Reserve Bank Of Indiaa

Regulatory Institutions • RBI • SEBI • IRDA • NABARD • NHB

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Reserve Bank of India – Set up in 1935 as a private shareholders’ bank - Nationalized in January, 1949 by the RBI Act 1948 - Apex institution in the banking and financial systems of India

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Objectives of RBI – Maintain the internal value of the nation’s currency;

– Preserve the external value of the currency; – Secure reasonable price stability; and – Promote economic growth through employment, output and real income.

increasing

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Functions of RBI The functions of RBI may be classified into two categories: a) Traditional functions, and b) Developmental functions a) Traditional Functions: – RBI acts as a lender of last resort; – It acts as a banker to banks; – It issues currency and operates the clearing system for banks; – It supervises the operations of credit institutions; – It acts as the custodian of the foreign reserves; – It formulates and implements monetary and credit policies; – It moderates the fluctuations in the exchange value of the rupee.

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RBI Contd….. b) Developmental Functions:

– The prime developmental function is to integrate the unorganized financial sector with the organized financial sector; – It encourages opening of semi-urban and rural branches; – It provides education and training to banking personnel of commercial and co-operative banks; – It influences the allocation of credit; – It promotes the collection pooling and dissemination of credit information among banks; – It promotes the establishment of new institutions. 6

Securities Exchange Board of India (SEBI) Objectives: The SEBI has been entrusted with both the regulatory and developmental functions. – Investor protection with a view to get steady flow of savings into capital market; – Ensuring fair practices by the issues of securities by which corporations can raise resources of least cost; – Promotion of efficient services by brokers, merchant bankers, and other intermediaries with a view to make them competitive and professional; – Development and regulation of securities market. 7

Functions of SEBI a) Regulatory Functions – Registration and Regulation of capital market

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intermediaries (Brokers, sub-brokers, and other players in the market); Register and regulate the working of venture capital funds and Collective Investment Schemes including mutual funds; Regulate the business in Stock Exchanges and any other securities market; Promoting and regulating Self Regulatory Organisations (SRO); Prohibition of all fraudulent and unfair trade practices relating to securities market; Prohibition of insider trading and takeover bids and imposing penalties for such practices;

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– Registering and regulating the working of depositors,

custodians of securities, FIIs, credit rating agencies; – Regulating substantial acquisition of shares and takeover of companies. – Development Function of SEBI is to promote investors education, training intermediaries and conduct research and publish information b) Developmental Functions – Promote investors’ education;

– Training of intermediaries; – Promotion of fair practices and code of conduct for all SRO’s – Conduct research and publishing information useful to all market participants. 9

Insurance Regulatory Development Authority Functions – To exercise

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all powers and functions of controller of

insurance; Protection of the interests of the policyholders; To issue, renew, modify, withdraw or suspend certification of registration; To specify requisite qualifications and training for insurance intermediaries and agents; To promote and regulate professional organisations connected with insurance; To conduct inspection / investigations etc.; To regulate investment of funds and margins of solvency; To prescribe method of insurance accounting; To adjudication upon disputes; To conduct inspection and audit of insurers, intermediaries and other organisations concerned with insurance. 10