Regulators in the Financial Market of India – The Regulatory Setup

Financial Sector is one of the major sectors in the Indian Economy. It has been consistently rising since last 2 decades. There various tasks and operations performed in the financial market. There are many authorities who play important roles to regulate these processes. In this post, we will discuss the key regulators in the financial market in India who regulate the financial operations.

Regulators in the Financial Market in India

What is the Regulator?

A regulator is an authority or an institution who ensures the rational behaviour of security market participants. They make certain of the responsibilities of each of the player in the security market. They do it in order to protect the interests of investors. The regulators work to maintain the fairness and competitiveness of the marketplace where participants deliver a high quality of service. 

Various Regulators in the Indian Financial Market

Below is a list of key regulators in the Indian financial market:-

Ministry of Finance

The Ministry of Finance, within the government of India, concerns with the taxation, financial legislation, financial institutions, capital markets, budgets and centre and state finances. The finance ministry comprises the five departments which work as the major regulators in the financial market in India:-

  1. Department of Economic Affairs: It works as the nodal agency of the government which work out and monitors the economic policies. The primary responsibility of this department is the annual preparation of the union budget. the  It covers monetary and fiscal policies and functioning of the capital market. It also has the responsibilities of mobilization of external resources and the issuance of bank notes and coins. 
  2. Department of Expenditure: This department is responsible for the expenditure of the government of India. It administers the various financial rules and regulations such as service rules of the central government employees. It also has the responsibility of financial assistance to states and borrowing by states. 
  3. Department of Revenue: It controls all the matters related to the direct and indirect union taxes. It works under the direction of Revenue Secretary. It has two major statutory bodies – The Central Board of Direct Taxes (CBDT), and The Central Board of Indirect Taxes and Customs (CBIC). 
  4. Department of Financial Services: It covers Banks, Insurance, Financial services provided by the government agencies and private corporations. It also oversees the pension reforms, industrial finance and MSME. It has the statutory body Pension Fund Regulatory and Development Authority (PFRDA). 
  5. Department of Investment and Public Asset Management: Its older name was Department of Disinvestment. It is responsible for the management of the centre’s investments in equities and its disinvestment in Public Sector Undertakings (PSUs). 

Ministry of Corporate Affairs

The Ministry of Corporate Affairs is concerned with the administration of The Companies Act 2013, The Companies Act 1956, The Limited Liability Partnership Act 2008 and other acts and rules and regulations which are framed for regulating the functioning of the corporate sector. It is also responsible for administering The Competition Act 2002, It also oversees the three professional bodies – Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI), and the Institute of Cost Accountants of India (ICAI). 

Reserve Bank of India (RBI)

Reserve Bank of India (RBI) is an autonomous body and it is the major regulators in the financial market in India. It has the primary responsibility of administering the monetary policy of the Government of India. Its key responsibility is to make it certain the rational growth of the supply of money in the economy in order to facilitate economic growth and financial transactions. The key functionalities of the RBI are:-

  • Working as a Monetary Authority
  • Regulation and Supervision of the Financial System
  • Managing the Foreign Exchange
  • Issuance of the Currency
  • Role of Development
  • Regulation and Supervision of the Payments and Settlement System
  • Banker’s Bank
  • Banker and Debt Manager to the Government of India
  • Custodian to Foreign Exchanges

Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India (SEBI) is the autonomous statutory and regulatory body of the security market of India. It has the following major tasks to perform:-

  • Protection of the interests of investors in the security market.
  • Promotion and development of the security market.
  • Regulation of stock exchanges and related operations.
  • Regulations and monitoring of stock-brokers and sub-brokers.
  • Awareness of investors education training of intermediaries in the security market.
  • Prohibition of insider trading in securities and unfair trade practices.

Insurance Regulatory and Development Authority if India (IRDAI)

IRDAI is also one of the major regulators in the financial market in India. It is an autonomous and statutory body of the Government of India which has the primary responsibility of promoting and regulating the insurance and re-insurance industries in the country. The major functions are IRDAI are:-

  • Administering the registration of insurance companies.
  • Protecting the interests of policyholders.
  • Administering the intermediaries and agents in the insurance sector.
  • Promotion of the industry.
  • Adjudicating disputes.
  • Others.

 

 

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Tags: Finacial Market, Security Market, Regulators in the Financial Market in India

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