Financial Regulators in India | UGC NET Commerce Preparation Course PDF Download

Introduction

Who monitors for any injustice occurring in the country? Our law and order system.

Supervision, control, and policymaking are crucial components of maintaining efficient and stable institutions. Similarly, we have 'Financial Regulators' that oversee the Indian Financial System. These regulators are government bodies responsible for regulating the financial services industry, including markets, exchanges, and firms.

Purpose and Objectives of Financial Regulators

• Market Confidence: To uphold trust in the financial system.
• Financial Stability: To contribute to the protection and enhancement of the system's overall stability.
• Consumer Protection: To ensure consumers receive adequate protection.
• Reduction of Financial Crimes: To minimize the potential for regulated businesses to be exploited for financial crimes.

Reserve Bank of India (RBI)

• The Reserve Bank of India is entrusted with statutory powers to supervise and promote efficient banking in India.
• It holds broad authority in policymaking, regulation, and supervision over commercial, co-operative, and regional banks.
• No bank can be established without a license from the RBI, which directly oversees nationalized banks and regional rural banks.
• Its key roles include ensuring price, financial, and monetary stability, regulating credit and currency, and fostering the development of a robust financial structure in the country.

Securities and Exchange Board of India (SEBI)

• SEBI is the apex regulatory body overseeing the securities market in India.
• Established in 1988 and granted statutory power on April 12, 1992, SEBI is responsible for creating guidelines and codes of conduct for financial intermediaries and corporations.
• Its functions include regulating stock exchange business, conducting inquiries and audits of exchanges, and registering and safeguarding the interests of brokers, sub-brokers, investment advisors, portfolio managers, and other intermediaries.
• SEBI also regulates credit rating agencies, prevents insider trading and unfair trade practices, and levies fees to ensure compliance with the law.

Pension Fund Regulatory and Development Authority (PFRDA)

• Established under the PFRDA Act of 2003, the PFRDA is the statutory authority overseeing pension funds in India.
• Operating under the Ministry of Finance's Department of Financial Services, the PFRDA regulates pension fund managers, the Central Recordkeeping Agency (CRA), and the NPS Trustee Bank.
• It works to protect pension scheme subscribers, promote old age income security, resolve disputes between intermediaries and subscribers, and set norms for managing pension fund corpuses.

Insurance Regulatory and Development Authority of India (IRDAI)

• The IRDAI is the statutory body tasked with regulating and developing the insurance industry in India.
• Formed under the IRDA Act of 1999, it is headquartered in Hyderabad, Telangana.
• Its duties include issuing, renewing, and canceling insurance licenses, setting qualifications and training standards for agents and intermediaries, and protecting policyholders' rights.
• IRDAI also promotes efficiency in the insurance sector, regulates insurance fund investments, and resolves disputes between insurers and intermediaries.

 Forward Markets Commission (FMC)

• Previously the regulatory authority for the commodity market in India, the FMC oversaw forward and futures markets, advising the government on matters related to the Forward Contracts Act of 1952.
• In 2015, the FMC was merged with SEBI, effectively transferring its regulatory duties over to SEBI.