture and Rural Development Act, 1981.
It is the apex development financial institution for agriculture and rural development in India.
Headquarters:
- Mumbai
Ownership:
- Wholly owned by the Government of India
- Initial paid-up capital of Rs 100 crore
ORGANISATIONAL STRUCTURE OF NABARD
Board of Directors:
- Overall management vests with the Board
- Includes representatives from RBI, Government of India, State Governments and directors nominated by the Central Government
Appointment:
- Chairperson and directors are appointed by the Central Government in consultation with RBI
Executive Committee:
- Constituted by the Board
- Performs delegated functions
SUBSIDIARIES OF NABARD
- NABARD Consultancy Services (NABCONS), Delhi
- NABARD Financial Services (NABFINS), Bengaluru
- Agri Business Finance Ltd, Hyderabad
- NABKISAN Finance Ltd, Chennai
FUNCTIONS OF NABARD
Refinance Support:
- Provides short-term and long-term refinance to SCBs and RRBs
- Supports agriculture, allied activities, fisheries, MSMEs, artisans and non-farm sector
Rural Infrastructure Development Fund (RIDF):
- Established in 1995-96
- Financed through shortfall in Priority Sector Lending
- Supports rural roads, irrigation, education and health infrastructure
Key Features of RIDF:
- Covers 37 eligible activities
- Loan coverage of 80 to 95 percent of project cost
- Reimbursement-based funding
- Repayment period of up to 7 years including 2-year grace period
Rural Infrastructure Promotion Fund (RIPF):
- Corpus of Rs 25 crore
- Supports rural roads under Bharat Nirman
Warehouse Infrastructure Fund (WIF):
- Created in 2013-14
- Corpus of Rs 5,000 crore
- Supports scientific warehousing for agricultural produce
Long Term Irrigation Fund (LTIF):
- Launched in 2016
- Supports 99 priority irrigation projects under PMKSY
- Funded through budgetary support and market borrowings
DEVELOPMENTAL FUNCTIONS OF NABARD
Farm Technology Transfer Fund (FTTF):
- Established in 2008
- Promotes access to technology, credit and marketing
Tribal Development Fund (TDF):
- Established in 2003-04
- Supports livelihoods of tribal communities
Promotion of Farmer Producer Organisations (FPOs):
- Financial and developmental support through PODF and PRODUCE Fund
Kisan Credit Card (KCC):
- Designed in 1998 in collaboration with RBI
- Provides timely crop loans to farmers
RuPay Kisan Cards:
- Enables digital access to credit for farmers
e-Shakti Programme:
- Launched in 2015
- Digitisation of Self Help Groups
Microfinance:
- SHG-Bank Linkage Programme launched in 1992
District Credit Plans:
- Prepared to guide banking credit at district level
ROLE IN CLIMATE FINANCE
Green Climate Fund:
- NABARD accredited as National Implementing Entity
- Eligible for projects above USD 250 million
National Adaptation Fund for Climate Change (NAFCC):
- NABARD designated as National Implementing Entity
- Supports climate adaptation projects for vulnerable states
RECENT INITIATIVES OF NABARD
Agricultural Export Facilitation Centre:
- First centre launched in Pune
- Supports agri-export ecosystem
Grameena Habba:
- Platform for rural artisans to sell products
- Organised by NABARD Karnataka office
JIVA Programme:
- Agro-ecology based natural farming programme
- Implemented in 11 states
- Investment of Rs 50,000 per hectare
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (PFRDA)
Background:
- Statutory authority under Ministry of Finance
- Established by an Act of Parliament
Functions:
- Regulates National Pension System (NPS)
- Appoints Pension Fund Managers and Central Record Keeping Agencies
- Ensures orderly growth of pension sector
Nature:
- Quasi-government organisation with regulatory and supervisory powers
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (IRDAI)
Background:
- Established under IRDA Act, 1999
- Based on recommendations of Malhotra Committee
Headquarters:- Hyderabad, Telangana
Composition:
- Chairman
- Five whole-time members
- Four part-time members
Objectives:
- Protect policyholders’ interests
- Regulate and develop insurance industry
- Ensure transparency and fairness
Entities Regulated:
- Life insurance companies
- General insurance companies
- Reinsurance companies
- Insurance intermediaries
Powers and Functions:
- Grant and cancel insurance licences
- Prescribe code of conduct for agents and surveyors
- Levy fees and penalties
RECENT INITIATIVES OF IRDAI
Saral Jeevan Bima:
- Standardised term life insurance product
- Targeted at low-income and self-employed persons
- Age eligibility: 18 to 65 years
- Sum assured: Rs 5 lakh to Rs 25 lakh
- No maturity or surrender benefit
Domestic Systemically Important Insurers (D-SIIs):
- Identified annually by IRDAI
- LIC, GIC and New India Assurance identified as D-SIIs
- Considered too big to fail
DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION (DICGC)
Background:
- Established in 1978
- Subsidiary of RBI
Coverage:
- Insures deposits up to Rs 5 lakh per depositor per bank
- Covers commercial banks, RRBs, cooperative banks and foreign banks
Deposits Covered:
- Savings
- Fixed
- Current
- Recurring
Deposits Excluded:
- Deposits of governments
- Inter-bank deposits
- Foreign deposits
- Certain exempted deposits with RBI approval
PDF File:
No PDF attached
Subject: Economics
← Back