CAPITAL MARKET:

1
The capital market is the market for securities, where Companies and governments can raise
long-term funds. It is a market in which money is lent for periods longer than a year. A nation's
capital market includes such financial institutions as banks, insurance companies, and stock
exchanges that channel long-term investment funds to commercial and industrial borrowers.
Unlike the money market, on which lending is ordinarily short term, the capital market typically
finances fixed investments like those in buildings and machinery. Nature and Constituents: The
capital market consists of number of individuals and institutions (including the government) that
canalize the supply and demand for long- term capital and claims on capital. The stock exchange,
commercial banks, co-operative banks, saving banks, development banks, insurance companies,
investment trust or companies, etc., are important constituents of the capital markets.

The capital market, like the money market, has three important Components, namely the
suppliers of loanable funds, the borrowers and the Intermediaries who deal with the leaders on
the one hand and the Borrowers on the other.

The demand for capital comes mostly from agriculture, industry, trade The government.
The predominant form of industrial organization developed Capital Market becomes a
necessary infrastructure for fast industrialization. Capital market not concerned solely
with the issue of new claims on capital, But also with dealing in existing claims.

DEBT OR BOND MARKET:

The bond market2 (also known as the debt, credit, or fixed income market) is a financial market
where participants buy and sell debt securities, usually in the form of bonds. Nearly all of the
$822 billion average daily trading volume in the U.S. bond market takes place between broker-
dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a
small number of bonds, primarily corporate, are listed on exchanges.

1 WWW.SBIMF.COM

2 WWW.SBIMF.COM
References to the "bond market" usually refer to the government bond market, because of its
size, liquidity, lack of credit risk and, therefore, sensitivity to interest rates. Because of the
inverse relationship between bond valuation and interest rates, the bond market is often used to
indicate changes in interest rates or the shape of the yield curve.

DEBT OR EQUITY
+ MARKET
BOND

MARKET

CAPITAL MARKET

STOCK OR EQUITY MARKET

A stock market or equity market is a public market for the trading of company stock and
derivatives at an agreed price; these are securities listed on a stock exchange as well as those
only traded privately. The stocks are listed and traded on stock exchanges which are entities of a
corporation or mutual organization specialized in the business of bringing buyers and sellers of
the organizations to a listing of stocks and securities together. The largest stock market in the
United States, by market cap is the New York Stock Exchange, NYSE, while in Canada, it is the
Toronto Stock Exchange. Major European examples of stock exchanges include the London
Stock Exchange, Paris Bourse, and the Deutsche Brse. Asian examples include the Tokyo Stock
Exchange, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay
Stock Exchange..
Primary Market
also called the new issue market, is the market for issuing new securities. Many companies,
especially small and medium scale, enter the primary market to raise money from the public to
expand their businesses. They sell their securities to the public through an initial public offering.
The securities can be directly bought from the shareholders, which is not the case for the
secondary market. The primary market is a market for new capitals that will be traded over a
longer period.

In the primary market, securities are issued on an exchange basis. The underwriters, that is, the
investment banks, play an important role in this market: they set the initial price range for a
particular share and then supervise the selling of that share.

Investors can obtain news of upcoming shares only on the primary market. The issuing firm
collects money, which is then used to finance its operations or expand business, by selling its
shares. Before selling a security on the primary market, the firm must fulfill all the requirements
regarding the exchange.

After trading in the primary market the security will then enter the secondary market, where
numerous trades happen every day. The primary market accelerates the process of capital
formation in a country's economy.

The primary market categorically excludes several other new long-term finance sources, such as
loans from financial institutions. Many companies have entered the primary market to earn profit
by converting its capital, which is basically a private capital, into a public one, releasing
securities to the public. This phenomena is known as "public issue" or "going public."

There are three methods though which securities can be issued on the primary market: rights
issue, Initial Public Offer (IPO), and preferential issue. A company's new offering is placed on
the primary market through an initial public offer.
Secondary Market
is the market where, unlike the primary market, an investor can buy a security directly from
another investor in lieu of the issuer. It is also referred as "after market". The securities initially
are issued in the primary market, and then they enter into the secondary market.

All the securities are first created in the primary market and then, they enter into the secondary
market. In the New York Stock Exchange, all the stocks belong to the secondary market.

In other words, secondary market is a place where any type of used goods is available. In the
secondary market shares are maneuvered from one investor to other, that is, one investor buys an
asset from another investor instead of an issuing corporation. So, the secondary market should be
liquid.

Example of Secondary market: In the New York Stock Exchange, in the United States of
America, all the securities belong to the secondary market

Computerization
3
Automated Trading System: Today our country has an advanced trading system which is a
fully automated screen based trading system. This system adopts the principle of an order driven
market as opposed to a quote driven system.
i) NSE operates on the 'National Exchange for Automated Trading' (NEAT) system.

ii) BSE operates on the BSEs Online Trading (BOLT) system.

Order Management in Automated Trading System: The trading system provides

complete flexibility to members in the kinds of orders that can be placed by them. Orders
are first numbered and time-stamped on receipt and then immediately processed for
potential match.
Every order has a distinctive order number and a unique time stamp on it. If a match is not
found, then the orders are stored in different 'books'. Orders are stored in price-time priority in

3 Books.google.co.in
various books in the following sequence: Best Price, Within Price, by time priority. Price
priority means that if two orders are entered into the system, the order having the best price gets
the higher priority. Time priority means if two orders having the same price are entered, the order
that is entered first gets the higher priority.
Order Matching Rules in Automated trading system: The best buy order is matched
with the best sell order. An order may match partially with another order resulting in
multiple trades. For order matching, the best buy order is the one with the highest price
and the best sell order is the one with the lowest price. This is because the system views
all buy orders available from the point of view of a seller 25 and all sell orders from the
point of view of the buyers in the market. So, of all buy orders available in the market at
any point of time, a seller would obviously like to sell at the highest possible buy price
that is offered. Hence, the best buy order is the order with the highest price and the best
sell order is the order with the lowest price.

Members can proactively enter orders in the system, which will be displayed in the system till
the full quantity is matched by one or more of counter-orders and result into trade(s) or is
cancelled by the member. Alternatively, members may be reactive and put in orders that match
with existing orders in the system. Orders lying unmatched in the system are 'passive' orders and
orders that come in to match the existing orders are called 'active' orders. Orders are always
matched at the passive order price. This ensures that the earlier orders get priority over the orders
that come in later.
Order Conditions in Automated Trading System: A Trading Member can enter
various types of orders depending upon his/her requirements. These conditions are
broadly classified into three categories:

Time Related Condition

Price Related Condition

Quantity Related Condition

 4TimeConditions
a) Day Order - A Day order, as the name suggests, is an order which is valid for the
day on which it is entered. If the order is 26 not matched during the day, the order gets cancelled
automatically at the end of the trading day.

b) GTC Order - Good Till Cancelled (GTC) order is an order that remains in the
system until it is cancelled by the Trading Member. It will therefore be able to span
trading days if it does not get matched. The maximum number of days a GTC order can
remain in the system is notified by the Exchange from time to time

. c) GTD - A Good Till Days/Date (GTD) order allows the Trading Member to specify
the days/date up to which the order should stay in the system. At the end of this period
the order will get flushed from the system. Each day/date counted is a calendar day and
inclusive of holidays. The days/date counted are inclusive of the day/date on which the
order is placed. The maximum number of days a GTD order can remain in the system is
notified by the Exchange from time to time.

d) IOC - An Immediate or Cancel (IOC) order allows a Trading Member to buy or sell
a security as soon as the order is released into the market, failing which the order will be
removed from the market. Partial match is possible for the order, and the unmatched
portion of the order is cancelled immediately.
Price Conditions

a) Limit Price/Order An order that allows the price to be specified while entering the order
into the system.

b) Market Price/Order An order to buy or sell securities at the best price obtainable at the
time of entering the order. 27

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Stop Loss (SL) Price/Order The one that allows the Trading Member to place an order which
gets activated only when the market price of the relevant security reaches or crosses a threshold
price. Until then the order does not enter the market. A sell order in the Stop Loss book gets
triggered when the last traded price in the normal market reaches or falls below the trigger price
of the order. A buy order in the Stop Loss book gets triggered when the last traded price in the
normal market reaches or exceeds the trigger price of the order. E.g. If for stop loss buy order,
the trigger is 93.00, the limit price is 95.00 and the market (last traded) price is 90.00, then this
order is released into the system once the market price reaches or exceeds 93.00. This order is
added to the regular lot book with time of triggering as the time stamp, as a limit order of 95.00

INFORMATION TECHNOLOGYS ROLE TO REGULATE

STOCK MARKET
5In the 21st century the business world is marked by drastic changes. These changes are
paced by continuous innovations in computer & telecommunicating technologies. The
choice of a relevant IT is a crucial decision as it is bound to have a long term & lasting
impact on the future of the enterprise. Up-gradation of technology helps in increasing
productivity, reducing cost & in improving total quality. IT is being helpful & has a great
impact in business.
IT can help to identify the critical areas for competitive advantage of business
organization.
Competitive advantages may be achieved by various techniques is business with the help
of IT.
Helps in managing strategic alignment of critical business process.
Decision-making and operational control by managers has been improved by IT.
IT can help in maintaining the changing relationship with customers, suppliers, trials,
potential new entrants, etc.
IT in business results in improved communication, decreased costs, reducing decision
making time, monitoring the competitors and better control on transaction.

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 IT can be used as innovation in functioning of the complete business system during
strategic business planning.
IT is helpful in increasing the speed of flow of trade, reducing paperwork & emergence
of global financial system.
Growth and Promotion of Information Technology in Stockmarket in India

MODERN TRENDS OF IT IN INDIA

The help of online database on both national and international information can be accessed
which he valuable tool for making decisions. Expansion of e-commerce, e-business, m-
commerce etc has emerged as a sunrise market for the software industry business. The modern
trends of IT in India are as follows:

E-commerce
Electronic Commerce is doing business online or selling and buying products & services through
Web storefronts. The use of computer is a primary tool to perform basic business operations..
The functional areas covered by it are: finances, information services, human resources,
manufacturing, and marketing. Electronic business also requires the firms interaction with the
environmental parties such as government, competitors, labour unions etc.

MCommerce
6
M- Commerce (M-Com) is a type of e-commerce that enables the users to access the internet
through handheld wireless devices. Buying & selling, the services are accomplished by means of
cellular phones, personal data assistants such as palm pilots and their combination. M-Commerce
has a great market potential due to its faster and more secured wireless working as compared to
the working of wire line e-commerce. It saves time and money. It is quick and safe also due to
mobile speed passwords. For example, in mobile banking, the customers can access their
accounts through handheld devices from anyplace. They need not sit in front of their computer
(having Internet connectivity). They can pay their bills, can see the stock quotations and trading

6 Sgsrjournal.
and can acquaint themselves with any desired information from anywhere. They can even know
about traffic bottlenecks, if any, in their movement way.

STOCK TRADING AND INFORMATION TECHNOLOGY

REVOLUTION Information technology has made a tremendous development in respect
of our approach at a mass level. It opens the door of several avenues as well as has brought in
several threats, which should be analyzed carefully. Due to development in technology, the
information can be transferred from one place to another in very short span of time, earlier which
required lot of time. Transfer of large information and storing capacity for a long period also has
some draw backs, inherent in the process itself. For example, manipulation of message is very
easy and it requires small level of technical literacy. It is also observed that master in a subject
may not be Growth and Promotion of Information Technology in Stock market in India Priya
many times able to express his views effectively as compared to a person having less knowledge
of subject but more computer literacy, who can make better presentations. Here, the knowledge
part of the core subject has been compromised with proficiency with technology. Whole
economy of the world is very much dependent upon the technological advancement. This
increased competition in each segment of the market. The Internet makes the stock exchange
accessible in the global market. Being more accessible will give them the opportunity to pick up
a bigger market share, and give them a greater market value. There has been a migration from a
Screen based trading system for government securities to an order matching system so as result
in better price discovery and more transparency in the market related transactions in government
securities Negotiated Dealing System (NDS)- which has been in use for many years now, has
been enhanced to provide for changing market and regulatory requirements. Clearing
Corporation Of India Ltd., (CCIL) as a fully IT enabled entity providing for electronic
transaction processing as well as reporting has enabled the market to grow in depth and coverage
as well. Use of the Multi-Lateral Net Settlement Batch facility for effecting the settlements
arrived at by various clearing systems (such as the Stock Exchanges), through the RTGS mode
Pilot projects entailing the use of Multi Application Smart cards have not only yielded
satisfactory results; their usage for financial inclusion has opened up new vistas for their wide
spread use across the country. Use of credit transfer based RTGS transactions by brokers,
constituents etc. pertaining to the funds leg of secondary market transactions. To provide an
interactive and user friendly service, banks and financial institutions have adopted the most
recent technological trends. Queuing at banks is a thing of the past; now-a-days customers can
enjoy various facilities at the doorstep of their banks and at other locations. Phone banking and
SMS banking services can also keep customers updated with the status of their money,
investments and offer an array of additional services

INFORMATION TECHNOLOGY (IT) SHAPING INDIAN

STOCK MARKET Traditionally stock trading is done through stock brokers,
personally or through telephones. As number of people trading in stock market increase
enormously in last few years, some issues like location constrains, busy phone lines, miss
communication etc start growing in stock broker offices. Information technology (stock market
software) helps stock brokers in solving these problems with online stock trading. It is an internet
based stock trading facility. Investor can trade shares through a website without any manual
intervention from stock Broker. In this case these online stock trading companies are stock
broker for the investor. They are registered with one or more Stock Exchanges. Mostly online
trading websites in India trades in BSE and NSE. Installable Software Based Stock Trading
Terminals and Web (Internet) Based Trading Applications are two different type of trading
environments available for online equity trading.
Installable Software Based Stock Trading Terminals
These trading environments require software to be installed on investors computer. This
software is provided by the stock broker. This software requires high speed internet connection.
These kind of trading terminals are used by high volume intraday equity traders.
Orders directly send to stock exchanges rather than stock broker. This makes order execution
very fast.
It provide almost each and every information which is required to a trader on a single screen
including stock market charts, live data, alerts, stock market news etc.
Web (Internet) Based Trading Applications
This kind of trading environments doesnt require any additional software installation. They are
like other internal websites which investor can access from around the world through normal
internet connection such as:
 Real time stock trading without calling or visiting brokers office.
Display real time market watch, historical data, graphs etc.
Investment in IPOs, mutual funds and bonds.
Check the trading history; demat account balance and bank account balance at any time.
Provide online tools like market watch, graphs and recommendations to do analysis of
stocks.
Place offline orders for buying or selling stocks.
Set alert to inform you certain activity on the stock through email or sms.
Customer service through email or chat.

OTHER IMPORTANT DEVELOPMENTS:

What are other developments in the Indian Capital Market?" is not only important
question for finance students but there are large number of investors, researchers and companies
may also be interested in this topic
Development of Indian Capital Market:
7
Indian Capital Market before Independence:

Indian capital market was hardly existent in the pre-independence times. Agriculture was the
mainstay of economy but there was hardly any long term lending to agricultural sector. Similarly
the growth of industrial securities market was very much hampered since there were very few
companies and the number of securities traded in the stock exchanges was even smaller.

Indian capital market was dominated by gilt-edged market for government and semi-government
securities. Individual investors were very few in numbers and that too were limited to the
affluent classes in the urban and rural areas. Last but not the least, there were no specialised
intermediaries and agencies to mobilise the savings of the public and channelise them to
investment.

Indian Capital Market after Independence:

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Since independence, the Indian capital market has made widespread growth in all the areas as
reflected by increased volume of savings and investments. In 1951, the number of joint stock
companies (which is a very important indicator of the growth of capital market) was 28,500 both
public limited and private limited companies with a paid up capital of Rs. 775 crore, which in
1990 stood at 50,000 companies with a paid up capital of Rs. 20,000 crore. The rate of growth of
investment has been phenomenal in recent years, in keeping with the accelerated tempo of
development of the Indian economy under the impetus of the five year plans.

Factors Influencing Capital Market:

The firm trend in the market is basically affected by two important factors: (i) operations of the
institutional investors in the market; and (ii) the excellent results flowing in from the corporate
sector.

New Financial Intermediaries in Capital Market:

Since 1988 financial sector in India has been undergoing a process of structural transformation.

Some important new financial intermediaries introduced in Indian capital market are:

Merchant Banking:

Merchant bankers are financial intermediaries between entrepreneurs and investors. Merchant
banks may be subsidiaries of commercial banks or may have been set up by private financial
service companies or may have been set up by firms and individuals engaged in financial up by
firms and individuals engaged in financial advisory business. Merchant banks in India manage
and underwrite new issues, undertake syndication of credit, advice corporate clients on fund
raising and other financial aspects.

Since 1993, merchant banking has been statutorily brought under the regulatory framework of
the Securities Exchange Board of India (SEBI) to ensure greater transparency in the operation of
merchant bankers and make them accountable. The RBI supervises those merchant banks which
were subsidiaries, or are affiliates of commercial banks.

Leasing and Hire-Purchase Companies:

Leasing has proved a popular financing method for acquiring plant and machinery specially or
small and medium sized enterprises. The growth of leasing companies has been due to
advantages of speed, informality and flexibility to suit individual needs.

The Narasimhan Committee has recognized the importance of leasing and hire-purchase
companies in financial intermediation process and has recommended that: (i) a minimum capital
requirement should be stipulated; (ii) prudential norms and guidelines in respect of conduct of
business should be laid down; and (iii) supervision should be based on periodic returns by a
unified supervisory authority.

Mutual Funds:

It refers to the pooling of savings by a number of investors-small, medium and large. The corpus
of fund thus collected becomes sizeable which is managed by a team of investment specialists
backed by critical evaluation and supportive data.

A mutual fund makes up for the lack of investors knowledge and awareness. It attempts to
optimise high return, high safety and high liquidity trade off for maximum of investors benefit.
It thus aims at providing easy accessibility of media including stock market in country to one and
all, especially small investors in rural and urban areas.

Mutual funds are most important among the newer capital market institutions. Several public
sector banks and financial institutions set up mutual funds on a tax exempt basis virtually on
same footing as the Unit Trust of India (UTI) and have been able to attract strong investor
support and have shown significant progress.

Government has now decided to throw open the field to private sector and joint sector mutual
funds. At present Securities and Exchange Board of India (SEBI) has authority to lay down
guidelines and to supervise and regulate working of mutual funds.

The guidelines issued by the SEBI in January 1991, are related in advertisements and disclosure
and reporting requirements etc. The investors have to be informed about the status of their
investments in equity, debentures, government securities etc.
The Narasimhan Committee has made the following recommendations regarding mutual funds:
(i) creation of an appropriate regulatory framework to promote sound, orderly and competitive
growth of mutual fund business: (ii) creation of proper legal framework to govern the
establishments and operation of mutual funds (the UTI is governed by a special statute), and (iii)
equality of treatment between various mutual funds including the UTI in the area of tax
concessions.

Global Depository Receipts (GDR):

Since 1992, the Government of India has allowed foreign investment in the Indian securities
through the issue of Global Depository Receipts (GDRs) and Foreign Currency Convertible
Bonds (FCCBs). Initially the Euro-issue proceeds were to be utilized for approved end uses
within a period of one year from the date of issue.

Since there was continued accumulation of foreign exchange reserves with RBI and there were
long gestation periods of new investment the government required the issuing companies to
retain the Euro-issue proceeds abroad and repatriate only as and when expenditure for the
approved end uses were incurred.

Venture Capital Companies (VCC):

The aim of venture capital companies is to give financial support to new ideas and to
introduction and adaptation of new technologies. They are of a great importance to technocrat
entrepreneurs who have technical competence and expertise but lack venture capital.

Financial institutions generally insist on greater contribution to the investment financing, in

which technocrat entrepreneurs can depend on venture capital companies. Venture capital
financing involves high risk.

According to the Narasimhan Committee the guidelines for setting up of venture capital
companies are too restrictive and unrealistic and have impeded their growth. The committee has
recommended a review and amendment of guidelines.
Knowing the high risk involved in venture capital financing, the committee has recommended a
reduction in tax on capital gains made by these companies and equality of tax treatment between
venture capital companies and mutual funds.

8
Other New Financial Intermediaries:

Besides the above given institutions, the government has established a number of new financial
intermediaries to serve the increasing financial needs of commerce and industry is the area of
venture Capital, credit rating and leasing etc.

(1) Technology Development and Information Company of India (TDICI) Ltd., a technology
venture finance company, which sanctions project finance to new technology venture since 1989.

(ii) Risk Capital and Technology Finance Corporation (RCTFC) Ltd., which provides risk capital
to new entrepreneurs and offers technology finance to technology-oriented ventures since 1988.

(iii) Infrastructure Leasing and Financial Services (IL&FS) Ltd., set up in 1988 focuses on
leasing of equipment for infrastructure development.

(iv) The credit rating agencies namely credit rating information services of India (CRISIS) Ltd.,
setup in 1988; Investment and Credit Rating Agency (ICRA) setup in 1991, and Credit Analysis
and Research (CARE) Ltd., setup in 1993 provide credit rating services to the corporate sector.

Credit rating promotes investors interests by providing them information on assessed

comparative risk of investment in the listed securities of different companies. It also helps
companies to raise funds more easily and at relatively cheaper rate if their credit rating is high.

(v) Stock Holding Corporation of India (SHCIL) Ltd., setup in 1988, with the objective of
introducing a book entry system for transfer of shares and other type of scrips thereby avoiding
the voluminous paper work involved and thus reducing delays in transfers

INVESTORS PROBLEMS AND PROTECTION

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9
Misleading Advertisement

The investors have complaint regarding the contents of the advertisement, brochures etc, which
contains exaggerated claims of the performance of the product and misleading information. This
is high in NFO products. This is a case of clear violation of the investors right to receive true and
adequate disclosures. The offer document and advertisement materials shall not be misleading or
contain any statement or opinion which are incorrect or false.

Disclosure in the Offer Document

The offer document shall contain disclosures which are adequate in order to enable the investors
to make informed investment decision (including the disclosure of maximum investments
proposed to be made by the scheme in the listed securities of the group companies of the
sponsor). No Asset Management Company shall issue any form of application for units of a
mutual fund unless the form is accompanied by the memorandum containing such information as
may be specified by the board.

Delay in Allotment Units of NFO

According to SEBI, the mutual fund should allot units/refund of money within 5 business days
from the closure of the NFO and all the schemes (except ELSS) shall be available for ongoing
repurchase/sale/trading within five business days of allotment. But sometimes mutual fund
companies delayed in allotment of units.

Non Payment of dividend

This is the major problem faced by the mutual fund investors in India. Non-receipt of dividends
and redemption proceeds remains the biggest worry for mutual fund investors. According to data
put up so far on the AMFI website, the 37 fund houses have received 61,604 'non-receipt of
dividend' complaints in the financial year 2009-10.6

Non receipt of Redemption Proceeds

9 Fernando, A.C., (2009), Business Ethics: An Indian Perspective, Pearson

Education India, p.204.
Non receipt of redemption proceeds remains the biggest worry for mutual fund investors.
Followed by non payment of dividend, there were 51,509 complaints pertaining to non-receipt of
redemption proceeds. In case of failures to dispatch the redemption/repurchase proceeds within
the stipulated time period, Asset Management Company is liable to pay interest as specified by
SEBI from time to time (15% at present).

Delay in dispatch of account statement

Account statement is like a share certificate, it contain the details of name of the fund/scheme,
account number, number of units allotted, date of transaction etc. The asset management
company shall issue to the applicant whose application has been accepted, unit certificate or
statement of accounts specifying the number of units allotted to the applicant as soon as possible
but not later than six weeks from the date of closure of the initial subscription list7. 10

Investment against objectives of the scheme.

Every scheme should have an investment objective. It should be clearly mentioned in the
prospectus. Sometimes the fund follows different investment strategy which is against or
different mentioned in the prospectus.

Non Receipt of annual reports

The scheme wise annual report of a mutual fund shall be published and mail mutual fund
investors or unit holders11. It is the right of every investor.

Delay in listing of close ended schemes.

Every close ended scheme shall be listed in a recognized stock exchange within six months from
the closure of the subscription. But there is a delay in listing of these funds in stock exchange.

INVESTORS PROBLEM AND PROTECTION:

Redressal measures

10 SEBI Mutual Fund Amendment Regulation, op.cit.

11 SEBI Mutual Fund Amendment Regulation, op.cit.

Investors would find the name of contact person in the offer document of the mutual fund
scheme whom they may approach in case of any query, complaints or grievances. Trustees of a
mutual fund monitor the activities of the mutual fund. The names of the directors of asset
management company and trustees are also given in the offer documents. All mutual fund
companies have their own grievance cell. Investors should approach the concerned Mutual
Fund / Investor Service Centre of the Mutual Fund with their complaints, if the complaints
remain unresolved, the investors may approach SEBI for facilitating redressal of their
complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund
and follows up with it regularly.

The basic objective of the government and the regulatory bodies is the protection of interest of
investors. For these activities various market participants are to be brought under legal
framework. In this regard government of India has made an elaborate legislative framework
through various acts like Consumer Protection Act 1986 and SEBI act 1992.

Investor Helpline is a free of charge dedicated online portal to handle investor grievances
administered by different authorities i.e. Ministry of Corporate Affairs, Securities and Exchange
Board of India (SEBI) and Reserve Bank of India (RBI) in a focused and sustained manner.

Role of SEBI on investor protection

SEBI is the important regulator in the Indian capital market. It is armed with statutory powers
through the promulgation of SEBI act 1992. It has also the power of a civil court and summon all
categories of market intermediaries to investigate on their working, to impose penalty to initiate
prosecution against them. The following steps are taken by SEBI to give remedy to investor

OIAE

The Office of Investor Assistance and Education (OIAE) acts as the single window interface,
interacting with investors seeking assistance of SEBI. Investors can submit their grievances in
any form i.e. plain paper, post card, via e-mail etc., at the Head Office at Mumbai or at any of the
Regional Offices at Delhi, Chennai, Kolkata and Ahmedabad. Besides, grievances can also be
filed in standardised forms that are available at all its offices. Investors also have the option to
electronically file their grievances through the SEBI website (www.sebi.gov.in). All complaints
received by SEBI (excluding those which refers/pertain to investigation) are individually
acknowledged with unique number, which facilitates tracking. Dedicated investor helpline
telephone numbers are available for investors seeking general guidance pertaining to securities
markets and to provide assistance in filing grievances. Dedicated personnel manning the helpline
also guide the investors in filing up the grievance submission forms as well as in determining the
appropriate authority for their first recourse. Guidance is also provided to approach the
appropriate authority if their grievance is outside the purview of SEBI. The grievances lodged by
investors are taken up with the respective listed. During 2009-10, SEBI received 32,335
grievances from investors and resolved 42,742 grievances as compared to 57,580 grievances
received and 75,989 grievances resolved in 2008-09. As on March 31, 2010 there were 1,60,593
grievances pending resolution as compared to 1,71,000 unresolved grievances as on March 31,
2009. These include 1,22,713 complaints where appropriate regulatory actions have been
initiated9.

Investor Awareness Division (IAD)

A separate division namely, the Investor Awareness Division (IAD), was created to rejuvenate
and to bring focused attention on the activities of the Board pertaining to investor education and
awareness. IAD also handles work pertaining to financial literacy initiatives of the board.

Investors Associations

Informed investment decisions by investors have been the key thrust of the investor protection
initiatives of the Board. Towards educating investors and to spread awareness, SEBI continues it,
association with Investors Associations (IA) who play a role in this regard by conducting
investor education workshops. Educative material developed by SEBI was distributed in these
workshops. At the end of March 2010, there were 22 IAs that were recognised by SEBI. The
feedback/suggestions from the IA are used as inputs for policy decisions of the Board.