Securities and Exchange Board of India

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Securities and Exchange Board of India
भारतीय प्रतिभूति और विनिमय बोर्ड
SEBI logo.svg
SEBI Logo
SEBI Bhavan.jpg
SEBI Bhavan, Mumbai headquarters
Agency overview
FormedApril 12, 1988;31 years ago (1988-04-12)
January 30, 1992;27 years ago (1992-01-30) (Acquired Statutory Status) [1]
Jurisdiction Government of India
Headquarters Mumbai, Maharashtra
Employees643+(2012) [2]
Agency executives
  • Ajay Tyagi, IAS, (Chairman)
  • Anand Rajeshwar Baiwar, IRS, (Executive Director)
Website www.sebi.gov.in

The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992. [1]

A regulatory agency is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. An independent regulatory agency is a regulatory agency that is independent from other branches or arms of the government.

India Country in South Asia

India, also known as the Republic of India, is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the south, the Arabian Sea on the southwest, and the Bay of Bengal on the southeast, it shares land borders with Pakistan to the west; China, Nepal, and Bhutan to the northeast; and Bangladesh and Myanmar to the east. In the Indian Ocean, India is in the vicinity of Sri Lanka and the Maldives; its Andaman and Nicobar Islands share a maritime border with Thailand and Indonesia.

Securities and Exchange Board of India Act, 1992

The Securities and Exchange Board of India Act, 1992' is an Act of the Parliament of India enacted for regulation and development of securities market in India. It was amended in the years 1995, 1999 and 2002 to meet the requirements of changing needs of the securities market.

Contents

History

Securities and exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market. It became an autonomous body by The Government of India on 12 May 1992 and given statutory powers in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI has its headquarters at the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It has opened local offices at Jaipur and Bangalore and is planning to open offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 - 2014.

Government of India Legislative, executive and judiciary powers of India

The Government of India, often abbreviated as GoI, is the union government created by the constitution of India as the legislative, executive and judicial authority of the union of 29 states and seven union territories of a constitutionally democratic republic. It is located in New Delhi, the capital of India.

Parliament of India National bicameral legislature of the Republic of India

The Parliament of India is the supreme legislative body of the Republic of India. It is a bicameral legislature composed of the President of India and the two houses: the Rajya Sabha and the Lok Sabha. The President in his role as head of legislature has full powers to summon and prorogue either house of Parliament or to dissolve Lok Sabha. The president can exercise these powers only upon the advice of the Prime Minister and his Union Council of Ministers.

Bandra Kurla Complex Business district in Maharashtra, India

Bandra-Kurla Complex is a planned business district in Bandra, India. It is the most prominent commercial hub in Maharashtra after Mumbai's Nariman Point and Cuffe Parade. According to MMRDA, the complex is the first of a series of "growth centres" created to "arrest further concentration" of offices and commercial activities in South Mumbai. It has aided to decongest the CBD in South Mumbai while seeding new areas of planned commercial real estate in the metropolitan region.

Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947.

Initially SEBI was a non statutory body without any statutory power. However, in 1992, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act, 1992. In April 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India. The SEBI is managed by its members, which consists of following:

The chairman who is nominated by Union Government of India.Two members, i.e., Officers from Union Finance Ministry. One member from the Reserve Bank of India. The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members.

Reserve Bank of India Central banking institution of India

The Reserve Bank of India (RBI) is India's central banking institution, which controls the issuance and supply of the Indian rupee. Until the Monetary Policy Committee was established in 2016, it also controlled monetary policy in India. It commenced its operations on 1 April 1935 in accordance with the Reserve Bank of India Act, 1934. The original share capital was divided into shares of 100 each fully paid, which were initially owned entirely by private shareholders. Following India's independence on 15 August 1947, the RBI was nationalised on 1 January 1949.

After amendment of 1999, collective investment scheme brought under SEBI except NIDHI, chit fund and cooperatives.

Organization structure

SEBI headquarters, Mumbai Sebi Headquarter.jpg
SEBI headquarters, Mumbai

Ajay Tyagi was appointed chairman on 10 January 2017, replacing U K Sinha, [3] and took charge of the chairman office on 1 March 2017.

The board comprises: [4]

NameDesignation
Ajay Tyagi Chairman
Gurumoorthy MahalingamWhole time member
S.K MohantyWhole time member
Ananta BaruaWhole time member
Madhabi Puri Buch Whole time member
Subhash Chandra GargPart-time member
Injeti SrinivasPart-time member
N.S. VishwanathanPart-time member
Arun P. SathePart-time member

List of Chairmen: [5]

NameFromTo
Ajay Tyagi 10 February 2017present
U K Sinha 18 February 201110 February 2017
C. B. Bhave 18 February 200818 February 2011
M. Damodaran 18 February 200518 February 2008
G. N. Bajpai20 February 200218 February 2005
D. R. Mehta 21 February 199520 February 2002
S. S. Nadkarni17 January 199431 January 1995
G. V. Ramakrishna24 August 199017 January 1994
Dr. S. A. Dave12 April 198823 August 1990

Functions and responsibilities

The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected there with or incidental there to".

SEBI has to be responsive to the needs of three groups, which constitute the market:

SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeal process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is currently headed by Justice Tarun Agarwala, former Chief Justice of the Meghalaya High Court. [6] A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards. [7]

Supreme Court of India Judicial body

The Supreme Court of India is the highest judicial court and the final court of appeal under the Constitution of India, the highest constitutional court, with the power of judicial review. Consisting of the Chief Justice of India and a maximum of 31 judges, it has extensive powers in the form of original, appellate and advisory jurisdictions.

Securities and Exchange Board of India (SEBI) Securities and Exchange Board of India(SEBI).jpg
Securities and Exchange Board of India (SEBI)

Powers

For the discharge of its functions efficiently, SEBI has been vested with the following powers:

There are two types of brokers:

SEBI committees

Technical Advisory Committee

Eliminate mal practices in security market

Major achievements

SEBI has enjoyed success as a regulator by pushing systematic reforms aggressively and successively. SEBI is credited for quick movement towards making the markets electronic and paperless by introducing T+5 rolling cycle from July 2001 and T+3 in April 2002 and further to T+2 in April 2003. The rolling cycle of T+2 [8] means, Settlement is done in 2 days after Trade date. [9] SEBI has been active in setting up the regulations as required under law. SEBI did away with physical certificates that were prone to postal delays, theft and forgery, apart from making the settlement process slow and cumbersome by passing Depositories Act, 1996. [10]

SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.[ citation needed ] In October 2011, it increased the extent and quantity of disclosures to be made by Indian corporate promoters. [11] In light of the global meltdown, it liberalised the takeover code to facilitate investments by removing regulatory structures. In one such move, SEBI has increased the application limit for retail investors to ₹ 2 lakh, from ₹ 1 lakh at present. [12]

Controversies

Supreme Court of India heard a Public Interest Litigation (PIL) filed by India Rejuvenation Initiative that had challenged the procedure for key appointments adopted by Govt of India. The petition alleged that, "The constitution of the search-cum-selection committee for recommending the name of chairman and every whole-time members of SEBI for appointment has been altered, which directly impacted its balance and could compromise the role of the SEBI as a watchdog." [13] [14] On 21 November 2011, the court allowed petitioners to withdraw the petition and file a fresh petition pointing out constitutional issues regarding appointments of regulators and their independence. The Chief Justice of India refused the finance ministry's request to dismiss the PIL and said that the court was well aware of what was going on in SEBI. [13] [15] Hearing a similar petition filed by Bengaluru-based advocate Anil Kumar Agarwal, a two judge Supreme Court bench of Justice SS Nijjar and Justice HL Gokhale issued a notice to the Govt of India, SEBI chief UK Sinha and Omita Paul, Secretary to the President of India. [16] [17]

Further, it came into light that Dr KM Abraham (the then whole time member of SEBI Board) had written to the Prime Minister about malaise in SEBI. He said, "The regulatory institution is under duress and under severe attack from powerful corporate interests operating concertedly to undermine SEBI". He specifically said that Finance Minister's office, and especially his advisor Omita Paul, were trying to influence many cases before SEBI, including those relating to Sahara Group, Reliance, Bank of Rajasthan and MCX. [18] [19]

SEBI and Regional Securities Exchanges

SEBI in its circular dated May 30, 2012 gave exit - guidelines for Securities exchanges. This was mainly due to illiquid nature of trade on many of 20+ regional Securities exchanges. It had asked many of these exchanges to either meet the required criteria or take a graceful exit. SEBI's new norms for Securities exchanges mandates that it should have minimum net-worth of Rs.100 crore and an annual trading of Rs.1,000 crore. The Indian Securities market regulator SEBI had given the recognized Securities exchanges two years to comply or exit the business. [20]

Process of de-recognition and exit

Following is an excerpts from the circular: [21]

1.Exchanges may seek exit through voluntary surrender of recognition.

2.Securities where the annual trading turnover on its own platform is less than Rs 1000 Crore can apply to SEBI for voluntary surrender of recognition and exit, at any time before the expiry of two years from the date of issuance of this Circular.

3.If the Securities exchange is not able to achieve the prescribed turnover of Rs 1000 Crores on continuous basis or does not apply for voluntary surrender of recognition and exit before the expiry of two years from the date of this Circular, SEBI shall proceed with compulsory de-recognition and exit of such Securities exchanges, in terms of the conditions as may be specified by SEBI.

4.Securities Exchanges which are already de-recognised as on date, shall make an application for exit within two months from the date of this circular. Upon failure to do so, the de-recognized exchange shall be subject to compulsory exit process.

SEBI departments

SEBI regulates Indian financial market through its 20 departments. [22]

See also

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References

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  22. https://fundsbase.com/sebi-departments/