The financial system in India is regulated by independent regulators in the field of banking, insurance, capital market, commodities market, and pension funds. However, Government of India plays a significant role in controlling the financial system in India and influences the roles of such regulators at least to some extent.
The following are five major financial regulatory bodies in India
(A) Statutory Bodies via parliamentary enactments:
Reserve Bank of India is the apex monetary Institution of India. It is also called as the central bank of the country. The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India.
It acts as the apex monetary authority of the country. The Central Office is where the Governor sits and is where policies are formulated. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India. The preamble of the reserve bank of India is as follows:
“…to regulate the issue of Bank Notes and keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage.”
SEBI Act, 1992 : Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market. It became an autonomous body in 1992 and more powers were given through an ordinance. Since then it regulates the market through its independent powers. SEBI is an authority to regulate and develop the Indian capital market and project the interest of investors in the capital market. Controller of Capital Issues has been replaced by the SEBI, an authority under Capital Issue (Control) Act, 1947.
1. Formatted on 30th Jan, 1992.
2. Replaced Capital issue control Act, 19747
3. Head office is in Mumbai
4. Branch offices: Deli, Kolkata & Chennai
The financial system in India is regulated by independent regulators in the field of banking, insurance, capital market, commodities market, and pension funds. However, Government of India plays a significant role in controlling the financial system in India and influences the roles of such regulators at least to some extent.
The following are five major financial regulatory bodies in India
(A) Statutory Bodies via parliamentary enactments:
The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India and is based in Hyderabad (Andhra Pradesh) . It was formed by an Act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is “to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.”
(B) Part of the Ministries of the Government of India
Forward Markets Commission (FMC) headquartered at Mumbai, is a regulatory authority which is overseen by the Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India. This Commission allows commodity trading in 22 exchanges in India, out of which three are national level.
FMC is a regulatory authority for commodity futures market in India. FMC is the chief regulator of forward and futures markets in India. FMC comes under the Ministry of Consumer Affairs, Food and Public Distribution because futures traded in India are traditionally in food commodities.
FMC is a legal body set up under Forward Contracts (Regulation) Act 1952. The Act provides that the Commission should consist of minimum two and maximum four members appointed by the Central Government. The chairman of the FMC is nominated by the central government.
Pension Fund Regulatory and Development Aulthority:
PFRDA was established by Government of India on 23rd August, 2003. The Government has, through an executive order dated 10th October 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is development and regulation of pension sector in India.
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