Despite the 90’s globalization and the recent surge in the volume of digital payments, a vast segment of the Indian financial market is still unorganized. However, the share of the unorganized market has declined in the last couple of years. The credit goes to the visionary and decisive Government of India and to the financial regulatory authorities in India
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This article briefs the financial regulatory authorities in India, who are consistently taking new steps to organize and improvise the Indian financial sector.
An eco-system can remain healthy only if its organisms behave as per some set guidelines, instead of their own presumptions and predictions. These guidelines also develop a sense of accountability among the organisms and clearly distinguish the DO’s from the DONTs’. This in return, develops a healthy and transparent atmosphere for everyone. However, having some guidelines is one thing and abiding by them is another. Thus, a regulatory authority is needed to strictly ensure that every organism in the eco-system follows the guidelines.
Financial Regulatory Authorities in India
In the Indian financial market eco-system, there are 4 regulatory authorities which keep a strict tab on the activities of all its organisms.⇯
- Reserve Bank of India
- Securities and Exchange Board of India
- Maintain transparency in Indian security and commodity market
- Create and enforce bye-laws
- Listen to investor’s grievances and take action
- Insurance Regulatory and Development Authority of India
- Pension Fund Regulatory and Development Authority
- RBI
- SEBI
- IRDAI
- PFRDA
The Reserve Bank of India (RBI) is the apex of the Indian monetary system which controls the issue and supply of Indian Rupee. It plays a major role in the financial strategies of the Indian Government. The RBI regulates all the commercial banks and the non-banking finance companies of India.
Reserve Bank of India started operating in Calcutta on 01 April 1935, in accordance with the Reserve Bank of India Act, 1934. Later, it was moved to Mumbai in 1947. After India got independence in 1947, RBI was nationalized on 01 January 1949.
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Taking into account many complaints about frauds within the security market, in 1988 Govt. of India formed Securities and Exchange Board of India (SEBI). At that time SEBI did not have any powers. With SEBI Act 1992, Govt. of India made SEBI an autonomous body and provided statutory powers to it. Its head office is situated in Mumbai with 20 regional offices nationwide. Currently, SEBI regulates the security and the commodity market of India.
Main objectives of SEBI are
SEBI has also created a grievance support system for the investors called SCORES.
With the help of its 20 SEBI departments, it regulates the Indian security and commodity market.⇯
Insurance Regulatory and Development Authority of India (IRDAI) regulates the insurance and re-insurance industries of India. It was established after Govt. of India passed the Insurance Regulatory and Development Authority Act, 1999. Its headquarter is in Hyderabad, Telangana.
IRDAI is a 10 member body. It consists of one chairman, 5 full-time and 4 part-time members appointed by the Government of India.
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The Pension Fund Regulatory and Development Authority (PFRDA) was established on 23 August 2003 by Govt. of India. It is a statutory body which regulates the pension in India. It is administered by the Department of Financial Services, Ministry of Finance.
PFRDA body consists of one chairperson and not more than six members, of which at least three should be whole-time members to be appointed by Govt. of India.
Summarizing
In recent years several changes have been made by the Indian Government to bring transparency and increase the share of organized financial market in India. To assist the Indian Government in its initiatives, there are four regulators of Indian financial market viz
These regulators assist the Indian Government in their initiatives as well as, are the statutory body who have executive, legislative and judicial powers.