1) Reserve Bank of India
• When established? On April 1, 1935 under RBI Act, 1934 (recommended by Hilton Young Commission)
• Headquarter – The Headquarter of the RBI is in Mumbai and it has offices at 31 locations throughout India.
• Composition – General superintendence & direction by 21-member Central Board of Directors: the Governor, 4 Deputy Governors, 2 Finance Ministry representatives, 10 government-nominated directors to represent important elements of India’s economy, and 4 directors to represent local boards headquartered at Mumbai, Kolkata, Chennai and New Delhi
Role of the RBI
A) Bank of Issue – Issuing bank notes of all denominations. As an agent of the government it has right to distribute one rupee notes & the small coins throughout the country.
B) Banker to Government – Act as an agent of Central Government and of all State Governments except that of J & K. Right to receive and make payments, and other banking operations, helps both the Union and the States to float new loans and to manage public debt.
C) Banker’s Bank & Lender of the Last Resort – The scheduled banks can borrow from the RBI on the basis of eligible securities & expect the RBI to come to their help in times of banking crisis.
D) Controller of Credit – Power to influence the volume of credit through changing the Bank rate or open market operations, to ask not to lend to particular groups or persons, to inspect the accounts of any commercial bank.
E) Custodian of Foreign Reserves – Responsibility to maintain the official rate of exchange & to act as the custodian of India’s reserve of international currencies.
F) Supervisory Functions – Powers under the Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 to supervise and control commercial and co-operative banks, relating to licensing and establishments, branch expansion, management, and liquidation.
G) Adviser to Government – To advice the government on the banking and financial matters, planning, resource mobilization, international finance etc.
H) Monetary Data & Publications – To maintain & publish the monetary data and the data relating to banking for framing the economic and banking policies.
I) Banking Ombudsman Scheme – To provide an expeditious and inexpensive forum to bank customers for resolution of their grievances regarding banking services.
J) Promotional Functions – Building up and strengthening financial infrastructure, ensuring the allocation of credit in the socially desired directions like cooperative banking, agriculture & rural credit, industrial finance etc.
2) Security & Exchange Board of India (SEBI)
• When established? In 1988 through an executive resolution. Subsequently it was upgraded as a fully autonomous body (a statutory Board) in 1992 with the passing of the Securities and Exchange Board of India Act on 30th January 1992.
• Headquarter – in Mumbai & has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It also has local offices at Jaipur and Bangalore.
• Composition – Following members:
a) a Chairman
b) two members from the Ministry of the Central Government dealing with Finance and administration of Companies Act, 1956
c) one member from the Reserve Bank of India
d) five other members – at least three shall be whole time members to be appointed by the Central Government
• Functions of SEBI – It has three important functions as follows:
a) Protective Functions – To protect the interest of investor, provide safety of investment, check price rigging, prohibit insider trading, fraudulent and unfair trade practices etc.
b) Developmental Functions – Increase the business in stock exchange, training of intermediaries of the securities market, adopting flexible and adoptable approach by permitting internet trading, making underwriting optional to reduce the cost of issue etc.
c) Regulatory Functions – To frame rules, regulations and a code of conduct for the intermediaries such as merchant bankers, underwriters, etc. To register and regulates the working of stock brokers, merchant bankers. Regulate the working of mutual funds, takeover of the companies, conducts inquiries and audit of stock exchanges.
• Powers of SEBI – The SEBI has following powers:
a) To call periodical returns from recognized stock exchanges.
b) To compel listing of securities by public companies.
c) To levy fees or other charges for carrying out the purposes of regulation.
d) To call information or explanation from recognized stock exchanges or their members.
e) To grant approval to by laws of recognized stock exchanges.
f) To control and regulate stock exchanges.
g) To direct enquiries to be made in relation to affairs of stock exchanges or their members.
• In any country, the financial system plays as a mediator between lenders and borrowers. The investors always need adequate protection to encourage more savings and investments. The SEBI is one of such institutions.
• In general, the financial market is divided into two parts, one is money market and another one is capital market. Money market is a market which provides short term finance while capital market provides medium and long term finance. Securities market is an organized capital market. Securities market is divided into as primary market and secondary market.
3) Insurance Regulatory & Development Authority (IRDA)
• When established? Constituted by the Insurance Regulatory and Development Authority Act, 1999.
• Headquarter – Hyderabad, Telangana.
• Composition – A Chairman & nine members of whom five are whole-time members and four are part-time members. All the members including the Chairman are appointed by the government of India.
• Objective – An autonomous, statutory agency to regulate and promote the insurance and re-insurance industry. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market.
• Role of IRDA –
a) Safeguard the interest of and secure fair treatment to insurance policy holders.
b) Bring quick and systematic growth of the insurance industry, to provide long term funds for accelerating growth of the economy.
c) To set, promote, monitor and apply high standards of integrity, fair dealing, financial viability and capability.
d) To make sure that insurance policy holder receives precise, accurate, clear & correct information about the products & services; make customers aware about their duties & responsibilities.
e) To ensure quick settlement of genuine claims, prevent insurance frauds, scams & and put in place a grievance redressal machinery.
f) To boost transparency, fairness, and orderly conduct in market & build a trustworthy management information system in order to enforce high standards of financial soundness amongst market players.
• Functions of IRDA –
a) Issue a certificate of registration, & renew, modify, withdraw, suspend or cancel such registration
b) Specifying requisite qualifications, code of conduct and practical training for insurance intermediaries and agents
c) Specifying the code of conduct for surveyors and loss assessors
d) Promoting and regulating professional organisations connected with the insurance and re-insurance business
e) Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, insurance intermediaries etc.
f) Specifying the form and manner in which books of account shall be maintained
g) Regulating investment of funds by insurance companies
h) Adjudication of disputes between insurers and intermediaries or insurance intermediaries
4) Telecom Regulatory Authority of India (TRAI)
• When established? On 20 February 1997 to regulate telecom services and tariffs. Earlier it was done by the Central Government.
• Headquarter – New Delhi
• Composition – TRAI shall have a Chairman, at least two and at the most six members, all appointed by the Central Government
• Mission – To create and nurture conditions for growth of telecommunications in a manner and at a pace to enable India play a leading role in emerging global information society. It also has jurisdiction over the broadcasting sector.
• According to the TRAI act, amended in 2000, the functions of the TRAI have now been divided between two separate bodies namely:
a) The Telecom Regulatory Authority of India (TRAI)
b) The Telecom Disputes Settlement and Appellate Tribunal
• The recommendatory and regulatory functions are vested with the TRAI while dispute settlement & adjudicatory functions are handled by the Appellate Tribunal.
• Recommendatory Functions of TRAI – It can make recommendations either on its own initiative or on a request from a licensor on the following:
a) The need, timing for introduction & terms and conditions of license to a service provider
b) Revocation of license for Non-compliance with its terms and conditions
c) Measures to facilitate competition and promote efficiency in the operation of telecommunication services
d) Technological improvements in the services provided & type of equipment to be used by the service providers
e) Efficient management of available spectrum
• Regulatory Functions of TRAI –
a) To ensure compliance of terms and conditions of license by either issuing directions or recommending termination of license for non-compliance. Limited powers in this regard because any action under the license can only be taken by the licensor which is the Central government. But TRAI has the freedom to issue any kind of directions to the service providers.
b) Ensure technical compatibility and effective inter-connection between different service providers
c) Lay down the standards of quality of service to be provided to protect the interest of the consumers
d) Ensure effective compliance of universal service obligation
• Telecom Disputes Settlement and Appellate Tribunal – Performs the adjudicatory functions as follows:
a) Adjudicate disputes between a licensor and a licensee, two or more service provider and a group of consumers.
b) Dispose of appeal against any direction, decision or order of the TRAI
• This function of tribunal is alternative to filing an appeal in the High Court. An appeal from order of the tribunal lies with the Supreme Court.
5) Competition Commission of India (CCI)
• When established? On 14th October 2003 under the Competition Act, 2002
• Headquarter – New Delhi
• Composition – A Chairperson and 6 Members appointed by the Central Government.
• Functions of CCI –
a) To eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade.
b) Give opinion on competition issues on a reference received from any statutory authority, competition advocacy, create public awareness and impart training.
• Powers of CCI –
a) Inquire into certain agreements and abuse of dominant position of enterprises likely to have adverse effect on competition.
b) Summoning and enforcing the attendance of any person and examining him on oath
c) Requiring the discovery and production of documents, receiving evidence on affidavit
• In discharge of its functions, the Commission shall be guided by the principles of natural justice and shall have the powers to regulate its own procedure.
6) Pension Fund Regulatory & Development Authority (PFRDA)
• When established? On August 23, 2003. The Pension Fund Regulatory & Development Authority Act was passed on 19th September, 2013.
• Headquarter – New Delhi
• Composition – The Authority consists of a Chairperson and not more than five members, of whom at least three shall be whole-time members, to be appointed by the Central Government.
• Functions of PFRDA – It performs promotional, developmental and regulatory functions relating to pension funds as follows:
a) Regulating the NPS
b) Approving the schemes, the terms and conditions, management of the corpus of the pension funds
c) Issue investment guidelines
d) Educating the subscribers and the general public on issues relating to pension, and training of intermediaries
e) Adjudicating disputes between intermediaries as well as between intermediaries and subscribers
f) Establishing mechanisms for grievance redressal of the subscribers
7) Central Electricity Regulatory Commission
• Recognizing that electricity is one of the key drivers for rapid economic growth and poverty alleviation Central Electricity Regulatory Commission (CERC), a key regulator of power sector in India, has been set up in 1998 as a statutory body functioning with quasi-judicial status.
• The Commission intends to promote competition, efficiency and economy in bulk power markets, improve the quality of supply, promote investments and advise government on the removal of institutional barriers to bridge the demand supply gap and thus foster the interests of consumers.
• In pursuit of these objectives the Commission aims to – Improve the operations and management of the regional transmission systems through Indian Electricity Grid Code (IEGC), Availability Based Tariff (ABT), etc; Formulate an efficient tariff setting mechanism, which ensures speedy and time bound disposal of tariff petitions, promotes competition, economy and efficiency in the pricing of bulk power and transmission services and ensures least cost investments; to facilitate open access in inter-state transmission; to facilitate technological and institutional changes required for the development of competitive markets in bulk power and transmission services.
• The National Electricity Policy has been evolved in consultation with and taking into account views of the State Governments, Central Electricity Authority (CEA), Central Electricity Regulatory Commission (CERC) and other stakeholders.
• Recently CERC announces Renewable Energy Certificate (REC) system for fulfillment of its mandate to promote renewable sources of energy and development of market in electricity. REC mechanism is aimed at addressing the mismatch between availability of Renewable Energy resources in state and the requirement of the obligated entities to meet the renewable purchase obligation (RPO).