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Regulatory Authorities in India and Their Impact on Business Environment

Presented By:Abhishek

Dishant HansMayank Jain

Agenda of Presentation

• Introduction• Different Regulatory Bodies• TRAI –A Review• SEBI – A Review • RBI – A Review• Need for Autonomy• Autonomy and Accountability• Future Scope

Regulatory Authority

Definition: a governmental agency that regulates businesses in the public interest

Necessity: Complexity of Markets Supervision Rapid Implementation of Policy Political Interference

Functions: quasi-legislative, quasi-judicial and quasi-executive

Regulatory Authorities In India

Reserve Bank of India

Securities and Exchange Board of India

Insurance Regulatory Development Authority

Competition Commission of India

Telecom Regulatory Authority of India

National highway Authority of India

All India Council for Technical Education

Medical Council of India

And many more...

TRAI – A Review

SEBI - A Review

Stock Exchanges- History & Problems

• Trade in stock market expanded after World War II• Stock Exchange trebled from 7 to 21. Various problems that

arose were:• Excessive Fluctuations-Wide and Wild Fluctuations in the

Stock Market

Stock Exchanges- History & Problems…

• Defect in the system of settlement in force• Defect in the credit facility such as budla, blank transfer• Put through business• Street Markets and Share Bazaars• Independent firms and Outside Brokers• Connection with the Stock Exchange• Manipulations

--Stock Exchange Members-Bear and Bull Tactics, Fake Transactions--Company Promoters and Directors-False Promotion, Unequal

Voting Rights

Effect on Business Environment

• Effect on credit System

• Widespread Tax Evasion

• Stock Market Crises and its effect on Banking

Problems before SEBI’s Creation

SEBI-Objectives

• In 1988, SEBI was established by the Government of India through • Became fully autonomous with the passing of the (SEBI Act) on

30th January 1992 with the prime objective of

– Protecting the interests of investors in securities,– Promoting the development of, and – Regulating, the securities market and for matters connected

therewith or incidental thereto.’

Focus being the greater investor protection, SEBI has become a vigilant watchdog

Stock Market Reformed

RBI – A Review

•Monetary  Authority

•Regulator and supervisor of the financial system: •Manager of Foreign Exchange •Issuer of currency •Banker to banks •Banker to Government 

Need For Autonomy

•Self Sustainability - Independence

•Need for review of existing laws regarding appointment and removal of members of regulatory bodies

•Better legal mechanism with checks and balances for the governance

•Freedom from political interference

Autonomy………Accountability…?

•Only administrative ministry…

•Implications of the policies of these authorities

•Too much belief in competency and intent of individuals

Future Scope…

•Clear definition of functional areas of different bodies (recent case of IRDA vs. SEBI)

• We have four major financial market regulators(RBI,SEBI, IRDA, PFRDA)…

• Is there a need for a super regulator? (Role of FSDC- Financial Stability and Development Council Fears of Govt. intruding on RBI’s and SEBI turf)

Thank You…

Questions?