institutional structure for financial regulation in india

8/8/2019 Institutional Structure for Financial Regulation in INDIA

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Institutional Structure forFinancial Regulation in

INDIAPresentation by:-

Rajesh Sharma : 0949650

Saurabh Malik : 0954187

Mohit Chatpalliwar : 0952588

Chintan Shah : 0934708


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Introduction:In present scenario, no country can think tosurvive without efficient financial structure. An

efficient financial structure can help a country toboost its economy and provide better standard ofliving to its people. Financial regulations are helpin this case; these regulations are a form of

regulations which subjects financial institutions tocertain requirements, restrictions and guidelines.This may be handled by either a government ornon-government organization.


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Roles of Financial Regulators:y To maintain confidence in the financial system.

y To protect the clients interest and investigate

complaints.y To enforce applicable laws.

y Control on the inflation.

y

Provide license to different financial services.


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India has Multiple Agency Regulator Financial System.

y The regulators :

y Ministry of Finance (MOF)

y Reserve Bank of India (RBI)

y Insurance Regulatory and Development Authority (IRDA)

y Securities and Exchange Board of India (SEBI)

y High Level Coordination Committee on Financial and CapitalMarkets (HLCC)


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Ministry of Finance (MOF)

y Plays a role in creating regulators.

y Legislative work.

y Owner of Many Finance Company.

y Presents Annual Budget every year.

y Played supervisory role in rules and regulations(before the reforms of nineties)


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Reserve Bank Of India (RBI)y Set up under the RBI Act, 1935

y Central Bank.

y Regulators for deposit taking agencies.

y Investment banker for the govt.

y Regulators for Debt , foreign exchange markets.

y Issuance of currency.


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Insurance Regulatory and Development Authority(IRDA)

y Setup under the IRDA Act, 1999

y Protect the interest of policy holder.

y

Regulate, promote and ensure growth of theInsurance Industry.


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Securities and Exchange board of India

(SEBI)

y Setup under the SEBI Act, 1992.

y Regulator authority of capital Markets.

y SEBI can set regulatory policy, carry out

implementation as well as has the power toenforce regulatory rules and imposepunishment on wrong-doing.


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High Level Coordination Committee onFinancial and Capital Markets (HLCC)

y Chaired by Governor of RBI.

y Members are the top officials of otherregulators.

y Coordination among various financialregulators.


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Problems with current regulatory system

yommunication .

y ac es onsibility in crises.

y conomies of cale

y esource fficiency

y ar et n ironment


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Advantage of current regulatory system

y Less work pressure

y

Awareness of role and responsibilityy Quick response

y Facilitate Innovation


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Bailout during 2007 Financial Crises

y The economic problems of the global slowdownbegan to surface in India during the mid-2008.

y On December, 2008, the first bailout packagewas estimated to pumped in additional funds tothe tune of Rs 40,000 crores into the Indianeconomy.

y

The second bailout package, announced in thebeginning of January, 2009, provided the systemwith additional liquidity to the extent of Rs20,000 crore, taking the total additional fund

availability to Rs 60,000 crores.


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India GDP Growth ratey The Indian economy is the twelth largest economy

in the world.

y Indian economy is the fourth largest economy byPurchasing Power Parity (PPP).

y By 2008, India had established itself as the worldssecond fastest growing economy.

y However in 2009, India saw a slowdown in GDP to6.7%.

Source: trading economics


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India GDP Growth Rate (Cont.)y Indias GDP in C rrent rices will o erta e rance

and Ital .

y Ger an , UK and R ssia .

y Ja an .y , It was rojected to e the third lar est

econo of the world, ehind U and China.

y India rchased tons of old of $ . illon

fro I in .

o rce: Gold an achs


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India GDP Growth rate (Cont.)y The gross Domestic Product in India expanded at

an annual rate of 7.2% in last quarter.

y Indias GDP is worth 1217 billion dollars or 1.96%of the world economy, according to the WorldBank.

y The economy has posted an average growth rate ofmore than 7% in the decades since 1997.

Source: tradingeconomics.com


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y Jan 06- GDP 9.5 %y Jan 07- GDP 9.7 %y Jan 08- GDP 9.2 %y Jan 09- GDP 6.7 %y Jan 10- GDP 7.2 %

Source: tradingeconomics.com

India GDP Growth rate :

0

2

4

6

8

10

12

Jan/06 Jan/07 Jan/08 Jan/09 Jan/10


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The Annual Budget India, 2010-2011Challenges:

The first challenge is to maintain the GDP growth

rate to over 9% p.a., then find means to cross thedouble digit growth barrier.

To address the weakness in government

system, structure and institution at different levelsof government.

Source: Ministry of finance, India


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Overview of the Indian economyy India among the first few countries in the world to

implement major reforms to minimize the fallout of theglobal slowdown.

y The growth rate in manufacturing sector inDecember, 2009 was 18.5%, the highest in past twodecades.



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Budget Snapshoty People ownership & improving investment

environment.

y Govt. plans to raise more than INR 25,000 crorethrough disinvestment of PS s

y Granting additional banking licenses to Pvt. Banksto diversify their operations and provide more

financial infrastructure.



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Proposed laws :y Direct tax code (DTC) to be implemented from 1st

April, 2011.y Goods and Services Tax (GST) to be rolled out from

1stApril, 2011.

y Introduction of pending companies bill, 2009 to

replace the existing companies Act, 1956.



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Direct Taxes:I

ndividual Male (Below the Age 65 Years)p to 1,60,000 Nil

From 1,60,001 to 5,00,000 10 %

From 5,00,001 to 8,00,000 20 %

Above than 8,00,000 30 %

Individual Female (Below the Age 65 Years)

p to 1,90,000 Nil

From 1,90,001 to 5,00,000 10 %

From 5,00,001 to 8,00,000 20 %

Above than 8,00,000 30 %Senior Citizen (Above than 65 Years of Age)

Up to 2,40,000 Nil

From 2,40,001 to 5,00,000 10 %

From 5,00,001 to 8,00,000 20 %

Above than 8,00,000 30 %


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Direct Taxes : (Cont.)

y To boost investment in tourism, initial capitalinvestment in two star hotels construction is allowed

as deduction from the incomes.y As one time relief to housing & real estate

sector, extension of additional one year has beengranted to complete the projects to avail the deduction.

y

Surcharge on capital income tax has been reduced to7.5% from 10%.



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Direct Taxes: (Cont.)y Expenses on which, TDS is deducted during the

financial year will be allowed as deduction only if

TDS is paid before due date of filing of income taxreturn.

y Delay in payment of TDS will attract interest @18% p.a. vs 12% p.a.



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Indirect Taxes :y Basic central excise duty on non petroleum products

increased from 8% to 10%.

yCentral excise duty on petrol & diesel increased by INR1 per liter.

y Proportionate rise in specific duty for cement and

cement clinkers.

y Duty on large cars, multi utility vehicle increased by2% to 22%, corrugated boxes and cartoons from 8% to4%.



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THAN YOU

institutional structure for financial regulation in india

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