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SGM COLLEGE OF COMMERCE & ECONOMICS

Introduction

India has a financial system that is regulated by independent regulators in the sectors of banking, insurance, capital markets, competition and various services sectors. In a number of sectors Government plays the role of regulator. Ministry of Finance, Government of India looks after financial sector in India. Finance Ministry every year presents annual budget on February 28 in the Parliament. The annual budget proposes changes in taxes, changes in government policy in almost all the sectors and budgetary and other allocations for all the Ministries of Government of India. The annual budget is passed by the Parliament after debate and takes the shape of law.

Financial Regulatory Bodies


Financial sector in India has experienced a better environment to grow with the presence of higher competition. The financial system in India is regulated by independent regulators in the field of banking, insurance, mortgage and capital market. Government of India plays a significant role in controlling the financial market in India. Ministry of Finance, Government of India controls the financial sector in India. Every year the finance ministry presents the annual budget on 28th February. The Reserve Bank of India is an apex institution in controlling banking system in the country. Its monetary policy acts as a major weapon in India's financial market.

Financial Regulatory Bodies

Securities and Exchange Board of India (SEBI) is one of the regulatory authorities for India's capital market.
1.Securities and Exchange Board of India (SEBI) 2. National Stock Exchange 3. Bombay Stock Exchange (BSE) 4. Reserve Bank of India (RBI) 5. Foreign Investment Promotion Board 6. Major Financial Institutions in India

Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India (SEBI) established under the Securities and Exchange aboard of India Act, 1992 is the regulatory authority for capital markets in India. India has 23 recognized stock exchanges that operate under government approved rules, bylaws and regulations. These exchanges constitute an organized market for securities issued by the central and state governments, public sector companies and public limited companies. The Stock Exchange, Mumbai and National Stock Exchange are the premier stock exchanges. Under the process of de-mutualization, these stock exchanges have been converted into companies now, in which brokers only hold minority share holding. In addition to the SEBI Act, the Securities Contracts (Regulation) Act, 1956 and the Companies Act, 1956 regulates the stock markets.

Securities and Exchange Board of India (SEBI)

Objectives of SEBI
As an important entity in the market it works with following objectives:It tries to develop the securities market. Promotes Investors Interest. Makes rules and regulations for the securities market.

Functions Of SEBI
Regulates Capital Market Checks Trading of securities. Checks the malpractices in securities market. It enhances investor's knowledge on market by providing education. It regulates the stockbrokers and sub-brokers. To promote Research and Investigation.

Securities and Exchange Board of India (SEBI)

SEBI In India's Capital Market


SEBI from time to time have adopted many rules and regulations for enhancing the Indian capital market. The recent initiatives undertaken are as follows:

Sole Control on Brokers: Under this rule every brokers and


sub brokers have to get registration with SEBI and any stock exchange in India.

For Underwriters: For working as an underwriter an asset limit


of 20 lakhs has been fixed.

For Share Prices: According to this law all Indian companies are
free to determine their respective share prices and premiums on the share prices.

National Stock Exchange (NSE)

In the year 1991 Pherwani Committee recommended to establish National Stock Exchange (NSE) in India. In 1992 the Government of India authorized IDBI for establishing this exchange. In National Stock Exchange there is trading of equity shares, bonds and government securities. India's Stock Exchanges particularly National Stock Exchange has achieved world standards in the recent years. Presently there are 24 stock exchanges in India, out of which 20 have exchanges National Stock Exchange (NSE), Over the Counter Exchange of India Ltd. (OTCEI) and Inter-connected Stock Exchange of India limited (ISE) have nationwide trading facilities.

Nati

al t ck xc ang (NSE)

New NSE Reference Rates

Both MIBOR (Mumbai Inter Bank Offer Rate) and MIBID (Mumbai Inter Bank Bid Rate) are the two new references rates of the National Stock Exchanges. These two new reference rates were launched on June 15, 1998 for the loans of inter bank call money market. Both MIBOR and MIBID work simultaneously. The MIBOR indicates lending rate for loans while MIBID is the rate for receipts.

Bombay Stock Exchange (BSE)

Bombay Stock Exchange is one of the oldest stock exchanges in Asia was established in the year 1875 in the name of "The Native Share & Stock Brokers Association". Bombay Stock Exchange is located at Dalal Street, Mumbai, India. It got recognition in 1956 from the Government of India under Securities Contracts (Regulation) Act, 1956. Presently BSE SENSEX is recognized over the world. Trading volumes growth in the year 2004-05 has drawn the attention over the globe. As to the statistics, the total turnover from BSE transacation as in June 2006 is calculated at 72013.36 crores.

Companies in BSE: Companies listed on the


Bombay Stock are rising very fast. As to statistics, companies listed to the end of March 1994 reached at 3,200 compared to 992 in 1980.

Role of Reserve bank of India (RBI)


Reserve Bank of India is the apex monetary Institution of India. It is also called as the central bank of the country. The bank was established on April1, 1935 according to the Reserve Bank of India act 1934. It acts as the apex monetary authority of the country. The Central Office of the Reserve Bank has been in Mumbai since inception. The Central Office is where the Governor sits and is where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.

Role of Reserve bank of India (RBI)


The preamble of the reserve bank of India is as follows: To regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. Central Board The Reserve Bank's affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. Appointed / nominated for a period of four years. Constitution Official Directors Full-time: Governor and not more than four Deputy Governors Non-Official Directors Others: four Directors - one each from four local boards Functions: General superintendence and direction of the Bank's affairs

Role of Reserve bank of India (RBI)

Local Boards
Each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi Membership Consist of five members each Appointed by the Central Government For a term of four years

Functions
To advise the Central Board on local matters and to represent territorial and economic interests of local co-operative and indigenous banks, to perform such other functions as delegated by Central Board from time to time.

State Bank of India (SBI) & other associate Banks

India have commercial banks, co-operative banks and regional rural banks. The commercial banking sector comprises of public sector banks, private banks and foreign banks. The public sector banks comprise the State Bank of India and its seven associate banks and nineteen other banks owned by the government and account for almost three fourth of the banking sector. The Government of India has majority shares in these public sector banks. India has a two-tier structure of financial institutions with thirteen all India financial institutions and forty-six institutions at the state level. All India financial institutions comprise term-lending institutions, specialized institutions and investment institutions, including in insurance.

State Bank of India (SBI) & other associate Banks

State level institutions comprise of State Financial Institutions and State Industrial Development Corporations providing project finance, equipment leasing, corporate loans, short-term loans and bill discounting facilities to corporate. Government holds majority shares in these financial institutions. Insurance sector in India has been traditionally dominated by state owned Life Insurance Corporation and General Insurance Corporation and its four subsidiaries. Government of India has now allowed FDI in insurance sector up to 26%. Since then, a number of new joint venture private companies have entered into life and general insurance sectors and their share in the insurance market in rising. Insurance Development and Regulatory Authority (IRDA) is the regulatory authority in the insurance sector under the Insurance Development and Regulatory Authority Act, 1999.

Foreign Investment Promotion Board

The Foreign Investment Promotion Board is a special agency in India dealing with the matters relating to Foreign Direct Investment. This special board was set up with a view to raise the volume of investment to the country. The sole aim of the board is to create a base in the country by which a larger volume of investment can be drawn to the country. On 18 February 2003, the board was transferred to the Department of Economic Affairs (DEA) Ministry of Finance. Important functions of the Board are as follows: Formulating proposals for the promotion of investment. Steps to implement the proposals. Setting friendly guidelines for facilitating more investors. Inviting more companies to make investment.

Foreign Investment Promotion Board

With regards to the structure of the Foreign Investment Promotion Board, the board comprises the following group of secretaries to the Government:
Secretary to Government Department of Economic Affairs, Ministry of Finance- Chairman. Secretary to Government Department of Industrial Policy and Promotion, Ministry of commerce and Industry. Secretary to Government, Economic Relations, Ministry of External Affairs. Secretary to Government, Ministry of Overseas Indian Affairs. In the recent years, particularly after the implementation of the new economic policy, the Government has undertaken many steps to attract more investors for investing in the country. The new proposals for the foreign investment are allowed under the automatic route keeping in view the sectoral practices.

Financial Regulation is Global


Most countries throughout the world have their own laws regulating the types of securities, investment and insurance products offered to their citizens and residents. Every state in the United States of America has insurance and investment compliance regulations. We give you insightful information on the regulators and what you need to do to get along with them. We also give overviews of the Securities Exchanges in the United States. Stock markets in the United States are regulated on a federal level, and on state level. We take a look at both.

Financial

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Currently, the Insurance Industry in the U.S is regulated primarily on the state level. We give you insightful information on the regulators and what you need to do to get along with them. We also give you insight on the pros and cons that is being discussed by U.S. Regulators, Insurance Industry and Special Interest Groups for the new Federal Insurance Department. We will also take a look at the Registered Investment Advisor (RIA) licensing and registration in the USA and other countries. We do this because it is important to professionals working in an ever-growing multicultural financial society.

Major Financial Institutions in India

This is a list on the major financial institutions in India and their respective date of starting operations.
Financial Institution Imperial Bank of India Reserve Bank of India Industrial Finance corporation of India State Bank of India Unit Trust of India IDBI NABARD SIDBI EXIM Bank National Housing Bank Life Insurance Corporation (LIC) General Insurance Corporation (GIC) Regional Rural Banks Risk Capital and Technology Finance Corporation Ltd. Technology Development & Info. Co. of India Ltd. Infrastructure Leasing & Financial Services Ltd. Housing Development Finance Corporation Ltd. (HDFC) Date of Starting 1921- 1935 April 1, 1935 1948 July 1, 1955 Feb. 1,1964 July 1964 July 12,1982 1990 January 1, 1982 July 1988 September 1956 November 1972 Oct. 2, 1975 March 1975 1989 1988 1997

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