Reasons for Establishing SEBI With the growth in the dealings of stock markets, lot of malpractices also started in stock markets such as price rigging, unofficial premium on new issue, and delay in delivery of shares, violation of rules and regulations of stock exchange and listing requirements. Due to these malpractices the customers started losing confidence and faith in the stock exchange. So government of India decided to set up an agency or regulatory body known as Securities Exchange Board of India (SEBI).

REGULATORSSEBI & IRDABy Akshay KrishnanAakash SinghReethika S Iyer

Salient Features Of The Present RegulationsREGULATORY CONTROL

Problems with multiple regulators in India

Organisational Structure of SEBISEBI is working as a corporate sectorIts activities are divided into five departments. Each department is headed by an executive director.

Organisational Structure of SEBI (contd.)The head office of SEBI is in Mumbai and it has branch office in Kolkata, Chennai and Delhi.SEBI has formed two advisory committees to deal with primary and secondary markets.These committees consist of market players, investors associations and eminent persons.

Objectives of the two Committees areOnly advise SEBI cannot forceRegulation and development of secondary stock exchange.Stock market TransparencyChanges in Legal frameworkCompanys disclosure requirementsIssue of securities in primary marketRegulate intermediaries

Reasons for Establishing SEBIMalpractices in stock markets such as: price rigging, unofficial premium on new issue, delay in delivery of shares, violation of rules and regulations of stock exchange and listing requirements

Due to these malpractices the customers started losing confidence and faith in the stock exchange. So government of India decided to set up an agency or regulatory body known as Securities Exchange Board of India (SEBI).

Purpose and Role of SEBISEBI was set up with the main purpose of keeping a check on malpractices and protect the interest of investors.

Functions of SEBITo meet these objectives SEBI has three important functions. These are:Protective functionsDevelopmental functionsRegulatory functions.

Protective FunctionsThese functions are performed by SEBI to protect the interest of investor and provide safety of investment.Check Price RangingProhibits Insider TradingFraudulent and Unfair Trade PracticesUndertakes steps to educate investorsIssues guidelines to protect the interest of debenture-holdersInvestigate cases of insider trading Provisions for stiff fine and imprisonmentStopped the practice of making preferential allotment of shares unrelated to market prices

Developmental FunctionsTo promote and develop activities in stock exchange Increase the business in stock exchange.Promotes training of intermediaries of the securities market.Permitted internet trading through registered stock brokersUnderwriting made optional to reduce the cost of issueEven initial public offer of primary market is permitted through stock exchange

Regulatory FunctionsTo regulate the business in stock exchangeFramed rules and regulations and a code of conduct to regulate the intermediariesIntermediaries have been brought under the regulatory purview Private placement has been made more restrictive.Registers and regulates the working of stock brokers, sub-brokers, share transfer agents, trustees, merchant bankersRegisters and regulates the working of mutual funds etc.Regulates takeover of the companiesConducts inquiries and audit of stock exchanges.

Powers of SEBIPowers relating to stock exchanges & intermediariesPower to impose monetary penaltiesPower to initiate actions in functions assignedPower to regulate insider tradingPowers under Securities Contracts ActPower to regulate business of stock exchanges

IRDA (Insurance Regulatory and Development Authority of India)

RECOMMENDED REFORMS

Birth of IRDAInsurance Regulatory and Development Authority (IRDA) set up as autonomous body under the IRDA Act, 1999 and thereon incorporated as statutory body in 2000IRDAs Mission: To protect the interests of policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

IRDAs ActivitiesFrames regulations for insurance industry in terms of Section 114A of the Insurance Act 1938From the year 2000 has registered new insurance companies in accordance with regulationsMonitors insurance sector activities for healthy development of the industry and protection of policyholders interests

Functions and Duties of IRDAEnsuring insurance coverage in rural areas and of vulnerable sections of societyEnsuring the maintenance of solvency margin by insurance companiesRegulating investment of policyholders funds by insurance companiesSpecifying financial reporting norms of insurance companiesRegulating and overseeing premium rates and terms ofnon-life insurance coversPromoting professional organizations in insuranceRegistering and regulating insurance companiesProtecting policyholders interestsLicensing and establishing norms for insurance intermediaries

Indian Insurance Market

Insurance Industry In India

Policy Holders Grievances Redressal System

You can approach the Ombudsman with complaint if:You have first approached your insurance company with the complaint andThey have not resolved itNot resolved it to your satisfaction orNot responded to it at all for 30 daysYour complaint pertains to any policy you have taken in your capacity as an individual andThe value of the claim including expenses claimed is not above Rs 20 lakh

The recommended settlement processAct as counselor and mediator Arrive at a fair recommendation

Award:If a settlement by recommendation does not work, the Ombudsman will:Pass an award within 3 months of receiving the complaint and which will beA speaking award with the detailed reasoningBinding on the insurance company butNot binding on the policyholderThe Ombudsman can also award an ex-gratia payment

Once the Award is passedYou have to accept the award in writing and the insurance company has to be informed of it within 30 daysThe Insurance company has to comply with the award in 15 days after that.

If you accept this as a full and final settlement, inform the company which should comply with the terms in 15 days

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