Evolution of Indian Financial System-2 [Compatibility Mode]

8/20/2019 Evolution of Indian Financial System-2 [Compatibility Mode]

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Financial Services(MBA-2F07)

UNIT-I

Introduction

Introduction to Financial Services

Course Coordinator: Dr. Saboohi Nasim

FMS&R, AMU


2/70

Unit –I (Syllaus)

• Introduction to Financial System and Financial

Markets, Instruments

• Evolution of Indian Financial System

• nanc a erv ces: concepts, eatures,constituents and types

• Regulatory Framework for Financial

Services(NF!"

• Stock E#c$anges of India% SEI


3/70


4/70

• ase I* Indian Financial Syste+ (IFS) on

te eve o, lannin (U. to /1/)

• ase II* IFS in te ost Inde.endence

eriod (/1/-late /0s)

3AS!S IN T3! !"#$UTI#N #F

IN%IAN FINAN&IA$ S'ST!M

• ase III* Financial Sector 4e,or+s since

early /0s56$#BA$ FINAN&IA$ &4ISIS

ITS IMA&T #N IN%IAN

!N#M'8FINAN&IA$

S!&T#4


5/70

3AS! - I

Indian Financial Syste+ (IFS) on te eve o,

annin U. to /1/


6/70

!volution o, various constituents o, te Financial

Syste+

• &urrency Money Su..ly

3AS! - I

Indian Financial Syste+ (IFS) on te eve o, lannin(U. to /1/)

• an n ector• S+all Savins

• Insurance Funds

• Stoc9 Mar9et

• ulic %e.osits

• 6overn+ent Securities Treasury Bills


7/70

&urrency Money Su..ly• Indian currency not standardi:ed e,ore

Inde.endence• Till /;--- silver standard (,or


8/70

&urrency Money Su..ly (&ontd?)• roress o, Moneti:ation

•&olume of currency in circulation

')* '+*

Rs ''cr Rs ''++ !r

• o a oney upp y

'+./ '+*/ '+/0

Rs 1/ cr Rs 10/1 cr Rs '.. cr

• &urrency constituted a +a@or .ortion o, +oney

su..ly (increased from /12 in '+./ to 3) 2 in

'+/1"


9/70

Ban9in Sector

• Indienous Ban9ers

%o+inated te an9in sector till //0

5

till /


10/70

Ban9in Sector (contd?)

• Structure 6rot o, Modern Ban9s

Foundation o, +odern an9in it te

estalis+ent o, ; .residency an9s»Ban9 o, Benal (/0


11/70

• 4a.id .roress in te DModern Ban9in

Syste+E in early 20t century

/2/- I+.erial Ban9 o, IndiaG ,or+ed y tea+ala+ation o, te tree .residency an9sH

,unctioned as te uasi central an9s

Ban9in Sector (contd?)

/;1- 4BI as estalised

• By /10 Indian Ban9in Syste+G co+.rised o,

RBI IBI Co-operativeBanks

ExchangeBanks

Indian Jointstock Banks


12/70

Ban9in Sector (&ontd?5)

• Feature o, Indian Ban9in Syste+

3i deree o, concentration in te an9inusiness (to. 7 an9s IBI accounted ,or +ost

S+aller an9s ere res.onsile ,or .rovidin

an9in ,acilities to te +asses (28;rd o, .laces

on te an9in +a. o, India)%e.osits- +ainstay o, all an9sH IBI invested

+ore in ovt5 securities tan te class A/ an9s


13/70


• Feature o, Indian Ban9in Syste+?5&redit8 de.osit ratio as lo in eneral

&as 8credit overdra,t ,olloed y loan.o.ular ,or+s

o, an9 credit

Ban9s invested +ore in sort ter+ ovt5 securities5

Bill Financin and &all +oney +ar9et not develo.ed

Sectoral distriution o, advances (/C)*

&o++erce (C


14/70


• 6a.s in Ban9in Services

$ac9 o, su..ly o, lon-ter+ ,unds to allindustrial units ( industrial an9s set u. in

$ac9 o, su..ly o, any ,or+ o, ca.ital to s+all

scale units

$ac9 o, su..ly o, ,unds to te aricultural sector(&oo.erative an9s set u. in //


15/70

S+all Savins• #ldest +ediu+ ,or co++unity savins

• 6ovt5 run savins an9- attaced it

.res ency an s str ct treasur es osto,,ice savins an9 (#SB)

• By /< – #SB- +ono.oli:ed te s+all

savin usinessH variety in savin sce+es

introduced only since //15


16/70

Stoc9 Mar9et

• First Stoc9 !=cane estalised in Bo+ay in /7

• "olu+e o, ,unds raised increased sini,icantly in

,irst al, o, 20t century

• &a.ital raised .ri+arily trou issuance o,

ordinary sares

• %eentures not .o.ular e,ore /


17/70

ulic %e.osits

• Kide s.read .ractice o, usin .ulic

de.ositsG y %e.osit &o+.anies in ,inancin

o, ,i=ed assets (cause o, serious concern ,orte +onetary autorities?)

• e.os s accoun e or o o a,undin o, Bo+ay A+edaad Mills-

/;05

• Interest rates on de.osits ere less tan te

averae lendin rates o, co++on an9s


18/70

Insurance Funds

• $i,e Insurance usiness ean it teenact+ent o, $i,e Insurance &o+.anies Act-

//2G

•arr e y var ous n an o5s ore n o5srovident Societies ost Telera. %e.t5

/2 /10

• No5 o, $i,e insurance &o5s 70 2CC

No5 o, Non $i,e insurance &o5s /2 /7C


19/70

6ovt5 Securities Treasury Bills

• Mar9et ,or 6overn+ent Securities e=.anded

.eno+enally

• A+ount o, ross issue o, suc securities increased

,ro+ 4s 2 cr /0 to 4s5 ;2 cr /C

• Treasury Bills ,irst issued in India in //7H used to

induce in,lo o, ,orein ,unds

• 4BI- discounted te Treasury Bills


20/70

3AS! - II

IFS in te ost Inde.endence eriod (/1/-late /0s)


21/70

FINANCIAL REFORMS DURING PHASE II

• !volved in res.onse to te

i+.eratives o, .lanned econo+ic

develo.+ent

• %istriution o, resources y te

Financial Syste+ to e alined itte .riorities o, F's–

6overn+ental &ontrolG


22/70

ELEMENTS OF FINANCIAL REFORMS

FINAN&IA$ 4!F#4MS %U4IN6 3AS! II

PublicPublicOwnership ofOwnership of

FinancialFinancial

InstitutionsInstitutions

FortificationFortificationofof

InstitutionalInstitutionalStructureStructure

ProtectionProtectiontoto

InvestorsInvestors

ParticipationParticipationof Financialof Financial

Institutions inInstitutions inCorporateCorporate

ManagementManagement


23/70

(A) ulic #nersi. o, Financial(A) ulic #nersi. o, Financial

InstitutionsInstitutionsProgressive transfer of important constituents ofIFS from private ownership to public control

NATIONALIZATION

Adopted

NEWINSTITUTIONS


24/70

Nationali:ation Ti+eline

1948 1956 1969 19721972 1980

Markedthe

beginning

Landmark in the historyof public control


25/70

Ne Institutions• Battery o, ne institutions estalised in te

.ulic sector

• Kide rane o, s.ecial .ur.ose ,inancial institutions ?

estalised at national reional and state levels

• &reation o, an invest+ent trust orani:ation in te

.ulic sector-UTI –,inancial innovation

Entire industrial financin s!stem "o#ned, controlledand led b! the o$t.


26/70

(B)Forti,ication o, Institutional StructureForti,ication o, Institutional Structure

DevelopmentBanks

LIC

Strengthening oinstit!tional

str!"t!re

#$I

Commer"ialBanks

Changes in structure& policies


27/70

Fortification of Develo!ent "an#$

Massi$e ro#th in number & functions %erformed /C-Industrial Finance &or.oration o, India (IF&I)

mared the beinnin of de$elo%ment banin in 'ndia

Filled the a% in lon term 'ndustrial financin

/1/-State Finance &or.oration (SF&)

E(cessi$e control & caution Failed to deli$er

/1C- National Industrial %evelo.+ent&or.oration (NI%&)

Shift from finance to de$elo%ment

Ended u% as a financin aenc!

Functionin as consultanc! orani)ation %resentl!


28/70

Fortification of Develo!ent "an#$%&&

/11-Industrial &redit Invest+ent &or.oration o,India (I&I&I)

re%resent the di$ersification of de$elo%ment banin in 'ndia

*ioneer in man! functions +under#ritin of issues of ca%italchanneli)ation of %ri$ate currenc! loans to %ri$ate sector-.

/1-4e,inance &or.oration o, India(4&I)

/o %ro$ide refinance facilities to bans e(tendin term loansto SMEs+e. SFCs

Mered #ith 'D0' later in 1234

/


29/70

Fortification of Develo!ent "an#$%&

/7/-Industrial 4econstruction &or.oration o,India (I4&I)

Estbd. For the rehabilitation of sic units 7ointl! set u% b!'D0' & 8'C " renamed as 'R0' in 1294

Con$erted into a full fleded %ublic financial institution &renamed as 'nd. 'n$estment 0an of 'ndia +''0' in 1225

Tecnical &onsultancy #rani:ation(T)

Di$ersification of de$elo%ment banin in 'ndia oint %artnershi% of 'D0', 'FC' & 'C'C'

/- S+all Industries %evelo.+ent Ban9 o, India(SI%BI)

'nstitutional inno$ation

De$elo%ment of small industries

;arieated structure of de$elo%ment bans6%ro$idin finance to the industr! in di$erse forms


30/70

Fortification of Life In$'rance Cororation

Ste. toards ,orti,yin industrial ,inancin –delierate conscious e,,ort to re-+ould te ,inancial syste+

A+ala+ation o, 2C1 li,e insurance co+.anies to ,or+$I&-trans,er o, i+.ortant savins ,ro+ .rivate to .ulic

&oncentration o, ue investile resources (lon ter+)used in

Underritin o, cor.orate issues artici.ation in .urcase o, securities

%irect lendin to te industry


31/70

Fortification of Unit Tr'$t of In(ia )UTI*

&ul+ination o, a lon overdue need o, te ca.ital+ar9et

Introduced ne ,or+ o, ,inancial asset-unitsce+es –to suit di,,erent class o, investors

6overn+ent Su..ort-initial ca.ital contriuted yvarious ,inancial institutionsH ta= e=e+.tione=tended?5

!+ered as te +ost do+inant uyer o, teindustrial securities in India ($I& releated to te

second .osition)


32/70

Fortification of Co!!ercial "an#$

4ede,inin te structure .olicies o, te e=istinco++ercial an9s

Te ortodo= ,unctions o, de.osit an9in and su..ly o, sort-ter+ ,unds roadened?

&o++ittee /1C) reco++ended .artici.ation o, an9s inunderritin o, issue o, ca.ital

!ntry o, an9s in +ercant an9in activitiesH.artici.ation o, co++ercial an9s in lon ter+ ,inancininstitutionali:ed y te creation o, susidiaries li9e SBI&a.ital M9t5 NB &a.ital M9t5?5


33/70

(&) rotection to Investors(&) rotection to Investors

1

Industrial securities as a form of saving not popular before1951, due to “general distrust of public of privatebusinesses” (corporate fraud & abuses were rampant)

Extensive and drastic legal reforms introduced, focusingon …..

%emo&elingthe legal '

a&ministrative

aspe"t o"ompanies

$ightening othe listing

re(!irements

o Sto"k

Control oCapital iss!es' in&!strial

li"ensing


34/70

Significant 4egislative reforms

197)*oreign +,"hange

%eg!lation -"t

1969

1956

1947

onopo es es r " ve

$ra&e /ra"ti"es -"t

•Se"!rities Contra"t %eg!lation -"t

Capital Iss!es Control -"t

•Companies -"t


35/70

Caital I$$'e$ Control Act +,-.otent tool in te ands o, te overn+ent to

.revent invest+ent in non-essential activities(introduced t$roug$ t$e 5efence of India Rules in

'+*."

4eulated te ca.ital structure o, co+.aniesH

ti+in o, issues scrutini:ed te reorani:ation(MA)H .ricin o, issues?etc

I+.le+ented tru D&ontroller o, &a.italE- Ministryo, Finance

4e.ealed in May /2


36/70

Sec'ritie$ Contract Re/'lation Act +,01 To .revent undesirale transactions in securities y

reulatin te usiness o, dealin terein

6overn+ent e+.oered to .rovide8itdra reconition tostoc9 e=canes H only reconi:ed S! can ,unction

4e,or+s in stoc9 e=cane tradin +etods .ractices

rovisions ,or listin o, securities on te S!

Act en,orced y te D%irectorate o, S!E- Ministry o,

Finance

%eleation o, .oers to S!BI in /CH A+end+ents to teAct in /<


37/70

T2e Co!anie$ Act +,01

I+.ortant ste. in te develo.+ent o, cor.orate enter.rises in India

Most i+.ortant .iece o, leislation tate+.oers te &entral 6overn+ent to

,unctionin and indin u. o, co+.anies

Ad+inistered y te &entral 6overn+enttrou te Ministry o, &or.orate A,,airs andte #,,ices o, 4eistrar o, &o+.anies


38/70

T2e Co!anie$ Act +,01Underlyin o@ective- .rotection o, investorsG- eavin

an interated .attern o, relationsi. eteen .ro+otersinvestors +anae+ent5 For e55

• %ue reconition o, te leiti+ate interest o, sareolders and

creditors

• A ,air and true disclosure o, te a,,airs o, co+.anies in teir

annual ulised alance seet and ro,it and loss accounts5

• ro.er standard o, accountin and auditin5• 4econition o, te rits o, sareolders to receive

reasonale in,or+ation

I+.ortant canes in Dcontent o, .ros.ectusEH Dallot+ento, saresEH Dca.ital structure o, co5EH Dter+s conditions,or estalis+ent o, co5E etc ??in te suse>uent

a+end+ents in 2000 200/ 2002 and 200


39/70

Mono.olies 4estrictive Trade ractices Act /


40/70

Mono.olies 4estrictive Trade ractices Act /


41/70

Mono.olies 4estrictive Trade ractices Act /uestioned and as tus een re.ealed5

een enacted instead ,or .rotectin andenancin co+.etition in te econo+y5

Te Un,air trade .ractices .art as een si,ted

under te &onsu+er rotection Act /


42/70

Forei/n E3c2an/e Re/'lation Act +,.4• To reulate te ,orein e=cane +ar9et

• 4eulated ,orein invest+ents – it te ai+ o, dilutin

e>uity oldin in ,orein co+.anies- to instill con,idence

a+on te investin .ulic

• F!4A .rovisions i+.osed restrictions on locally

incor.orated co+.anies it ,orein e>uity oldin in

e=cess o, C0 .er cent (9non as F!4A co+.anies)

• rovisions rela=ed later in te caned conte=t o, /0s5

F!4A as re.laced y F!MA (/)

(%) artici.ation o, Financial Institutions


43/70


in &or.orate Manae+entShift towards participation of financialinstitutions in the management of the assisted

concerns

‘ ’

making an impact on the ‘corporate powerstructure’

Large shareholding & voting rights leading

to Board representation Control over Board composition,appointment of CEOs……etc

Powerful role as loan provider/



44/70


in &or.orate Manae+ent?GOI conscious policy for PFI to control the

company financed by them(Dutta Committee, 1969)

PFIs switching of investment was difficultdue to large size of holdings

Thrust on “Development Banking” thanmere ‘Financing’

ReasonsReasons

%e,iciencies in te Financial 4e,or+s


45/70

%e,iciencies in te Financial 4e,or+s

o, ase II

Weakness in theWeakness in the

InstitutionalInstitutionalStructureStructure

Deficiency in theDeficiency in the

Form ofForm ofFinancingFinancing

Problems ofProblems ofSmall & newSmall & newEnterprisesEnterprises

Lack of

InstitutionalArrangementin New Issue

Market

WEAKNESSESWEAKNESSES

K 9 i t I tit ti lK 9 i t I tit ti l


46/70

Kea9ness in te InstitutionalKea9ness in te Institutional

StructureStructure• IFS eavily do+inated y %evelo.+ent Finance

Institutes• &reated as arti,icial li+sG in te syste+ to

• Not ca.ale o, +oili:in ,unds-.layed li+ited role

as distriutors

• &ould not ro it te re>uire+ents o, teindustrial sector

%e,iciency in te For+ o,%e,iciency in te For+ o,


47/70

yy

FinancinFinancin• %FIs e=tended ,unds in te ,or+ o, loans

• $ed to te .re-.onderence o, det in te,inancial structure o, industrial enter.rises

-

ratio

• Serious .role+s in recoveryH a,,ected te

,inancial viaility o, te %FIs te+selves

• Urent need to interate te+ it te

ulti+ate .ool o, savers

role+s o, S+all Nerole+s o, S+all Ne


48/70

role+s o, S+all Nerole+s o, S+all Ne

!nter.rises!nter.rises• Unale to +eet te ,inance needs o, tis sector

• S+all enter.rises did not ,all into te invest+ent

.ort o o o t e to o+ nat n nvest n

institutions o, tat ti+e-$I& UTI

• SI%BI-S+all Industries %evelo.+ent Ban9 o, India,or+ed in /- i cost o, ca.ital

$ac9 o, Institutional Arrane+ent$ac9 o, Institutional Arrane+ent


49/70

$ac9 o, Institutional Arrane+ent$ac9 o, Institutional Arrane+ent

in Ne Issue Mar9etin Ne Issue Mar9et

• UnderritinG as te only

su..ort o,,ered y te Institutions

• 4e>uired an interated uni,ied

co+.reensive service .rovider-DMercant an9inE


50/70

3AS! - III

Financial Sector 4e,or+s since early /0s

ase III* ost /0s !volution o,


51/70

Indian Financial Syste+

Profound Transformation

Planned

Free Market

Major Economic Policy Changes•Delicensing of industries•Trade liberalization•Currency reforms•privatization

•Disinvestments…..etc

EconomicDevelopment

-State controlled FS

Economics•Liberalization•Deregulation•Globalization

Fi i l 4 , d i III


52/70

Financial 4e,or+s durin ase-III

InvestorProtection

IntegrationIntegrationof the Financialof the FinancialStructure with theStructure with the

Savings poolSavings pool

Privatizationof

FinancialInstitutions

Re-Organizationof

InstitutionalStructure

rivati:ation o, Financial Institutions


53/70

rivati:ation o, Financial Institutions

State +ono.oly on ,inancial institutions dis+antled in.ased +anner

– %FIs converted into .ulic co+.any (I%BI IF&I?5)

– rivate MFs set u. under S!BI uidelines

– rivate an9s ca+e into e=istence- 4BI uidelines

– Insurance 4eulatory Autority I4A (I4%A Act-/)-

alloed .rivate insurance co+.anies to o.erate

4evolutionary canes in IFS- accelerated durin

2000s

4e-orani:ation o, Institutional Structures


54/70

4e orani:ation o, Institutional Structures

I+.ortant canes in te roles structure .olicies o, ,inancial institutions and +ar9ets

DFIsDFIs MutualMutual

ChangesChangesAcrossAcross

CommercialBanks

NBFCsNBFCs

SecuritiesSecuritiesMarketMarket

MoneyMoneyMarketMarket

e-oran :a on o

% l Fi i l I i i (%FI )


55/70

%evelo.+ent Financial Institutions (%FIs)

Neer ,or+s o, ,inancin - direct

,inancin lease ,inancin underritin

loans ,or or9in ca.ital?55

6roin ,ocus on non-,und ased

,inancial services- .ro@ect counselin

.ort,olio +t5 trusteesi. +ercantan9in?55

e-oran :a on o

% l t Fi i l I tit ti (%FI )


56/70

%evelo.+ent Financial Institutions (%FIs)&anes in te .attern o, ,inancin o, %FIs

$esser de.endence on overn+ent 4BI?5

Funds sourced ,ro+ ca.ital +ar9et- issue o, stoc9s onds

etc55

6ovt5 uaranteed onds only ,or SI%BI NABA4% N3B?55

anes n t e ty.e o oran :at ons nst tut ons

s.onsored y %FIs

%FIs ne role in /0s* To su..le+entG ca.ital

+ar9et and not sustituteG it (/0s)

F#&US S#NS#4!% #46ANIATI#N

%evelo.+ent Finance T M%I IFM4?5

&a.ital +ar9et develo.+entorientation &4ISI$ I&4A &A4! NS! #&T!I ?

e-oran :a on o

& i l B 9


57/70

&o++ercial Ban9s

Ma@or trans,or+ation in structure

.olicies and accountin nor+s and

standards?55

rudential Ban9in Nor+s introduced

(Narsina+ &o++ittee //)- inco+e

reconition asset classi,ication ca.italade>uacy nor+s?5

e-oran :a on o

& i l B 9


58/70

&o++ercial Ban9sI+.ortant .olicy initiatives to increase te

.ro,itaility o, te an9s

4eduction in S$4 &44 Invest+ent li+it in sares 8deentures increased

,ro+ /51J to 1J

$easin Factorin 38 usiness u.to /0J o, totaladvances

&losure o, un.ro,itale rances +erers o, an9s55

6reater o.erational ,le=iility dereulation o, interest rates?5

4e-orani:ation o,

NBF& (N B 9i Fi & )


59/70

NBF&s (Non-Ban9in Finance &os)!+ered as a sini,icant ele+ent o, IFSH roadened

te rane o, ,inancial services

Fund ased NBF&s--- e>ui.+ent leasin Bill%iscountin 3ire urcase ,inancin "&F?5

---

ort,olio Mt5 MA advisory?55

Increase in nu+er de.osits and innovation in

,unctionin o, NBF&s in recent years5

4eulatory ,ra+eor9 evolved (Oanna

&o++ittee /


60/70

4e+ar9ale rot in MF industry

&o+.rises o, do+estic MFs y UTI an9

susidiaries insurance orani:ationsH .rivatesectors it ,orein collaorations ?5

eteroeneous cateory o, investors?

Increase in nu+er o, sce+es and ,unds

+anaed y te MF co+.anies

4eulatory ,ra+eor9 laid don y S!BI

4e-orani:ation o, Securities Mar9et


61/70

!+ered ,ro+ a +arinal institution(+id 0s) to a

sini,icant +ecanis+ o, IFS today?

Trans,or+ation in securities +ar9et re,lected in Increase in >uantu+ o, ,unds raised and nu+er o,

investors in te ri+ar +ar9et

Increase in nu+er o, stoc9 e=canes and listedstoc9s

S.eedy rise in +ar9et ca.itali:ation and volu+e o,

trade !ntry o, so.isticated investors li9e FIIs MFs

4e-orani:ation o, Securities Mar9et


62/70

%evelo.+ents in ri+ary Mar9et

!ntry o, +ar9et s.ecialists

Issue .rocedure activities re,or+s – S!BI nor+s

%evelo.+ents in Secondary Mar9et

4iorous nor+s ,or inter+ediaries introduced y S!BI

Screen ased tradin syste+- ,ro+ o.en outcry syste+ to

auto+ated syste+

%e+ateriali:ation o, securities- NS%$ and &%S$

4eduction in tradin cycle (,ro+ TP1 to TP2)

%erivative tradin (Lune 2000)

&or.orati:ation and %e+utuali:ation o, S!( Lune 200/)

4e-orani:ation o, Money Mar9et


63/70

y

&aracteristics o, +oney +ar9et till /0s

Narro ase- li+ited no5 o, .artici.ants

aucity o, Instru+ents (only / days T-Bills inter- an9

de.osits and loans ?5)

3ily reulated interest rates

ost /0 re,or+s in Money Mar9et !+erence o, S.eciali:ed institutions- ri+ary %ealers

Introduction o, ne instru+ents (& &% 4e.o?5)

Trend toards interation o, ,ore= and +oney +ar9et

Measures ,or Increased rotection to

Investors


64/70

Investors

Add Your Title

INTEGRATEDINTEGRATED

CHANGESCHANGESIN THEIN THE

FINANCIALFINANCIAL

MARKETMARKET

INADEQUACYINADEQUACYOF THE OLDOF THE OLDLEGISLATIVELEGISLATIVEFRAMEWORKFRAMEWORK

REGULATORYREGULATORYFRAMEWORKFRAMEWORK

REQUIREDREQUIRED

Measures ,or Increased rotection to


65/70

Investors

LEGISLATIONLEGISLATIONSEBI ACT1992ACT1996

S!BI( Securities !=cane Board o, India)


66/70

• !stalised on A.ril /2 /2 in accordance it

te .rovisions o, te Securities and !=cane

Board o, India Act /2

• Initially (/) estalised as an ad+inistrative

statutory autono+ous ody• Basic #@ective

?55to .rotect te interests o, investors in

securities and to .ro+ote te develo.+ent o,

and to reulate te securities +ar9et ?G

S!BI( Securities !=cane Board o, India) ?5

l d d


67/70

• Its reulatory @urisdiction e=tends over cor.orates in te

issuance o, ca.ital and trans,er o, securities in addition

to all inter+ediaries and .ersons associated it

securities +ar9et5

• It can conduct en>uiries audits and ins.ection o, all

concerned and ad@udicate o,,ences under te Act5

• It as .oers to reister and reulate all +ar9et

inter+ediaries and also to .enali:e te+ in case o,

violations o, te .rovisions o, te Act 4ules and

4eulations +ade tere under5

SE0' has full autonom! and authorit! to reulate and

de$elo% an orderl! securities maret.

%e.ositories Act /<


68/70

•It .rovides ,or te estalis+ent o, de.ositories insecurities it te o@ective o, ensurin ,ree

trans,eraility o, securities it s.eed accuracy

and security• (a) +a9in securities o, .ulic li+ited

co+.an es ree y rans era e su ec o

certain e=ce.tionsH

• () de+ateriali:in te securities in te

de.ository +odeH and• (c) .rovidin ,or +aintenance o, onersi.

records in a oo9 entry ,or+5

%e.ositories Act /<


69/70

•Te Act envisaes trans,er o, onersi. o, securities electronically y oo9 entry itout

+a9in te securities +ove ,ro+ .erson to .erson5

• Te Act as +ade te securities o, all .ulic li+ited

E

rit to use discretion in e,,ectin te trans,er o,securities

• To %e.ositories» NS%$-National Securities %e.ository $td (/


70/70

Documents

Evolution of Indian Financial System-2 [Compatibility Mode]