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Project on
“Overview of Selected objectives of SEBI”
Prepared by
Shubhangi Bhanudas Ghadge
T.Y.B.Com (banking & insurance)
Semester –V
Roll no.06
Year 2011-12
Under the guidance of
Professor. Bhavika karkera
Submitted to
Shailendra Education Society’s
Arts, commerce, & Science College
(NAAC accredited B+)
Affiliated to
University of Mumbai
Dahisar (E), Mumbai 40006
1
ACKNOWLEDGEMT
It gives me a great pleasure to present my project on
‘Overview of Selected Objectives of SEBI’. I am very thankful
of our co-coordinator ‘Mrs. Bhavika Karkera’, who always
helped me to complete my project. Without her support and
motivation this project would not have seen the light of the
day, her review, comments, suggestions, have enormously
enriched my project.
I also would like to thank ‘Mrs.Ahuja. P. jadhav’ madam who
is our librarian and who supported me by giving various
books, magazines related to my project and to help me in
completion of my project.
And lastly I will also thank my friend’s, who helped me in
completing my project.
Before conducting this project I was having limited
knowledge about SEBI but this project helped me to expand
my knowledge related to IDBI.
2
INDEX
Sr.no chapters Page no
1 INTRODUCTION 4-10
2 HISTORY OF SEBI 11-13
3 SEBI FULFILING ITS OBJECTIVES 14-23
4 PRIMARY DATA ANALYSIS 24-54
5 FINDINGS AND CONCLUSIONS 55-59
6 SUGGESTIONS AND
RECOMMENDATIONS
60-61
7 BIBLIOGRAPHY
ANNEXURE I
QUESTIONERIRE
62-6
CHAPTER 1: INTRODUCTION3
1.1 INTRODUCTION
1.2 CONSTITUTION AND ORGANISATION
1.3 RESEARCH AND OBJECTIVE
1.4 BACKGROUND
1.5 LIMITATIONS OF PROJECT
1.6 RESEARCH METHODOLOGY
4
CHAPTER1.INTRODUCTION TO SEBI
1.1 INTRODUCTION
As it is very necessary for the road which is heavily crowded
to have traffic police man to regulate the traffic in an orderly manner and to
see that there are no accidents, similarly the same way here SEBI (securities
and exchange board of India) act as a regulatory body that regulates stock
exchange intermediaries so that there is no loss to the public. It takes care
that all the intermediaries are working efficiently and with honesty with the
interest of the investor .the investor are the backbone of the stock exchange
so there care is first and foremost duty of the regulatory body. The SEBI has
put in lots of efforts to make the market move smoothly and grow faster
with avoiding the frauds and errors by intermediaries and companies handle
the finance of the investor which have to be rightly use in order to earn
profit and give return to investor thus SEBI became necessary for the
investors protection .
5
1.2 CONSTITUTION AND ORGANISATION
The SEBI is a body of six members comprising the chairman two
members amongst the officials of ministry of central government dealings
with finance and law, two members who are
Professional and have experience or special knowledge related to securities
market and one member from RBI. all except the RBI members are
appointed by government who lays down their term of office tenure and
condition of service and who can also remove any members from office
under certain circumstances .the central government is empowered to
supersede the SEBI in public interest or if ,on account of grave
emergence ,its unable to discharge its functions or duties ,or if persistently
defaults in complying with any directions issued by governments ,or if its
financial position and administration deteriorates. The work of the SEBI has
been organized into five operational department each of which is headed by
an executive director who reports to the chairman. Besides, there is a legal
department and the investigation department. The department has been
divided into two divisions .the various departments and scope of their
activities are as follows
The primary market policies intermediaries, self regulations (SRO’s),
investors grievance and guidance department. It looks after all policy
matter and regularly issues in respect of primary market ,
registration ,merchant bankers , portfolio management
service ,investment advisors, debenture trustee , underwriters ,SRO’s
and investor grievance ,education and association .
6
The issue management and intermediaries department it is responsible
for vetting of all prospectuses and letter of offer for public rights
issue,
For co ordination with the primary market policy, for registration,
regulation and monitoring off issues related to intermediaries.
The secondary market policy ,operations and exchange administration
,new investment products and insider trading department it is
responsible for all the policy and regulatory issues for the secondary
market and new investment product , registration and monitoring of
members of stock exchange , administration of stock
exchange ,market surveillance and monitoring of price movements,
insider trading and EDP and SEBI’s data base.
The secondary market exchange administrator ,inspection and non
members intermediary department it looks after the smaller stock
exchange of Guwahati , Magadh, Indore ,Mangalore , Hyderabad ,
Bhubaneswar ,Kanpur ,Ludhiana , and cochin .it is also responsible
for inspection of all stock exchange registration , regulations and
monitoring of non members intermediaries such as sub brokers .
7
Institutional investment (mutual fund and foreign institutional
investment) mergers and acquisitions , research and publications ,and
international relation and IOSCO department it looks after the policy ,
registration regulation and monitoring of foreign institutional
investors (FII’s), domestic mutual fund , mergers and substantial
acquisition of shares and IOSCO (international organization of
security commission). Membership, international raters and research,
publication and council report of SEBI.
Legal departments look after all legal matters under the supervision of
the general council.
Investigation department carries out inspection and investigation
under the supervision of the chief of investigation.
1.3 RESEARCH OBJECTIVES
To identify different types of investor.
To study the guidelines of SEBI in respect of investors protection.
To identify intermediaries in the security market.
To study rules and regulations of SEBI in respect of intermediaries
dealing in market.
8
1.4 BACKGROUND
The objectives of investor protection is selected because the
investor almost is important part of market as they are one who are at
the maximum risk of ultimate losing their money.
The guideline of SEBI are studied to know the legal
frame work for investors protection
To identify the intermediaries as they are operating in
market and take the money of public for investing.
The guidelines of intermediaries are studied to know the
functions of intermediaries.
1.5 Limitations of Project
Only limited guidelines and regulations are studied for investor
protection
Overview of objectives of SEBI is taken.
All the intermediaries are not studied in the projects.
All the regulations and guidelines regarding the intermediaries are not
studied
9
1.6 Research Methodology
Primary data is the data collected from direct source, primary
data was collected from the institution of merchant banker, Mutual
Fund Company, brokers, sub brokers. My sample study consist 15
institution that is the above mentioned intermediaries from which
questioner of seven questions were filled.
The questioner consist of data that how did they act to SEBI
guidelines enforcement. Sample study also consist of ten individual
investor who invested in stock exchange to know there attitude and
knowledge about the SEBI guidelines This question gives the
information about the SEBI efficient work
For the investor protection. A small questioner is also collected from
SEBI which gives information about the workers of SEBI in the
market.
10
CHAPTER 2 HISTORY OF SEBI
11
CHAPTER: 2 HISTORY OF SEBI
The SEBI was established in 12th April 1988 through an
administrative order, but it became a statutory and really powerful
organization only since 1992. The CICA was repealed and the office
of CCI was abolished in 1992 and the SEBI was set up on 21st
February 1992 through an ordinance issued on 30th January 1992. The
ordinance was replaced by SEBI act on 4th April 1992.
Certain powers under certain sector of SCRA and CA have been
deleted to the SEBI. The regulatory powers of SEBI were increased
through the securities law (amendment) ordinance of January 1995
which was subsequently replaced by an act of parliament.
The SEBI is under the overall control of ministry finance and has its
head office in Mumbai. It has now become a very important
constituent of financial regulation framework in India .The
philosophy
Underlining the creation of SEBI is that multiple bodies for securities
industries mean that the regulatory system gets dividend, causing
confusion among market participant as to who is really on command
12
.in a multiple regulatory structure there is also an overlap of functions
of different regulatory bodies.
Through the SEBI, the regulation model which is sought to be put in
place in India is one which every aspect of security market regulation is
entrusted to a single highly visible and independent organization, which is
backed by a statue and which is accountable to the parliament and in which
investor can have trust.
13
CHAPTER 3. SEBI FUILFILLING ITS OBJECTIVES
PRIMARY SECURITY MARKET
SECONDARY MARKET AND INTERMEDIARY
MUTUAL FUNDS
MISCELLANEOUS
14
CHAPTER 3. SEBI FULFILING ITS OBJECTIVES
Since the enactment of the SEBI act 1992 financial institutions
agencies and marketing intermediaries are been governed by the guidelines,
rules and regulations notified by SEBI from time to time.
Few major policies measures and reforms introduced by
SEBI during 1992-1996
PRIMARY SECURITY MARKET
The issue of capital by companies no longer requires any consent
from any authority either for making the issue or for pricing it
Efforts have been made to raise the standard of disclosure in public
issue and enhance the transparency. The SEBI has accepted and
implemented almost all the Malegam committee appointed by it in
1994-95 in this connection.
The offer document is now made public even at the draft stage
Companies making their first public issue are eligible to do so only if
they have three years of dividend paying track record preceding an
15
issue .Those not meeting this requirement can still make an issue if
their project are upraised by bank or foreign institute with minimum
10% of participation in the equity capital of the issue, or if their
securities are listed on the OTCEI (over the counter exchange of
India).
For issue above Rs 100crore ,Book building process has been
introduced
The pricing of preferential allotment has to be at market related levels
and there is a five year lock in period for such allotment.
In case of proportionate allotment scheme, a minimum of 50% of net
offer to the public is to be reserved for individual investor applying
for securities not exceeding 1000 securities and the remaining part
can be allotted to application for more than 1000 securities.
Initially the underwriting of the issue to public was mandatory, but
now this stipulation has been removed .During 1995-96, the SEBI
granted registration to four underwriters bringing their total number
to 40.
16
Banker to an issue and portfolio manager has to be registered with
SEBI. There were 77 bankers to the issue thus registered as of 31
March 1996.
SECONDARY MARKET AND INTERMEDIARIES
The governing boards and various committees of stock exchange
(SE’s) have been recognized, restructured a board based.
The inspection of all 22 stock exchanges has been carried out to
determine the extent of compliance with directives of SEBI.
Computerized or screen based trading has achieved on almost all
exchange except some of the smaller one
Corporate membership of SE’s allowed encouraged and preferred.
The article of association of SE’s has been amended so as to increase
their membership.
All the SE’s have been directed to established either a clearing house
or a clearing corporation
17
The Bombay stock exchange has been asked to reduce their trading
period or settlement cycle from 14 to7 days for B group of
shareholders
A process through which a investors grievances against brokers may
find redressed through a complaint to SEBI has been put in place.
The SEBI has been instructed to set up independent market
surveillance department .The SEBI has strengthened its own
investigation and enforcement machinery.
All the recommendation of Dave committee for improving the
working of OTCEI has been accepted.
In accordance with the recommendations of GS Patel committee BSE
has been allowed to introduced a revised carry forward system (CFS)
of trading .Other SE’s can introduce forward trading only with prior
permission of SEBI .Transactions are not allowed to be carried
forward more than 19 days now. The shares received by financiers
funding carry forward transaction have to be deposited and kept in
safe custody of clearing house of stock exchange and its authorized
agent every member is required to keep books and record the source
of
18
finance with the sub accounts being maintained in the clearing
house .The likewise carry forward position has to be disclosed to the
market .The SE’s are required to introduce the twin track system
which will segregate transaction into carry forward and cash
transaction and each
One of the former will be indentified with a transaction identification
number till its final settlement.
The brokers are required to ensure segregation of client account &
owned account.
The capital adequacy norms of 3 percent for individual brokers & 6
percent for corporate brokers introduced.
Both of the brokers & sub brokers have been brought within the
regulatory fold for the first time now; & the concept of the dual
registration of stock brokers with the SEBI & the Se’s has been
introduced. The total number of registered brokers & sub brokers was
8, 746 at the end of March 1996, of which 1917 were corporate
members.
19
Penal action can now be taken directly by the SEBI against any
member of a stock exchange for violation of any provision of the
SEBI Act.
It has been made mandatory for the stock brokers to disclose the
transaction price & brokerage separately in the contract notes issued
by them to their client.
The daily margin & additional margin for volatile scrips are now lei
vied on a weekly & marked –to- marked basis.
The Se’s have amended their listing agreements such that the issuer
have now to provide share holders with a cash flow statement in a
prescribed format, along with the complete balance sheet & profit &
loss statement.
The trading hours in all most all the Se’s have now been in realized
from 2 & half hour to 3 hours per day.
Compulsory audit of the broker’s books & filing of the audit reports
with the SEBI has now been made mandatory.
20
A system of market making in less liquid scrip’s on selected SEs has
been introduced.
Insider trading has been prohibited & such trading had been made a
criminal offence punishable in accordance with the provisions of the
SEBI Act.
Registrars to Issue(RI) & Shares Transfers Agent(STA) have now been
classified into two group : (a) Category 1 with a minimum net worth
requirement of Rs. 6 Lakh who can carry on the activities both as RI
& STA & (b) Category 2 with a minimum net worth requirement of
Rs. 3 Lakh who can carry on any of these activities. There were 209
RI & STA in category 1 & 125 in category at the end of March 1996.
Till end- August 1997, Merchant Bankers (MBs) were classified into
four categories, each with different responsibilities & commensurate
with capital requirements, with effect from September 1997, such a
classification has been abolished & there will be only one entity now,
namely, merchant bankers. A system of penalty points of MBs for
default committed by them has been introduced. It is provided that
they can be suspended or reauthorized after a maximum of 8 penalty
points. The MBs have to fulfill capital adequacy requirement also.
During 1995-96, 231 MBs were granted registration of nine MBs was
cancelled. The number of MBs was 1,012 in 1995-96 & 790 in 1994-
95.
21
Mutual Funds
March 31, 1996, 26 Mutual Fund excluding the UTI, were registered
with the SEBI. Mutual funds are required to have a board of trustees
or Trustee Company separate from the asset management company,
& securities belonging to the various schemes are required to be kept
with an independent custodian. There has to be an arm’s length
relationship between the trustees, the asset management company. &
the custodian. The SEBI (Mutual Fund) regulations, 1993 were
revised to provide for portfolio disclosure, standardization of
accounting policies, valuation norms for determining net asset value
& pricing.
The UTI has been organized under the UTI Act, 1963, & it has
evolved as a distinct institution. Therefore, certain special
dispensations have been provided to it under the SEBI regulatory
framework. Subject to this, the UTI also has been brought under the
SEBI since July 1994. As a result, new schemes of the UTI also fall
under the jurisdiction of the SEBI.
22
Miscellaneous
Foreign institutional investors also required to be registered
with the SEBI. The total number of them so registered was 367
as of march 31, 1996.
It is required that the capital to be registered as depositories
must be Rs. 100 crore. Similarly custodians are required to
have a net worth of Rs, 50 crore, & they are to get their
systems & procedures evaluated externally.
Venture Capital Fund allowed investing in unlisted
Complainer’s, to finance turn around companies, & to provide
loans.
As per the approved modified takeover Code recommended by
the Bhagawati Committee, the minimum public offer of 20%
purchases, when the threshold limit of 10% equity is crossed, is
made mandatory. Those in control are permitted to 2% of share
per annum up to a maximum of 51%. The acquirers have to
deposit a certain value of cash & assets in an escrow account.
The escrow deposits have to be higher for conditional. Public
offers unless the acquirer agrees to buy a minimum of 20%.
23
CHAPTER 4 PRIMARY DATA ANALYSIS
24
CHAPTER 4 PRIMARY DATA ANALYSIS
1] Does the SEBI guide line provide the exact way of performing your
work?
Table 1.
Yes 15
No 0
The number of Market institution who said that yes SEBI Provides the exact
way of performing their work are fifteen.
The number of Market intermediaries who said that the SEBI does not
provide the exact way of performing their work is zero.
25
The data show that all the investors got the exact way of performing their
work. The SEBI has provided detailed guidelines for performing the work
of the intermediaries.
Chart 1
SEBI provide exact way of performing their work
Yes or No
Series1, No, 0, 0%
Series 1, Yes, 15,
100%
Here the number of institution who said YES for the question of providing
exact way of performing the work was 100% while the number of institution
who said NO were 0%. This question was to know that all the institutions
are provided the exact way of performing their work. The work relates to
the code of conduct for their business. There were no institutions which said
that they are not provided the exact way of performing their work they are
provided that include their complete work.
26
2] SEBI has full authority & control over your functioning?
Table 2
YES 15
NO 0
The number of intermediaries who said that the SEBI has the full authority
& control over the intermediaries are fifteen.
The number of intermediaries who said that the SEBI does not have full
authority & control over the intermediaries is zero.
The data show that the SEBI has full control all over the intermediaries in
the market.
SEBI examines this control by making continues observation on the market
intermediaries. SEBI is also allowed to charge penalties for those
institutions that are in the defaulters list.
Chart 2
SEBI has full authority and control over the market intermediaries
Yes or No
Series1, No, 0, 0%
Series 1, Yes, 15, 100%
27
Here the number of institutions who said YES that SEBI has full control &
authority over their functioning is 100% while the number of institutions
who said NO that the SEBI has no full control over the functioning are 0%.
The answer 100% showed that SEBI is one or the way had a full control on
all the institutions who are there in the market & who function by taking the
investors money in their hand. SEBI excise its power of control over the
institutions.
3] Does SEBI want you to register you with it?
Table 3
YES 15
NO 0
The above tables shows that the number of institution who said YES for the
registration with the SEBI are 15 & number of institution who said NO were
0. This showed that SEBI did not let any institute to come on his own &
take over the investor’s money for investing without the registration with
SEBI. The registration with SEBI is compulsory for all the market
intermediaries who invest the people’s money in the market. The SEBI also
wants all the companies to register themselves with is all the companies
existing in the stock market are taking the money of the investors which
includes common people also.
28
The SEBI has to take this step in order to control all the companies & the
market intermediaries
Chart 3
Does SEBI wants companies and market intermediaries to
register with it
Series1, No, 0, 0%
Series 1, Yes, 15,
100%
The above chart shows that here the institutions who said YES for the
registration with the SEBI are 100% & the number of intermediaries who
said NO is nil. This showed that SEBI did not let any institute to come on
his own & take over the Investor’s money as the market is very risky & the
29
Yes or no
companies & market intermediaries can practice any malpractices, if there is
no proper supervision.
4] Does SEBI take any amount as a security for the investor’s
protection
Table 4
YES 0
NO 15
Here the number of institution who said NO for the deposit was 15.
While no institution said that the SEBI takes any amount as a security for
the investors.
This show that the SEBI is not taking any amount for the investor’s
protection which tells that the SEBI have the control over the Organization
through it regulation in such a manner that it need not require any amount as
the investors security amount.
30
Chart 4
SEBI takes any amount as a security for the investors protection?
yes no
The above chart shows here that the number of institutions
Who said NO for the deposit was 100%.
While the institution who said YES for the deposit was 0%, thus the SEBI
takes no amount as investor’s protection.
But the intermediaries need certain condition to be fulfilled i.e. certain
minimum capital has to be rising by the company for entering into the
market.
5] Does SEBI guidelines create any rigidity in the process of your work?
31
Table 5
YES 9
NO 6
Here the number of institute who said that following the SEBI guidelines
create rigidity are 9, while the number of institution who said that following
the SEBI guidelines does not create rigidity were only 6.
The answer extracted tells that the intermediaries have to follow the guide
lines which are rigid according to them but the SEBI have framed they with
the intention of investors protection. The intermediaries who said that the
guidelines were not rigid according to them the guidelines have been
perfectly framed for the investor’s protection.
32
Chart 5
does the SEBI guidelines creates any rigidity?
yesno
The chart shows that here the number of institute who said that following
the SEBI guidelines rigidity are 60%. While the number of institute who
said that following the SEBI guidelines does not create rigidity were only
40%. The chart explains us more intermediaries fell that the Guidelines are
very legal & difficult to follow. But the purpose of SEBI for framing the
guidelines has been served.
33
6] Does SEBI provide any way through which you can give your
grievances to the SEBI?
Table 6
YES 15
NO 0
The above table shows that the number of intermediaries who said YES
SEBI provides any way through which you can give your grievances to the
SEBI is 15. While the number of institutions who said that SEBI does not
provides any way through which you can give your grievances to the SEBI
is 0. SEBI has taken this step in order to know the problems of the
intermediaries. The SEBI receives a lot of grievances from the
intermediaries which SEBI tries to solve to his best possible level. The
SEBI has setup some of the institutions who collect the investor’s
grievances for the purpose of resolving them.
34
Chart 6
100%
Does SEBI provides any way through which investors can launch their complaints?
yes no
The numbers of institute who said that YES SEBI provides then the way
through which they launch their complaint are 100% i.e. All the institution
said that they can launch their Complaint with SEBI
35
7] Write in short the how to get registration?
Registration of merchant banking, venture capitalist, Mutual Fund Company
& other intermediaries. All the Intermediaries have to register them self
with SEBI.
This process is applicable to merchant bank which include all most all type
of intermediary services.
First the companies have to go through due diligence i.e. they have to follow
the SEBI regulation for being eligible to Enter into the market.
The company file DHRP (Draft Red Herring Prospectus) the SEBI checks
the DHRP to get all the required knowledge after that SEBI issues due
diligence certificate if he feels the company to be eligible to enter the
market & it had fulfilled all required conditions.
The company has to show their prospectus to SEBI within 21 days of
issuing public notice, the SEBI makes it available on its website, on book
running led manager’s sites & the company’s site for notice of the public &
if SEBI want any more information to be provided it is taken into
consideration. After this stage SEBI conducts as observation of all the
documents provided to it from the company. The SEBI have officers who
36
make the check of the company’s document. Ones the SEBI observation
procurer is over the company can go further for incorporation.
Advertisement – any company making any of its advertisement must not
provide any false or sugarcoated information.
Questions for individual investors.
Name of the intermediary through whom you invest?
Table 1
Broker 3
Mutual Fund 3
Merchant Bank 0
Portfolio Manager 4
Any other please mention
The above table shows that the number of investors who invested through
brokers was three.
The number of investors who invested through mutual fund was three.
& the number of investors who invested through portfolios managers was
four.
37
This shows that the investors are more relying on diversification of risk by
investing in diversified portfolio. While the person investing in through
broker & mutual funds are same.
Chart.1
30%
30%
40%
investment through intermediaries
brokermutual fundmerchant bankportfolio manager
The above chart show that the number of investors who invested through
brokers were 30%, the number who invested in through mutual fund were
38
30% & the number of investor who invested through portfolio managers
were 40%.
This showed that the people invest through intermediaries which are under
the control of SEBI.
1. You invest & interact regularly or some times?
Table 2
REGULARLY 6
Some times 4
The above table shows that the people investing in the stock market
regularly are 6.
Whereas the people investing sometimes are 4. This shows the number of
people seeking profits from the share market have increased along with that
the number of risk takes have also increased. This increase has been seen
because of the securities & exchange board of India is acting as the
regulatory body for controlling all the companies & the intermediaries who
are functioning in the market. Because of this no listed company can cheat
people can take away their money.
39
CHART 2
60%
40%
Regular and Irregular investors
regularlysometimes
The above chart shows that the people investing in the stock market
regularly are 60% where as the people investing some times are 40%. This
show the numbers of people seeking profits from the share market have
increased & along with the number of risk takers have also increased. This
shows that the efforts have to be increased for the market regulation as when
more number of investor’s increase the number of intermediaries also
increases.
40
3. Are you aware of SEBI guidelines available for investor’s protection?
Table 3
YES 7
NO 3
The number of investors who said that they are aware of the guidelines
available for the investor’s protection is 7.
Whereas the number of investors who said that they are not aware of the
investors protection guideline by the SEBI are 3, this shows that the SEBI
guidelines are known to majority of the people but the interest of the minor
must also be taken in consideration & some measures should be taken to
make the investors know about the guidelines provided for their benefit by
the SEBI. The SEBI has setup some of the institutes which work for the
investors awareness this institutes conduct investors awareness campaign in
which it makes many investors aware about the new schemes of the SEBI as
well as they act as a grievance taking institute which collect the investors
grievances & try to resolve them.
41
Chart 3
70%
30%
Awareness of SEBI guide lines
yesno
The above chart show that the number of investors who said that they
Are aware of the SEBI guidelines are 70%.
While the number of investors who said that they are not aware of the SEBI
guidelines are 30%.
This showed that the investors are aware of the market risk & SEBI to a
great extent has succeeded in his objective but still it has to take some
measures through which it can create awareness among all the people
investing in stock exchange.
42
4. Are you aware of “Investor education” informed provided by SEBI ?
Table 4
YES 7
NO 3
The number of people who said that they are aware of the investor’s
education provided by SEBI is 7.
Whereas the number of investors who said that they are not aware of the
investor’s education provided by SEBI are 3.
This data showed that the number of investors aware about the investors’
education is more. & the numbers of investors unaware are less. SEBI make
this investors education through different ways like news papers magazines
& SEBI bulletin which are available in the market.
Chart 4
43
70%
30%
Column1
yes no
The above chart shows that the number of investors who said that they are
aware of the investor’s education is 70%.
Whereas the number of investors who said that they are not aware of the
investor’s education are 30%. This data shows that the SEBI has done its
work to great extent but still it needs some improvement in its system to
create awareness among this minor class. But the overall work is successful.
44
5. Who do think is the most reliable source of information for
investing?
Table 5
Brokers 3
Portfolio manager 4
Mutual fund 3
Merchant banker 0
Your own knowledge 0
The above table shows that the investor who thinks that the Brokers give
best source of information is three.
The investor who thinks that the merchant bankers five best source of
information is three.
And the numbers of investor who believe the portfolio manager are best
source of information are four.
This data says that the investors depend on the information provided by this
organization.
45
Chart 5
30%
30%
40%
Investors best sources of information
brokermutual fundportfolio manager
The above table shows that the investor who thinks that the broker give best
source of information is 30%
The investor who thinks that the merchant banker give best source of
information is 30%
And the number of investor who believe the portfolio manager as best
source of information are 40%
The above data shows that investors believes in these intermediaries and
invest their money and these intermediaries have to work according to the
rules and regulations of SEBI.
46
6 In which instrument do you normally invest?
Table 6
Equity shares 2
Preference shares 2
Bonds 3
Debentures 3
Any other please mention 0
The above table shows that the number of investors investing in equity
shares is two
The numbers of investors investing in preference shares are two the number
of investors investing in the bonds is three
And the number of investors investing in debentures is three.
The data shows that the Indian investors are not the risk taker they try to
minimize the risk by investing in the secured securities.
Chart 6
47
20%
20%
30%
30%
Preference while investing in the market
equity sharespreference sharesbondsdebentures
The above chart shows the number of investors investing in the equity
shares is 20%.
The number of investor investing in preference share is 20%.
The number of investor investing in the debentures is 30%.
The number of investor investing in the preference share is 30%
The above data shows that the investors seek for the secured securities in the
market. Thus it is necessary for the SEBI to undertake all the intermediaries
under its proper guidance.
Data collected from SEBI
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1] Which are the intermediaries registered under SEBI please mention?
Stock exchange (cash market)
Stock exchange (derivative market)
Brokers (cash segment)
Corporate brokers (cash segment)
Sub brokers(cash segment)
Brokers (derivative)
Foreign institutional investor
Custodian
Depositaries
Depositary participants
Merchant banker
Bankers to an issue
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Underwriters
Debenture trustees
Credit rating agencies
Venture capital fund
Registrar to an issue & share transfer agents
Portfolio managers
Mutual funds
Collective investment schemes
Approved intermediaries(stock lending scheme)
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2] In what do you tackle the new emerging problem in the market?
Answer:- By charging penalty for defaulter and for new market
challenges in their rules and regulation.
Few regulation in which major amendment are made.
SEBI (Insider Trading) Regulation, 1992.
SEBI (Underwriter) Regulation, 1993.
SEBI (Debenture Trustees) Regulation, 1993.
SEBI (Portfolio Manager) Regulation, 1993.
SEBI (Foreign Institutional Investor) Regulations, 1995.
SEBI (Mutual Fund) Regulation, 1996.
SEBI (Substantial Acquisition of Shares and Turnover) Regulation,
1997.
SEBI (Employee Stock Option Scheme and Employee Stock
Purchases) guidelines, 1999.
SEBI (Credit Rating Agency) Regulation 1999.
SEBI (Disclosure and Investor Protection) Guideline 2006.
SEBI (Substantial Acquisition of Shares and Takeovers) Regulation
2006.
3] What is to be considered before investing in security market?
For the individual investor SEBI has proposed some of the objectives
which have to be considered before investing in the security market.
Obtain written documents explaining the investment,
Read & understand such documents,
Verify the legitimacy of the investments,
Find out the cost & benefit associated with the investment,
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Assess risk return profile of the investment,
Know the liquidity & safety aspect of the investment,
Ascertain if it is specific for your goals,
Compare this details with other investment opportunities
available,
Examine if it fits with other investments you are considered or
you have made
Deal only through & SEBI registered intermediary whenever
required
Seek all clarification about the intermediaries & the investment
Explore the option available to you might sometime go wrong
& then if satisfied make the investment
4] Do you interact with the investors in any indirect manner?
The SEBI said no The SEBI interact through newspaper, SEBI bulletins,
magazines where SEBI articles are printed. It also interacts indirectly with
the help of some institutions which are setup for gathering investor’s
grievances & for the creating investor awareness.
5] How are you able to achieve your objective of investor protection?
Answer: There is continues observation on the market, on all the stock
exchange, all the market intermediaries, and all the companies in the stock
market. This had let the full control over the activities in the market. The
SEBI setup comities whenever it sees that it is required to have a check on
the
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Suspected company or market intermediaries. SEBI also create a market
survey each year to see the overall progress report of the Indian stock
market. SEBI continuously monitors the changes in the indexes of all the
stock exchange & its record all the factor affecting the stock exchanges.
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CHAPTER 5 FINDINGS AND CONCLUSIONS
54
CHAPTER 5- FINDINGS & CONCLUSIONS
1] From the first question asked to the intermediaries I conclude that the
intermediaries are provided the perfect way of performing their work. They
carry all their work according to the guidelines provided by the SEBI. Here
the SEBI had done all the work of providing the guidelines to all the
intermediaries.
2] From the answer of second question I conclude that the SEBI full control
& authority over the functioning of intermediaries & their working. SEBI
makes the observation continuously over the intermediaries so that they
cannot make any malpractices or carry on the business in any unproved way
in opposite to the interest of the investors.
3] From the answer of third question I conclude that all intermediaries
have registered themselves with SEBI. From this SEBI is able to lay down
the control over the intermediaries in the market. Registration with SEBI
also give confidence to the investor in the stock exchange that there money
will be invested in proper place & no misuse of the money will be made for
any purpose by the company as SEBI is made for investors protection.
4] From the answer of the fourth question I conclude that SEBI does not
take any amount of the investor’s protection. As SEBI makes rules for the
intermediaries in the market so it has a full control over the intermediaries
so
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SEBI do not require any amount as a deposit however the intermediaries are
required to have certain minimum capital.
5] From the answer extracted from the fifth question asked to the
intermediaries it tells that the intermediaries have to follow guidelines
compulsorily though some of the intermediaries fell that following SEBI
guidelines create rigidity still they have to follow and those that do not
follow them are considered as defaulter and strict action are to be taken
against those intermediaries. Following guidelines by the intermediaries
helps the SEBI to regulate the stock market in the smoother manner.
6] From the answer of the sixth question I conclude that SEBI has provided
a exact way by which the investor can place their grievances to SEBI. These
grievances are resolved to the maximum extent to what it can be resolved.
SEBI tries in all the ways to satisfy the investor and market intermediaries
to their maximum possible extent.
7] From the answer of the seven questions I conclude that SEBI registers the
intermediaries in very legal manner after taking all the prerequisites into
consideration. It checks their all the document which are required for
registration their minimum capital to be subscribed. It gives them
registration when it fell sees that all conditions are fulfilled.
8] From the first question I conclude that all the investor invest through the
market intermediaries which are registered in the SEBI. This enables the
SEBI to work for investor’s protection as the as all the intermediaries are
registered under SEBI.
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9] From the second answer I conclude that more than 50%of the investor in
the market has become regular investor this situation is due to SEBI. This
has worked a lot for the market to run smoothly and which has led the
Indian stock market to grow.
10] From the third answer I conclude that 70% of the investor knows about
the SEBI guidelines available for the investor’s protection this leads to
better and efficient investment by the investors. Investor’s protection
guidelines help the investor to be aware of his rights and the intermediary’s
responsibility.
11] From the fourth answer I conclude that 70% of the investor knows about
the investor’s education that is provided by SEBI. These all points are to b
considered by an investor before investing in company. The awareness of
this education leads the investor to take right decision before investing in
any kind of security. This also helps the SEBI objectives from preventing
public from making very risky and unsystematic investment.
12] From the fifth question I conclude that people believe in the expert
knowledge provided by the market intermediaries like portfolio manager
mutual fund and brokers and not on their own knowledge. As all the market
intermediaries are controlled but the SEBI it assures quality services and
advises to be provided to the investors.
13] From the sixth question I conclude that people I India are low risk
bearer and they want regular returns. The people investing in the debt
market are more than the people investing in the equity market. For this
purpose SEBI
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Has been set up to make the companies and the market intermediaries work
efficiently.
14] From the first answer I conclude that all the market intermediaries have
to register themselves with SEBI. SEBI registers all the market
intermediaries with an intention of having full control over the market
intermediaries.
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CHAPTER 6. SUGGESTIONS AND
RECOMMENDATIONS
o SPECIFIC:
o GENERAL:
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CHAPTER 6. SUGGESTIONS AND
RECOMMENDATIONS
SPECIFIC:
1. All the intermediaries have to be checked properly for the purpose
of investors benefit.
2. Some sources should be there for direct interaction between SEBI
and investor.
3. The scamps like Dabba exchange should be prevented as it leads
to be lots of losses for investors.
4. Lacking areas of SEBI control.
GENERAL :
Further research can be carried out in
1. Study of all objectives of SEBI.
2. Study of registration of SEBI.
3. Study of work shop by SEBI.
4. All the intermediaries can be identified and studied in detail.
5. SEBI control over the intermediaries.
BIBLIOGRAPHY
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BOOKS:
Taxman, 2005, SEBI MANUAL
LM bhole, financial institution and marketing
M.Y.Khan, third edition financial services
Third edition, stock exchange
Layman’s guide for investment
GN bhajpai aaa9 third edition 2006)”stock market
book”, Mumbai.
NEWSPAPER:
The economic times
Times of India
WEBSITE:
WWW.sebi govt.in
www.money control.com
www.motilaloswal.com
ANNEXURE I
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QUESTIONERIRE
1. Do the SEBI guidelines provide the exact way of performing your
work?
2. SEBI has full authority control over your functioning?
3. Does SEBI want you to register yourself?
4. Do SEBI guidelines create rigidity in the process of your work?
5. Does SEBI provide any way through which u can give your
grievances to SEBI?
6. Does SEBI provide any way through which you can give your
grievances to SEBI?
7. Write in short how to get registration?
QUESTIONER FOR INDIVIDUAL INVESTOR
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1. Name of intermediary through whom you invest?
2. You invest or interact regularly or sometimes?
3. Are you aware of SEBI guidelines available for investor’s
protection?
4. Are you aware of “investor’s education” information provided by
SEBI?
5. Who do you think is the most reliable source of information for
investing?
6. In which instrument do you normally invest?
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