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. It's monetary policy acts as a major weapon in India's financial market.
Securities and Exchange Board of India (SEBI) is one of the regulatory authorities for India's capital market.
Securities and Exchange Board of India(SEBI)
Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market. It became an autonomous body in 1992 and more powers were given through an ordinance. Since then it regulates the market through its independent powers.
Objectives of SEBI
As an important entity in the market it works with following objectives:
Functions Of 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:
National Stock Exchange
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. The NSE India ranked its 3rd position since last four years in terms of total number of trading per calendar year.
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.
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 have drawn the attention over the globe.
As to the statistics, the total turnover from BSE transcation as in June 2006 is calculated at 72013.36 crores.
Companies In BSE:
Companies listed on the Bombay Stock is rising very fast. As to statistics, companies listed to the end of March 1994 reached at 3,200 compared to 992 in 1980.
Reserve Bank of India
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.
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."
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.
To advise the Central Board on local matters and to represent territorial and economic interests of local cooperative and indigenous banks, to perform such other functions as delegated by Central Board from time to time.
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:
With regards to the structure of the Foreign Investment Promotion Board, the board comprises the following group of secretaries to the Government:
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
Major Financial Institutions in India
This is a list on the major financial institutions in India and their respective date of starting operations.
||Date of Starting|
|Imperial Bank of India
|Reserve Bank of India||April 1, 1935|
|Industrial Finance corporation of India||1948|
|State Bank of India
||July 1, 1955|
|Unit Trust of India
||January 1, 1982|
|National Housing Bank||July 1988|
|Life Insurance Corporation (LIC)
|General Insurance Corporation (GIC)||November 1972|
|Regional Rural Banks||Oct. 2, 1975|
|Risk Capital and Technology Finance Corporation Ltd.
|Technology Development & Information Co. of India Ltd.||1989|
|Infrastructure Leasing & Financial Services Ltd.
|Housing Development Finance Corporation Ltd. (HDFC)