Reserve Bank of India (RBI) – RBI is established under the Reserve Bank of India Act, 1934 to regulate general banking, foreign exchange, money market operations. RBI also monitors investment ceilings for non-resident investors in India under the Portfolio Investment Scheme (PIS).
Securities and Exchange Board of India (SEBI)
SEBI was established under The Securities and Exchange Board of India Act,1992, to regulate capital market intermediaries and is the Securities market regulator. SEBI is also responsible for ensuring investor protection and overseeing the operations of intermediaries such as Mutual Funds, Merchant Banks, Foreign Institutional Investors (FIIs) and Custodians, amongst others.
SEBI has issued regulations for FIIs, Custodians, Depositories, Portfolio Managers, Mutual Funds, Underwriters, Merchant Bankers and other Capital Market intermediaries. In addition to registering and regulating intermediaries and service providers, SEBI is also vested with powers to issue directions to any person/persons related to the securities market or to companies in matters related to issuance of capital, transfer of securities and disclosures.
Stock Exchanges: Stock Exchanges are constituted as self-regulatory organisations and are supervised by SEBI. They regulate members on most policy-related and operational issues including regulating trading to prevent excessive speculation and avoid member defaults. The regulatory measures include imposition of margins and defining price bands (circuit filters), suspension of trading in specific instruments and in extreme cases, halt trading. A Governing Board, represented by non-broker public representatives and SEBI nominees manage the day-to-day operations of the exchanges.
BSE and NSE are the major exchanges for trading and contribute over 99% of the market share. 23 stock exchanges are granted recognition.
Depositories: National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) are recognised depositories empowered by the Depositories Act and SEBI (Depositories and Participants) Regulations. Such powers include provision of depository services through Depository Participants and enabling settlement of trades through the depository mode.