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CONCEPT - REGULATORY BODIES IN INDIA
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- Independent regulators: Indian financial system is regulated by some independent regulators. They oversee fields like banking, insurance, capital markets, commodities market, and pension funds.
- Government's role: Regulators may not be totally independent, as the Indian govt. plays a significant role in controlling the financial system in India.
- Six major financial regulators: The top regulators in India are listed. The first four are made by Parliamentary Acts, while the last two are part of government Ministries.
- Reserve Bank of India (RBI) - Monetary system
- Securities and Exchange Board of India (SEBI) - Securities markets
- Insurance Regulatory and Development Authority of India (IRDAI) - Insurance market
- Insolvency and Bankruptcy Board of India (IBBI) - Regulates IBC processes
- Forward Market Commission of India (FMC) - Commodity trading
- Pension Fund Regulatory and Development Authority (PFRDA) - Pension markets
- RBI as an apex monetary institution: Established in April, 1935 in Calcutta, the Reserve Bank of India (RBI) later moved to Mumbai in 1937. After its nationalization in 1949, RBI is presently owned by the Govt. of India. It has 19 regional offices, and 9 sub-offices. It is the issuer of the Indian Rupee. RBI regulates the banking and financial system of the country by issuing broad guidelines and instructions. It controls the money supply, monitors key indicators like GDP and inflation, maintains people’s confidence in the banking and financial system by providing tools such as ‘Ombudsman’. It also formulates monetary policies such as inflation control, bank credit and interest rate control
- SEBI as a regulatory body for the securities market: The Securities and Exchange Board of India (SEBI) was established in 1988 but got legal status in 1992 to regulate the functions of securities market to keep a check on malpractices and protect the investors. Headquartered in Mumbai, SEBI has its regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. It protects the interests of investors through proper education and guidance, regulates and control the business on stock exchanges and other security markets, stops fraud in capital market, and audits the performance of stock market.
- Insurance Regulatory and Development Authority of India (IRDAI): The IRDAI is an autonomous apex statutory body for regulating and developing the insurance industry in India. It was established in 1999 through an act passed by the Indian Parliament. Headquartered in Hyderabad, Telangana, IRDA regulates and promotes insurance business in India.
- The Insolvency and Bankruptcy Board of India (IBBI): The IBBI was established on 1st October, 2016 under the Insolvency and Bankruptcy Code, 2016 (Code). It is a key pillar of the ecosystem responsible for implementation of the Code that consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. The IBBI regulates a profession as well as processes, with regulatory oversight over the Insolvency Professionals (IPs), Insolvency Professional Agencies (IPAs), Insolvency Professional Entities and Information Utilities. It writes and enforces rules for processes, namely, corporate insolvency resolution, corporate liquidation, individual insolvency resolution and individual bankruptcy under the Code. It is also designated as the ‘Authority’ under the Companies (Registered Valuers and Valuation Rules), 2017 for regulation and development of the profession of valuers in the country.Forward Market Commission of India (FMC): Headquartered in Mumbai, the FMC is a regulatory authority governed by the Ministry of Finance, Govt. of India. It is a statutory body, established in 1953 under the Forward Contracts (Regulation) Act, 1952. The commission allows in 22 exchanges in India. The FMC is now merged with SEBI.
- Pension Fund Regulatory and Development Authority (PFRDA): Established in October 2003 by the Government of India, PFRDA develops and regulates the pension sector in India. The National Pension System (NPS) was launched in January 2004 with an aim to provide retirement income to all the citizens. The objective of NPS is to set up pension reforms and inculcate the habit of saving for retirement amongst the citizens.
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