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Indian Financial Regulatory Bodies

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Indian Financial Regulatory Bodies

shape Introduction

General Awareness is an important section of most of the competitive exams for employment in the government sector in India including, but not limited to, Banking, SSC, UPSC, Railways Insurance, etc. The article Indian Financial Regulatory Bodies presents the key points related to Regulatory Bodies and and the importance of Regulatory Bodies in Indian financial sector.

shape History

Indian Financial Regulatory Bodies - History:
  • RBI was set up in April 1935 under Reserve Bank of India, 1934.

  • Central Bank of India was nationalized in 1949.

  • Central office initial was established in Calcutta and later moved to Mumbai in 1937.

  • Official Directors- Governors and not more than four deputy governors.

  • Governor- Shaktikanta Das

  • RBI performs it's function under the guidance of the Board of financial supervision.

Board for Financial Supervision (BFS):
  • Constituted in November 1994.

  • The Board is constituted by co-opting four Directors from the Central Board and is chaired by the Government.

Indian Financial Regulatory Bodies - Important Acts Administered by RBI:
  • Reserve Bank of India Act, 1934

  • Public Debt Act, 1944/Government Securities Act, 2006

  • Government Securities Regulations, 2007

  • Banking Regulation Act, 1949

  • Foreign Exchange Management Act, 1999

  • Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

Indian Financial Regulatory Bodies - Other Relevant Acts:
  • Negotiable Instruments Act, 1881

  • Companies Act, 1956/ Companies Act, 2013

  • Deposit Insurance and Credit Guarantee Corporation Act, 1961

  • Regional Rural Banks Act, 1976

  • National Bank for Agriculture and Rural Development Act, 1981

  • National Housing Bank Act, 1987

  • Competition Act, 2002

  • Indian Coinage Act, 2011

  • RBI has 20 Regional offices and 11 Sub Offices

Fully owned subsidiary of RBI:
  • Deposit Insurance and Credit Guarantee Corporation of India (DICGC)

  • Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)

  • National Housing Bank (NHB)

Indian Financial Regulatory Bodies - Important Points:
  • First governor of RBI- Sir Osborne Smith

  • First governor of RBI after nationalization - C. D. Deshmukh

  • First women Deputy Governor of RBI - K.J.Udeshi.

  • RBI Emblem: Tiger and Palm tree

SEBI (Securities and Exchange Board of India):
  • Established in April 1992 under the SEBI Act, 1992.

  • Regulator for the securities market in India.

  • Headquarters - Mumbai

  • Current Chairman - Ajay Tyagi

  • The Forwards Market Commission, the commodities market regulator, was merged with the Securities and Exchange Board of India in December 2015.

Indian Financial Regulatory Bodies - IRDAI :
  • Apex Body in the insurance sector in India.

  • Based on the Insurance Regulatory and Development Authority Act, 1999.

  • Established on the recommendation of the Malhotra Committee report of 1994.

  • Headquarter- Hyderabad, Telangana

IRDAI consists of 10 members-
  • Chairman

  • Five full-time members

  • Four part-time members.

  • Current Chairman- Subhash Chandra Khuntia

Indian Financial Regulatory Bodies - NABARD :
  • Apex development financial institution in India.

  • Headquarter- Mumbai

  • Established in July 1982 under NABARD Act 1981.

  • On the recommendation of B. Sivaraman Committee.

  • Replaced the RBI’s Agriculture Credit Department and Rural Planning and Credit cell.

  • It is a specialized bank for Agriculture and rural development in India.

  • Rural Innovation Fund and the Rural Infrastructure Development Fund have been set under NABARD.

Important Functions-
  • Recommends about licensing for RRBs and Cooperative banks to RBI.

  • Resonances the financial institutions which finance the rural sector.

  • Current Chairman - Dr. Harsh Kumar Bhanwala

Indian Financial Regulatory Bodies - SIDBI :
  • Established in April 1990 under SIDBI Act, 1989.
  • Provide resonance facilities and short-term lending to industries and MSME’s.

  • Headquarter - Lucknow

Associates of SIDBI-
  • Credit Guarantee Fund Trust for Micro and Small Enterprises- provides guarantees to the bank for collateral-free loans extended to SME.

  • SIDBI Venture Capital Ltd

  • SME Rating Agency of India Ltd. (SMERA)- Provides composite ratings to SME.

  • ISARC - India SME Asset Reconstruction Company in 2009, as specialized entities for NPA resolution for SME.

  • MUDRA Bank is a subsidiary of SIDBI.

Indian Financial Regulatory Bodies - EXIM (Export-Import Bank of India):
  • Premier export finance institution in India

  • Established in 1982 under EXIM Act 1981.

  • Headquarters- Mumbai

  • It coordinates with the working of institutions engaged in financing export and import of goods and services

shape Quiz

1. SEBI is a
    A. Statutory Body B. Advisory Body C. Constitutional Body D. Only II and IV follow E. None of these

Answer: Option A
Explanation: SEBI is a statutory body created by a special act of parliament. It contains guidelines for security market.
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992.
2. The abbreviation ‘SEBI’ stands for
    A. Savings and exchanged Bank of India B. Securities and Exchange Bank of India C. Survey of essential business in India D. Securities and Exchange Board of India E. None of these

Answer: Option D
Explanation: SEBI’ stands for ‘Securities and Exchange Board of India’.
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992.
3. Currently, who is the chairman of SEBI
    A. Ajay Tyagi B. Ashok Chawla C. RK Kanoria D. SK Sharma E. UK Sinha

Answer: Option C
Explanation: Currently Ajay Tyagi is a chairman of SEBI.
4. The headquarter of Insurance Regulatory and Development Authority of India (IRDAI) is located in ___.
    A. New Delhi B. Mumbai C. Chennai D. Bengaluru E. Hyderabad

Answer: Option E
Explanation: The Insurance Regulatory and Development Authority of India is an autonomous, statutory agency tasked with regulating and promoting the insurance and reinsurance industries in India.
It was constituted as per provisions of the Insurance Regulatory and Development Authority Act, 1999.
Headquarters: Hyderabad, Telangana.
Structure and Composition: It is 10 members body consisting of: Chairman, 5 full-time members, 4 part-time members. All members are appointed by Union Government.
5. Who is the current Chairman of the Insurance Regulatory and Development Authority of India (IRDAI)
    A. Ajay Tyagi B. Prafful Patel C. Subhash Chandra Khuntia D. Devesh Gupta E. M K Singh

Answer: Option C
Explanation: Subhash Chandra Khuntia is a current chairman of Insurance Regulatory and Development Authority of India (IRDAI) for three years.
He is a former Karnataka Chief Secretary and 1981-batch IAS officer of Karnataka cadre.
He replaced TS Vijayan’s whose tenure ended on 21st February this year.
6. Recently IRDAI made some document mandatory for insurance policies. Which of the following is/are one of them
    A. PAN Card B. Aadhar C. Birth Certificate D. Option A and B E. Option A and C

Answer: Option D
Explanation: Recently IRDAI made mandatory for all life, general and standalone health insurance companies to link existing policies with Aadhaar and Permanent Account Number (PAN) or Form 60.
7. NABARD is a
    A. Commercial Bank B. Lead Bank C. Apex development financial institution D. Cooperative Bank E. None of the above

Answer: Option C
Explanation: National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution in India, headquartered at Mumbai with branches all over India.
8. What is the major function of NABARD
    A. Deal in government securities B. Accepts deposits from public and lend it to the rural sectors C. Provide loans to the public in rural areas D. Provide loans to the Commercial banks and Regional Rural Banks for the development of rural sector. E. Act as a regulator to Scheduled Commercial Banks.

Answer: Option D
9. Small Industries Development Bank of India (SIDBI) was established in _____.
    A. 1986 B. 1987 C. 1988 D. 1990 E. None of these

Answer: Option D
Explanation: Small Industries Development Bank of India(SIDBI) was established in 1990. Its main function is to provide assistance to small scale industries through state finance corporations, state industrial development corporations, commercial banks etc.
10. Where is the headquarter of EXIM Bank located
    A. New Delhi B. Bengaluru C. Mumbai D. Chennai E. Kolkata

Answer: Option C
Explanation: Export-Import Bank of India was set up under the Export-Import Bank of India Act 1981. Headquarters of EXIM Bank is at Mumbai.
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