SEBI & B

ANKING

REGULATI

ONS

Prepared by : Rajat, Harshit & yash

ORIGIN :

In 1988 the securities and exchange board of india was established by government of india through an executive resolution and was subsequently upgraded as a fully autonomous body (a statutory body) in the year 1992.

Govt. passed of securities and exchange board of india act (SEBI act) on 30th janury 1992

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SEBI head quarters in popular business district of Bandra-kurla complex in Mumbai

NEED FOR ESTABLISHMENT :

The capital market had witnessed a tremendous growth during the 1980’s characterized by the increasingb participation of the public.

This ever expanding investor population and market capitalization led to a variety of malpractices on the part of companies, brokers, merchant bankers, investment consultants and others involved in the securities market.

The glaring examples of these malpractices include existence of self styled merchant bankers, unofficial private placements, rigging of prices, unofficial premium on new issues, non adherence of provisions of The Companies Act , violation of rules and regulations of stock exchanges and listing requirements, delay in delivering shares etc.

These malpractices and unfair trade practices have damaged investor confidence and multiplied investor grievances.

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OBJECTIVES OF SEBI :

The primary objective of SEBI is to promote healthy and orderly growth of the securities market and secure investor protection.

To protect the interest of investors, so that , there is a steady flow of savings into to the capital market.

To regulate the securities market and ensure fair practices.

To promote efficient services by brokers , merchant bankers and financial intermediaries, so that, they become competitive and professional.

FUNCTIONS OF SEBI :

1. Regulatory functions :

Regulation of stock exchanges and self regulatory organizations.

Registration and regulation of stock brokers , sub-brokers , registrars of all issues, merchant bankers, underwriters, portfolio managers..etc

Registration and regulation of the working of collective investment schemes including mutual funds.

Prohibition of fraudulent and unfair trade practices ,insider trading.

Regulating substantial acquisition of shares and takeovers of the company.

2. Development functions :

Promoting investors education.

Training of intermediaries.

Conducting research and publishing information useful to all market

participants.

Promoting of fair practices.

Promotion of self regulatory organisations.

SEBI REGULATES :

SEBIregulates

PrimaryMarket

Secondary Market

MutualFunds

Foreign InstitutionalInvestment

FII’S GUIDELINE BY SEBI :

According to the 1995 regulations, FIIs should hold certificate granted by

SEBI to trade in Indian stock market.

To grant the certificate the applicant should –

1. Have track record, professional & competence record, financial soundness, general reputation of fairness and integrity.

2. Regulated by an appropriate foreign regulatory authority.

3. Permission under the provisions of FEM A Act 1999.)

Valid up to 5 yrs.

POWERS OF SEBI :

Power to call periodical returns from recognized stock exchanges .

Power to compel listing of securities by public companies.

Power to levy fees or other changes for carrying out the purposes of

regulation.

Power to call information or explanation from recognized stock exchanges

or their members.

Power to grant approval to bye-laws of recognized stock exchanges.

Power to control and regulate stock exchanges.

BANKING REGULATIONS :

Legal Framework

RBI Act, 1934

BR Act, 1949

State Bank of India (SBI) Act, 1955, SBI (Subsidiary Banks) Act, 1959 and Banking Companies (Acquisition and Transfer of Undertakings) Act 1970/1980.

NEED OF BANKING REGULATIONS :

To protect interests of depositors of banks.

To ensure orderly development and conduct of banking operations.

To ensure liquidity and solvency of banks.

To secure and ensure compliance with various provisions, directions,

policies etc.

To prevent any systemic crisis through preventive and corrective

measures.

SALIENT FEATURES OF REGULATIONS :

• Licensing of Banks

• Opening of New Private Sector and Foreign Banks

• Minimum paid-up capital and reserves

• Cash Reserve and Liquidity Reserve Requirement

• Priority Sector Advances

• Interest Rates

• Connected Lendings

• Sensible Norms – Capital Adequacy, IRAC norms, Classification and

Valuation of Investments, Disclosure Standards, Exposure norms, etc.

BENEFITS GAINED FROM REGULATION :

Regulated approach to financial sector reforms

Limited exposure of banking system to synthetic and complex structured products

Maintenance of adequate capital and liquidity

Containment of Exposure to sensitive sector

Disallowance on upfront booking of profit on securitization process

Thank y uPrepared by : Rajat, Harshit &

yash