Introduction
Capital markets plays an vital role in the economy. This is the main financial security to the country. Capital market is the backbone of the country’s economy. Heart of economic growth is in the capital market. How the regulation of capital market was done I.e. mainly responsible for the development of industrial and commercial sectors.
Capital market
- It is the source that maintains the relation between a supplier and buyer. Savings and investments are directed between the people who have capital and who needs the capital or in the market where buyers and sellers involved in buying [or] selling i.e. trading of financial securities like stocks, bods, e.t.c. in this transactions, there can be an individual [or] an institution. This capital market is introduced for the first tie in India through Bombay stock exchange. Capital market has a history of 200 years i.e. 2 centuries.
Functions
Capital markets regulates for better and efficiency transactions. It helps in economic growth of stabilizing stock prizes and capital market get together the people [or] institution requires capital and those who having excess capital and do transactions accordingly to develop the industrial and commercial sectors. And it make securities i.e easier for investors and industries.
Authorities governing the capital markets in India
It is very important for us to know because there are major impact on financial decisions. Especially, in India, people have sentiments and substantial changes in market according to psychology. So, the authorities is established to control the fluctuations accordingly.
Ministry of finance [MOF]
This authority maintains and deals with economic affairs of capital markets under the directions of [MOF]. It rules the growth of stock market which debts, differences and equity. It is also regulates for the security of the interest of investors. It regulate through some laws
- Securities contract act,1956
- Depositories act, 1996
- Securities and exchange board of India, 1992
Reserve bank of India [1934]
This authority manages the financial transactions through banks.
- It manages the payments and settlements
- Foreign exchange takes place through foreign management act, 1999
- It implements the monetory policies. Through this, RBI plays a vital role in developing the financial economy.
Securities and exchange board of India [SEBI], 1992
SEBI mediates and develop the financial growth of economy. It prohibits unfair trade practices. It is flexible by adopting the exchange activities regarding stock and go through adoptable approach. SEBI conducts the audits and enquiry of stock exchanges. SEBI regulates and registered , the working of share transfer agents, merchant bankers, stock brokers, and all, who are associated with stock exchange in any manner.
Abolishing insider trading. It control on mutual funds SEBI directly control the mutual funds of private and government sector. It has control on foreign institutional investors [FILS]. Determine the share prices and premium. SEBI deals smoothly and regulates the capital markets.
National stock exchange of India [NSE]
It is regulating and formulating to implement the rules and it follows under SEBI. It monitors the transactions. List out the securities. Register the members. NSE voluntarily regulated by SEBI and it is under the action, to observe all regulatory compliances.
IRDA [Insurance regulatory and development authority], 1999
IRDA regulates the insurance industry and protects the insurance policy holders of their interest. IRDA has strict control over the insurance rates. Since it is changing, it advisories are critical to keep up with changes in regulations and rules for insurance companies. IRDA specifically select the qualifications and train the person well to do as insurance agents and other intermediaries to regulate the insurances, by the insurer.
PFRDA [pension fund regulatory and development authority], 2013
PFRDA is the sole regulator of India to the pension sector. This is the authority to do service to all senior citizens and non- resident Indians [NRIS]. This authority is mainly established for the financial security of senior citizens PFRDA regulates the schemes like :NPS and atal pension yojana. It includes in investing the pension funds and increasing awareness about pension schemes and retirement.
Ministry of corporate affairs [MCA]
Ministry of corporate affairs manages the and administer the company at. It set up the rules and regulations has to be followed in lawful manner for the functioning of companies [or] corporate sector. Main objective of this authority MCA is to develop the growth of corporate sector in lawful manner.
Income tax department, government of India
Central board of direct taxes, this is the apex tax, it is administrative body, it functions under revenue department, it is administered by ministry of finance and take direct taxes in India. It control the double taxation and do avoidance of double taxation agreements.
FPI [foreign portfolio investments]
FPI regulates under SEBI [ Securities and exchange board of India ] FIIs [foreign institutional investors] sub-accounts and qualified foreign investors [QFIs] combined together into a single category, it referred as FPIs. FPI regulations, is for the security of the capital market, and it’s give permit to the investment. It gives the positive changes in accessing the capital markets of India by foreign investors.
Worldwide chief capital market regulatory authorities are
- Authority of financial markets
- Financial supervision commission at Bulgaria
- Financial supervision authority at finland
- Australian securities and investments commission
- Canadian securities administrators at Canada
- Securities and exchange board of India
- Securities and exchange surveillance commission
- Financial services authority at UK
- Commission nacional del mercado de valores at Spain
- Securities and futures commission at Hongkong
- Securities and exchange commission at Pakistan
- U.S. Securities and exchange commission
- Securities and exchange commission at Bangladesh
These are the authorities that governs the capital market and it develops the growth of capital market.
Role of regulators in capital markets
Distribution of funds
Capital market is an important platform to distribute in active savings from the people to productive channels for the economy. It puts in active funds in proper investment and develops the economy through capital markets.
Formation of capital
Capital market helps to form a capital by adding capital to the existing capital as investment in the economy. This improves the expansion of capital in the economy.
Platform for investment
When the capital market raises resources for longer period of time. Then the interest raises through the investment in capital market for longer period of time. Investor get returns through it and also get instruments like bonds, equities e.t.c. and it definitely useful for the public.
Provides service
Through the medium and long-term investments in capital markets was helpful for the loans consultancy services and export finance e.t.c. by this capital market plays a vital role in the economy.
References
https://www.civilserviceindia.com/subject/Management/notes/regulation-of-capital-market.html
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