Regulatory Institutions

• RBI
• SEBI
• IRDA
• NABARD
• NHB
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 Reserve Bank of India

– Set up in 1935 as a private shareholders’ bank

- Nationalized in January, 1949 by the RBI Act
1948
- Apex institution in the banking and financial
systems of India

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 Objectives of RBI

– Maintain the internal value of the nation’s currency;

– Preserve the external value of the currency;

– Secure reasonable price stability; and

– Promote economic growth through increasing

employment, output and real income.

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 Functions of RBI
The functions of RBI may be classified into two categories: a)
Traditional functions, and b) Developmental functions
a) Traditional Functions:
– RBI acts as a lender of last resort;
– It acts as a banker to banks;
– It issues currency and operates the clearing system for banks;
– It supervises the operations of credit institutions;
– It acts as the custodian of the foreign reserves;
– It formulates and implements monetary and credit policies;
– It moderates the fluctuations in the exchange value of the
rupee.

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 RBI Contd…..
b) Developmental Functions:
– The prime developmental function is to integrate the
unorganized financial sector with the organized financial
sector;
– It encourages opening of semi-urban and rural branches;
– It provides education and training to banking personnel of
commercial and co-operative banks;
– It influences the allocation of credit;
– It promotes the collection pooling and dissemination of
credit information among banks;
– It promotes the establishment of new institutions.
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 Securities Exchange Board of India (SEBI)
Objectives: The SEBI has been entrusted with both the
regulatory and developmental functions.
– Investor protection with a view to get steady flow of
savings into capital market;
– Ensuring fair practices by the issues of securities by
which corporations can raise resources of least cost;
– Promotion of efficient services by brokers, merchant
bankers, and other intermediaries with a view to make
them competitive and professional;
– Development and regulation of securities market.
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 Functions of SEBI
a) Regulatory Functions
– Registration and Regulation of capital market
intermediaries (Brokers, sub-brokers, and other players in
the market);
– Register and regulate the working of venture capital funds and
Collective Investment Schemes including mutual funds;
– Regulate the business in Stock Exchanges and any other
securities market;
– Promoting and regulating Self Regulatory Organisations
(SRO);
– Prohibition of all fraudulent and unfair trade practices
relating to securities market;
– Prohibition of insider trading and takeover bids and imposing
penalties for such practices;

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– Registering and regulating the working of depositors,
custodians of securities, FIIs, credit rating agencies;
– Regulating substantial acquisition of shares and takeover of
companies.
– Development Function of SEBI is to promote investors
education, training intermediaries and conduct research and
publish information
b) Developmental Functions
– Promote investors’ education;
– Training of intermediaries;
– Promotion of fair practices and code of conduct for all
SRO’s
– Conduct research and publishing information useful to all
market participants.
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 Insurance Regulatory Development Authority
Functions
– To exercise all powers and functions of controller of
insurance;
– Protection of the interests of the policyholders;
– To issue, renew, modify, withdraw or suspend certification
of registration;
– To specify requisite qualifications and training for insurance
intermediaries and agents;
– To promote and regulate professional organisations
connected with insurance;
– To conduct inspection / investigations etc.;
– To regulate investment of funds and margins of solvency;
– To prescribe method of insurance accounting;
– To adjudication upon disputes;
– To conduct inspection and audit of insurers, intermediaries
and other organisations concerned with insurance. 10