What Is the Securities and Exchange Board of India (SEBI)?
Let me explain what the Securities and Exchange Board of India (SEBI) is—it's the primary regulator for securities markets in India. Think of it as the Indian equivalent to the Securities and Exchange Commission (SEC) in the U.S. Its main goal, as stated, is to protect investors in securities, promote the development of the securities market, regulate it, and handle any related matters.
Key Takeaways
You should know that SEBI leads the regulation of securities markets in India, much like the SEC does in the U.S. It holds extensive powers for regulation, investigation, and enforcement, which include imposing fines on those who violate rules. However, some critics point out that SEBI lacks transparency and isn't directly accountable to the public, given its significant authority.
Creation of the SEBI
SEBI came into its current form in January 1992, after India's parliament passed the Securities and Exchange Board of India Act. It took over from the Controller of Capital Issues, which had been regulating securities under the Capital Issues (Control) Act of 1947, enacted just before India gained independence from Britain.
You'll find SEBI's headquarters in the Bandra-Kurla Complex business district in Mumbai. It also operates regional offices in New Delhi, Kolkata, Chennai, and Ahmedabad, plus over a dozen local offices in places like Bangalore, Jaipur, Guwahati, Patna, Kochi, and Chandigarh.
SEBI's Charter
According to its charter, SEBI is responsible for three key groups: the issuers of securities, investors, and market intermediaries.
In its role, SEBI drafts regulations and statutes as a regulator, issues rulings and orders like a judicial body, conducts investigations, and enforces penalties. For instance, it banned short selling from 2001 to 2008.
SEBI is governed by a board of directors, including a chair elected by parliament, two officers from the Ministry of Finance, one from the Reserve Bank of India, and five other members elected by parliament.
Criticism of SEBI
Critics argue that SEBI lacks transparency and is shielded from direct public accountability. The only checks on its power are the Securities Appellate Tribunal, a three-judge panel, and the Supreme Court of India, both of which have occasionally reprimanded SEBI.
That said, SEBI has been proactive in issuing punishments and implementing strong reforms. It set up the Financial Stability Board in 2009 following the global financial crisis, expanding its mandate to promote financial stability beyond what its predecessor had.
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