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SEBI - AN INTRODUCTION

06 Oct, 2018 RBI General Studies

An introduction to the Securities and Exchange Board of India

The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. Formed by the government of India in 1988, the Securities and Exchange Board of India (SEBI) got statutory powers after the Securities and Exchange Board of India Act, 1992 was passed by Parliament in 1992, the year in which the Rs. 5,000 crore Harshad Mehta securities scam hit Indian stock markets.

 

Headquarters                 Mumbai, Maharashtra
Chairman                        Ajay Tyagi,
Executive Director         Anand Rajeshwar Baiwar

Before SEBI - Controller of Capital Issues was the regulatory authority before SEBI came into existence

 

Management of the Board.

The Board shall consist of the following members, namely:—

(a) A Chairman;

(b) Two members from amongst the officials of the Central Government dealing with Finance.

(c) One member from amongst the officials of the Reserve Bank

(d) Five other members of whom at least three shall be the whole-time members appointed by the Central Government.

 

Powers of SEBI:

1. to approve by−laws of Securities exchanges.

2. to require the Securities exchange to amend their by−laws.

3. inspect the books of accounts and call for periodical returns from recognized Securities exchanges.

4. inspect the books of accounts of financial intermediaries.

5. compel certain companies to list their shares in one or more Securities exchanges.

6. registration broke

Major Landmarks –

1. Dematerialisation shares:

The market regulator introduced dematerialised holding of shares and securities after the Depositories Act was passed in 1996, which did away with physical certificates that were prone to postal delays, theft and forgery, apart from making the settlement process slow and cumbersome. This also prevented the issue of fake share certificates floating in the market. It enabled electronic trading, with investors and traders even able to work from home.

2. Fostering mutual fund industry:

While the Indian mutual fund industry has grown manifold from being a monopoly until the early 1990s—when Unit Trust of India, set up in 1964, was the only game in town—their reach remains low outside India’s top 20 cities. The market regulator has taken several steps to increase the popularity of mutual fund products and prevent mis-selling of products by distributors.

3. Foreign institutional investors:

The Indian equity markets were opened to foreign institutional investors, or FIIs, in 1993 and they are now the key driving force behind stock movements. The FII investment ceiling was raised to 49% in March 2001 while the dual approval process for FII registration, by the Reserve Bank of India and Sebi, was scrapped in 2003, when they came under the remit of the capital market regulator. Since 2004, Sebi has been consistently revising the FII investment limit in both corporate as well as government debt.

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