Regulatory bodies for financial institutions.

As the financial institutions play a key role in the growth of a nation, they also need to be regulated for structured growth of the nation. The various regulatory authorities in India are:

·         Reserve Bank of India:

The Reserve Bank of India (RBI) is the apex financial institution of the country; and is the regulator for financial and banking system, formulates monetary policy and prescribes exchange control norms. The Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934 authorize the RBI to regulate the banking sector in India. The RBI also regulates foreign exchange under the Foreign Exchange Management Act (FEMA). The Reserve Bank of India performs the supervisory function under the guidance of the Board for Financial Supervision (BFS). The primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. As a regulator and supervisor of the financial system, the RBI undertakes the following:

§  prescribes broad parameters of banking operations within which the country’s banking and financial system functions.

§  protect depositors' interest

§  provide cost-effective banking services to the public.

§  authorises setting up of payment systems

§  lays down standards for operation of the payment system

§  issues direction, calls for returns/information from payment system operators.

·         Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India (SEBI) formed under the Securities and Exchange Board of India Act, 1992 with the prime objective of:

·         protecting the interests of investors in securities

·         promoting the development of the securities market and

·         regulating the securities market.

Its regulatory jurisdiction extends over corporates in the issuance of capital and transfer of securities, in addition to all intermediaries and persons associated with securities market. SEBI has been obligated to perform the aforesaid functions by such measures as it thinks fit. In particular, it has powers for:

·         regulating the business in stock exchanges and any other securities markets

·         registering and regulating the working of stock brokers, sub-brokers etc.

·         promoting and regulating self-regulatory organizations

·         prohibiting fraudulent and unfair trade practices Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, intermediaries, self - regulatory organizations, mutual funds and other persons associated with the securities market.

·         Insurance Development and Regulatory Authority (IRDA)

Insurance Development and Regulatory Authority (IRDA) is the regulatory authority in the insurance sector under the Insurance Development and Regulatory Authority Act, 1999. The prime objectives of IRDA are:

o   to protect the interests of the policyholders

o   to regulate and promote competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market

o   and for matters connected therewith or incidental thereto.