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Role of Regulators in Indian
Market
presented
by:Mohd
Huzaifa
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What is regulatory authority?
A regulatory agency (also regulatory
authority, regulatory body or regulator) is a
public authority or government agency
responsible for exercising autonomous
authority over particular area of human
activity in a regulatory or supervisory
capacity.
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Functions of RegulatorsFunctions of Regulators
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Household SectorHousehold Sector Financial SystemFinancial System
Why do We need Regulators?Why do We need Regulators?
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Regulatory Structure in India
Banking /NBFCs
RBI
Ministry ofFinance
SEBI
CapitalMarkets
NABARD
Co-operativeBanks &Regional Rural Banks
Ministry ofConsumerAffairs
FMC
InsuranceRegulatoryDevelopment Authority
(IRDA)
Insurance PensionFunds
SIDBI
State FinancialInstitutions
NationalHousing Bank
Housing FinanceCompanies
CompanyLaw Board
Corporates
Pension FundsRegulatory
Development Authority(PFRDA)
Commodity
Exchanges
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Pension Fund Regulatory andPension Fund Regulatory and
Development AuthorityDevelopment Authority
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AboutPFRDA
Pension Fund Regulatory and DevelopmentAuthority was established by the Government ofIndia on 23rd August 2003 to promote old age
income security by establishing, developing andregulating pension funds, to protect theinterests of subscribers to schemes of pensionfunds and for matters connected therewith orincidental thereto.
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Role ofPFRDA
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Investment norms to PFRDAInvestment norms to PFRDA
PFRDA
Fund
15% into Equity Index15% into Equity Index85% into Government85% into Governmentsecurities with fixedsecurities with fixed
incomeincome
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Deployment ofFundsDeployment ofFunds
To use for Fiscal Deficit
To retire imbalance of BOP
To serve as internal debt to Central
Government for particular tenure
To Serve as restriction to excess liquidity
infusion
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The Employees Pension Scheme(EPS)
Public Provident Fund (PPF)
New Pension Scheme (NPS)
15% can be invested in Index Equity
85% to be invested in G-Securities with Fixedincome
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Overlapping Products
Personal Pension Plans (PPP) (IRDA)
Group Pension Plans (GPP) (IRDA)
Pension products with Mutual Fund (SEBI)
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IRDA
( Insurance Regulatory &Development Authority )
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What is IRDA?
In april 1993, the government of India appointed a committee of Reforms in
insurance sector with Shri. R.N. Malhotra, a former governor of Reserve Bank
Government of India in January 1994.In accordance with the recommendations of
the committee, the government set up a regulatory body known as Insurance
Regulatory and Development Authority and enacted the Act known as InsuranceRegulatory and Development Act, 1999
Mission:
Insurance Regulatory & Development Authority (IRDA) is regulatory and
development authority under Government of India in order to protect the interests
of the policyholders and to regulate, promote and ensure orderly growth of the
insurance industry.
Came into being in 1999 after the bill of IRDA was passed in the Indian parliament.
It is a national agency.
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Types of Insurance
Life insurance
Non - Life Insurance(general insurance)
Property (eg. Builders risk insurance)
Aviation (eg.Private aircraft insurance)
Marine (eg. Marine hull insurance)
Miscellaneous (eg. Purchase insurance)
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OBJECTIVES OFOBJECTIVES OF IRDAIRDA
i. Take care of the policyholders interest.
ii. Open the insurance sector for private sector.
iii. Ensure continued financial soundness and
solvency.iv. Regulate insurance and reinsurance companies.
v. Eliminate dishonesty and unhealthycompetition.
vi. Supervise the activities of intermediaries.
vii. Amend the insurance act 1938 ,the LifeInsurance Corporation Act1956, and the GeneralBusiness Act1972.
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FUNCTIONS, DUTIES & POWER OF IRDA
To issue certificate of registration.
To protect the interests of the policyholders. To specify requisite qualifications code of
conduct and training for insurance
intermediaries and agents. To specify code of conduct for Surveyors/
Loss Assessors.
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Functions Cont...
To promote efficiency in the conduct ofinsurance business.
To supervise the functioning ofTariff
Advisory Committee.
To regulate investment of funds by the
insurance companies. To undertake inspection, conduct enquiries and
investigations.
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unctions Cont
To specify the percentage of Life and
General Insurance business.
To promote and regulate professional
organizations connected with the
insurance and reinsurance.
To specify the form and manner for
maintenance of books of accounts.
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LAWS AND REGULATIONS
Insurance Act, 1938
Life Insurance Corporation Act, 1956
Insurance Regulatory and DevelopmentAuthority Act,1999
Consumer Protection Act, 1986
Ombudsman
Income Tax Act
Marriage Womens Property Act, 1874
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What is SEBI?
Securities & Exchange Board of India (SEBI) formedunder the SEBI Act, 1992 with the prime objective of
Protecting the interests of investors in securities,
Promoting the development of capital market
Regulating, the securities market and for mattersconnected therewith or incidental thereto.
To regulate the Securities market & ensure fairpractices
Focus being the greater investor protection, SEBI hasbecome a vigilant watchdog
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Role of SEBI in Capital market
SEBIs Principal tasks:
To regulate the business in Stock Exchange & other
Securities market
To register and regulate the working of capital
market intermediaries
To register & regulate the working of Mutual fund
To promote & regulate Self-Regulatoryorganization
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Role of SEBI in Capital marketRole of SEBI in Capital market
To Prohibit fraudulent unfair trade practices
in security market
To promote investors education & trainingto intermediaries of Capital market
Prohibit insider training securities
Regulate acquisition of shares & takeover ofcompanies
Perform other functions too.
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Compliance ofRules and
Regulations
Inspection andInvestigation
SecuritiesAppellate
Tribunal
Prohibition ofUnfair Trade
Practices
Insider
Trading
Takeover
Code
ESOPs and
ESOSBuy-back of
Securities
Buy-back
through
open market
Buy-back
through Book
Building
Buy-back
through Tender
Offer
Model Code of
Conduct
Continuing
Disclosures
Maintenance of
records and
documents
Efficacy and
Adequacy of
Security of Files
and documents
COMPLIANCES UNDER SEBI ACT, RULES AND REGULATIONS
Open Offer Exemption
Compliances
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The Key roles of the RBI are..
Regulator and supervisor of the financial system
Manager of exchange control
Issuer of currency
Banker to the Government
Bank to banks: maintains banking accounts of all scheduled
banks
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Objectives of RBI
The main objectives of RBI as the central bank of India are asfollows :
To manage the Monetary and credit system of the country
To stabilize internal and external value of rupee
To balance and systematic development of banking in thecountry.
To development of organized money market in the country
To make proper arrangement of agriculture finance
To make proper arrangement of industrial finance
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Objectives of RBI (contd..)
To make proper management of public debt
To establish monetary relations with other countriesof the world and international financial institutions.
To centralization of cash reserves of commercial
banks. To maintain balance between demand and supply of
currency
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