Regulatory (Apex) Bodies in the Financial sector in India
🔵🔴🔵🔴RBI (Reserve Bank of India):RBI is the regulator of Banking & Finance & Money Market.
➡RBI was established in April 1935 under Reserve Bank of India, 1934.
➡On the recommendation of Hilton-Young Commission.
➡Central Bank of India which was nationalized in 1949.
➡Central office initial was established in Calcutta and later moved to Mumbai in 1937.
➡Official Directors- Governors and not more than four deputy governors.
➡Currently following persons are on following posts-
➡RBI performs his function under the guidance of the Board of financial supervision.
➡Board for Financial Supervision (BFS)-
➡Constituted in November 1994. The Board is constituted by co-opting four Directors from the Central Board and is chaired by the Governor.
🔴Important Acts Administered by RBI-
(i) Reserve Bank of India Act, 1934
(ii) Public Debt Act, 1944/Government Securities Act, 2006
(iii) Government Securities Regulations, 2007
(iv) Banking Regulation Act, 1949
(v) Foreign Exchange Management Act, 1999
(vi) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002
🔴Other Relevant Acts-
(i) Negotiable Instruments Act, 1881
(ii) Companies Act, 1956/ Companies Act, 2013
(iii) Deposit Insurance and Credit Guarantee Corporation Act, 1961
(iv) Regional Rural Banks Act, 1976
(v) National Bank for Agriculture and Rural Development Act, 1981
(vi) National Housing Bank Act, 1987
(vii) Competition Act, 2002
(viii) Indian Coinage Act, 2011
🔴Following are the fully owned subsidiary of RBI-
(i) Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
(ii) Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
(iii) National Housing Bank (NHB)
➡The first governor of RBI- Sir Osborne Smith
➡The first governor of RBI after nationalization- C. D. Deshmukh
➡The first women Deputy Governor of RBI-K.J.Udeshi.
➡RBI Emblem: Tiger and Palm tree
🔵🔴🔵🔴🔵SEBI (Securities and Exchange Board of India)-SEBI is the regulator of Capital Market and Securities (Stock) in India.
➡Established in April 1988 and given statutory power on 12th April 1992 through SEBI Act 1992.Regulator for the securities market in India & Headquarters- Mumbai
🔴The Forwards Market Commission, the commodities market regulator was merged with the Securities and Exchange Board of India in December 2015.
🔵🔴🔵🔴IRDAI (Insurance Regulatory and Development Authority of India)-IRDAI is the regulator of the insurance sector in India.
➡Based on the Insurance Regulatory and Development Authority Act, 1999.
🔵🔴🔴🔵Important Acts of Banking Sector
1.Negotiable Instrument act, 1881
2.Co-operative Societies Act, 1912
3.Reserve Bank of India Act, 1934
4.The Industrial Finance Corporation of India Act–1948
5.The Banking Companies (Legal Practitioner Clients’ Accounts) Act–1949
6.The Industrial Disputes (Banking and Insurance Companies) Act–1949
7.The Banking Regulation (Companies) Rules–1949
8.The Banking Regulation Act–1949
9.The State Bank of India Act–1955
10.The State Bank of India (Subsidiary Banks) Act-1959
11.The Subsidiary Banks General Regulation–1959
12.The Deposit Insurance and Credit Guarantee Corporation Act–1961
13.Banking Companies (Acquisition and Transfer of Undertaking) Act, 1969
14.The Regional Rural Banks Act–1976
15.The Banking Companies (Acquisition and Transfer of Undertakings) Act–1980
16.The National Bank for Agriculture and Rural 17.Development Act–1981
18.NABARD General Regulations 1982
19.Banking Companies (Period of Preservation of Records) Rules, 1985
20.Banking Companies (Regulation)Rules,1985
21.The National Housing Bank Act–1987
22.SIDBI General Regulations, 1990
23.Securities and Exchange Board of India Act, 1992
24.The Industrial Finance Corporation (Transfer of Undertakings and Repeal) Act–1993
25.Recovery of Debts due to Banks and Financial Institutions Act,1993
26.Industrial Reconstruction Bank (Transfer of Undertaking & Appeal) Act–1997
27.Insurance Regulatory and Development Authority Act, 1999
28.Foreign Exchange Management Act, 1999
29.The Securitisation and Reconstruction of Financial 30.Assets and Enforcement of Security Interest Act (SARFAESI-2002)
31.Prevention of Money Laundering Act, 2002
32.Fiscal Responsibility and Budget Management Act, 2003
33.Industrial Development Bank (Transfer of *Undertaking & Repeal) Act–2003
34.Credit Information Companies (Rules & Regulation) Act–2005
35.Government Securities Act, 2006
A. Negotiable Instrument act, 1881:The Negotiable Instruments Act was introduced by the Imperial Legislative Council of India and was enacted on 9th December 1881 to define laws related to negotiable instruments. This act has been amended a lot many times and the last amendment done was in 2002. As per Section 13 of this Act, "A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. Negotiable Instruments may include Inland Instruments, Foreign Instruments and Bank Drafts.
B. Reserve Bank of India act, 1934
The RBI Act, 1934 is a legislative act under which the Reserve Bank of India was established. Along with the Companies Act, it was amended in 1936 to provide a framework for the supervision of banking firms in India. The act also defines Scheduled Banks.
Some points :
🔴Section 17 of the Act defines the manner in which the RBI can conduct business.
🔴Section 18 defines emergency loans to banks.
🔴Section 21 states that the RBI must conduct the banking affairs for the central government and manage public debt.
🔴Section 22 states that only the RBI has the exclusive rights to issue currency notes in India.
🔴Section 24 states that the maximum denomination of a note can be ₹10,000.
🔴Section 26 describes the legal tender character of the Indian banknotes.
🔴Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes.
🔴Section 31 states that in India only the RBI or the central government can issue and accept promissory notes that are payable on demand.
🔴Section 42(1) states that every scheduled bank must maintain an average daily balance with the RBI.
C. Banking Regulation Act, 1949
This act regulates all banking firms in India i.e. it provides a framework via which commercial banking in India is supervised and regulated.
Some points :
🔵Primary Agricultural Credit Society and Cooperative land mortgage banks are not included under this act.
🔵The act gives the RBI the power to issue new bank licences; have regulations over shareholding and the voting rights of shareholders.
🔵It also allows RBI to supervise the appointment of the boards and regulate the operations of banks.
🔵It also lays down the instructions for audits to be conducted by the RBI, control moratorium, mergers, and liquidation issue directives in the interests of public good and on banking policy.
🔵Cooperative Banks were included in this act under the 1965 amendment.
D. State Bank of India Act, 1955
Under the State Bank of India Act of 1955, the Reserve Bank of India acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the Imperial Bank of India became the State Bank of India. In 2008, the Government of India acquired the Reserve Bank of India's stake in the SBI to remove any conflict of interest between the two as the RBI is the country's topmost banking regulatory authority.
E. Deposit Insurance and Credit Guarantee Corporation Act, 1961
Under this Act, Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI was set up on 15th July 1978 to provide insurance of deposits and guaranteeing of credit facilities. DICGC insures saving deposits, fixed deposits, current deposits and recurring deposits up to a limit of Rs. 100,000. As per this act, all new commercial banks are required to be registered as soon as they are granted a license by the Reserve Bank of India.
F. Regional Rural Banks Act, 1976
Under this act, Regional Rural Banks were established to create an alternative channel to the cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector. This act was recommended by #M. Narasimham. They are jointly owned by the Government of India, the concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50 per cent, 15 per cent, and 35 per cent respectively.
G. Securities and Exchange Board of India Act, 1992
Under this act, the #Securities and Exchange Board of India (SEBI) was given Statutory powers on 30th January 1992. The Act was enacted for the regulation and development of the securities market in India. It was amended in the years 1995, 1999 and 2002 to meet the ever-evolving needs of the securities market.
H. Foreign Exchange Management Act, 1999
This act was enacted to consolidate and amend the law relating to foreign exchange in order to facilitate external trade and to promote orderly development and maintenance of foreign exchange market in India. This Act replaced the #Foreign Exchange Regulation Act (FERA), which had become incompatible with the pro-liberalization policies of the Government of India. The act paved the way for a new foreign exchange management regime that was consistent with the emerging framework of the #World Trade Organisation (WTO).
I. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI-2002):SARFAESI Act, 2002 enables banks and other financial institutions to auction residential or commercial properties to recover loans. #ARCIL, the first Asset Reconstruction Company (ARC) of India was set up under this act. The law does not apply to loans below ₹100,000 or where the remaining debt is below 20% of the original principal amount.
J. Prevention of Money Laundering Act, 2002
The act was enacted in order to prevent Money Laundering as well as to provide provisions for the confiscation of properties obtained from money laundering. This act was amended in 2005, 2009 and 2012. It involves the following:
🔴Punishment for Money laundering
🔴powers of attachment of tainted property
🔴the presumption in interconnected transactions
🔴Special court and FIU - Ind (Financial Intelligence Unit – India)
K. Fiscal Responsibility and Budget Management Act, 2003
#FRBMA Act was introduced to eliminate the revenue deficit of the country. It also aims to reduce India's fiscal deficit, improve economic management and the overall management of public funds by moving towards a balanced budget.
➡RBI was established in April 1935 under Reserve Bank of India, 1934.
➡On the recommendation of Hilton-Young Commission.
➡Central Bank of India which was nationalized in 1949.
➡Central office initial was established in Calcutta and later moved to Mumbai in 1937.
➡Official Directors- Governors and not more than four deputy governors.
➡Currently following persons are on following posts-
➡RBI performs his function under the guidance of the Board of financial supervision.
➡Board for Financial Supervision (BFS)-
➡Constituted in November 1994. The Board is constituted by co-opting four Directors from the Central Board and is chaired by the Governor.
🔴Important Acts Administered by RBI-
(i) Reserve Bank of India Act, 1934
(ii) Public Debt Act, 1944/Government Securities Act, 2006
(iii) Government Securities Regulations, 2007
(iv) Banking Regulation Act, 1949
(v) Foreign Exchange Management Act, 1999
(vi) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002
🔴Other Relevant Acts-
(i) Negotiable Instruments Act, 1881
(ii) Companies Act, 1956/ Companies Act, 2013
(iii) Deposit Insurance and Credit Guarantee Corporation Act, 1961
(iv) Regional Rural Banks Act, 1976
(v) National Bank for Agriculture and Rural Development Act, 1981
(vi) National Housing Bank Act, 1987
(vii) Competition Act, 2002
(viii) Indian Coinage Act, 2011
🔴Following are the fully owned subsidiary of RBI-
(i) Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
(ii) Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
(iii) National Housing Bank (NHB)
➡The first governor of RBI- Sir Osborne Smith
➡The first governor of RBI after nationalization- C. D. Deshmukh
➡The first women Deputy Governor of RBI-K.J.Udeshi.
➡RBI Emblem: Tiger and Palm tree
🔵🔴🔵🔴🔵SEBI (Securities and Exchange Board of India)-SEBI is the regulator of Capital Market and Securities (Stock) in India.
➡Established in April 1988 and given statutory power on 12th April 1992 through SEBI Act 1992.Regulator for the securities market in India & Headquarters- Mumbai
🔴The Forwards Market Commission, the commodities market regulator was merged with the Securities and Exchange Board of India in December 2015.
🔵🔴🔵🔴IRDAI (Insurance Regulatory and Development Authority of India)-IRDAI is the regulator of the insurance sector in India.
➡Based on the Insurance Regulatory and Development Authority Act, 1999.
➡Established on the recommendation of the Malhotra Committee report of 1994.
➡Headquarter- Hyderabad, Telangana
➡The Body consists of 10 members-
(a) Chairman (b) Five full-time members (c) Four part-time members.
🔴🔵🔴🔵NABARD (National Bank for Agriculture and Rural Development)-
➡NABARD is the regulator of the Financing Rural Development sector in India.
➡Established in July 1982 under NABARD Act 1981.
➡On the recommendation of Sivaraman Committee.
➡Replaced the RBI’s Agriculture Credit Department and Rural Planning and Credit cell.
➡It is a specialised bank for Agriculture and rural development in India.
➡Rural Innovation Fund and Rural Infrastructure Development Fund have been set under NABARD.
🔴Important Functions-
(i) Recommends about licensing for RRBs and Cooperative banks to RBI.
(ii) Refinances the financial institutions which finance the rural sector.
➡Headquarter- Mumbai
🔵🔴🔵🔴SIDBI (Small Industries Development Bank of India):SIDBI is the regulator of Financing Micro, Small and Medium-Scale Enterprises.
➡Established in April 1990 under SIDBIAct, 1989.
➡Provide refinance facilities and short-term lending to industries and MSME’s.
➡Headquarter- Lucknow
🔴Associates of SIDBI-
(i) Credit Guarantee Fund Trust for Micro and Small Enterprises- provides guarantees to banks for collateral-free loans extended to SME.
(ii) SIDBIVenture Capital Ltd
(iii) SME Rating Agency of India Ltd.(SMERA)- Provides composite ratings to SME.
(iv) ISARC - India SME Asset Reconstruction Company in 2009, as specialized entities for NPA resolution for SME.
🔜🔴MUDRA Bank is a subsidiary of SIDBI.
🔴🔵🔴🔵PFRDA – Pension Fund Regulatory & Development Authority:PFRDA is the regulator of the Pension sector in India.
➡Established on August 23, 2003.
➡Established on August 23, 2003.
➡Aim to promote, regulate and develop the pension sector in the country.
➡Headquarter - New Delhi
➡Headquarter - New Delhi
➡Intermediate agencies of PFRDA such as
Central Record Keeping Agency
🔵🔴🔴🔵Important Acts of Banking Sector
2.Co-operative Societies Act, 1912
3.Reserve Bank of India Act, 1934
4.The Industrial Finance Corporation of India Act–1948
5.The Banking Companies (Legal Practitioner Clients’ Accounts) Act–1949
6.The Industrial Disputes (Banking and Insurance Companies) Act–1949
7.The Banking Regulation (Companies) Rules–1949
8.The Banking Regulation Act–1949
9.The State Bank of India Act–1955
10.The State Bank of India (Subsidiary Banks) Act-1959
11.The Subsidiary Banks General Regulation–1959
12.The Deposit Insurance and Credit Guarantee Corporation Act–1961
13.Banking Companies (Acquisition and Transfer of Undertaking) Act, 1969
14.The Regional Rural Banks Act–1976
15.The Banking Companies (Acquisition and Transfer of Undertakings) Act–1980
16.The National Bank for Agriculture and Rural 17.Development Act–1981
18.NABARD General Regulations 1982
19.Banking Companies (Period of Preservation of Records) Rules, 1985
20.Banking Companies (Regulation)Rules,1985
21.The National Housing Bank Act–1987
22.SIDBI General Regulations, 1990
23.Securities and Exchange Board of India Act, 1992
24.The Industrial Finance Corporation (Transfer of Undertakings and Repeal) Act–1993
25.Recovery of Debts due to Banks and Financial Institutions Act,1993
26.Industrial Reconstruction Bank (Transfer of Undertaking & Appeal) Act–1997
27.Insurance Regulatory and Development Authority Act, 1999
28.Foreign Exchange Management Act, 1999
29.The Securitisation and Reconstruction of Financial 30.Assets and Enforcement of Security Interest Act (SARFAESI-2002)
31.Prevention of Money Laundering Act, 2002
32.Fiscal Responsibility and Budget Management Act, 2003
33.Industrial Development Bank (Transfer of *Undertaking & Repeal) Act–2003
34.Credit Information Companies (Rules & Regulation) Act–2005
35.Government Securities Act, 2006
A. Negotiable Instrument act, 1881:The Negotiable Instruments Act was introduced by the Imperial Legislative Council of India and was enacted on 9th December 1881 to define laws related to negotiable instruments. This act has been amended a lot many times and the last amendment done was in 2002. As per Section 13 of this Act, "A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. Negotiable Instruments may include Inland Instruments, Foreign Instruments and Bank Drafts.
B. Reserve Bank of India act, 1934
The RBI Act, 1934 is a legislative act under which the Reserve Bank of India was established. Along with the Companies Act, it was amended in 1936 to provide a framework for the supervision of banking firms in India. The act also defines Scheduled Banks.
Some points :
🔴Section 17 of the Act defines the manner in which the RBI can conduct business.
🔴Section 18 defines emergency loans to banks.
🔴Section 21 states that the RBI must conduct the banking affairs for the central government and manage public debt.
🔴Section 22 states that only the RBI has the exclusive rights to issue currency notes in India.
🔴Section 24 states that the maximum denomination of a note can be ₹10,000.
🔴Section 26 describes the legal tender character of the Indian banknotes.
🔴Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes.
🔴Section 31 states that in India only the RBI or the central government can issue and accept promissory notes that are payable on demand.
🔴Section 42(1) states that every scheduled bank must maintain an average daily balance with the RBI.
C. Banking Regulation Act, 1949
This act regulates all banking firms in India i.e. it provides a framework via which commercial banking in India is supervised and regulated.
Some points :
🔵Primary Agricultural Credit Society and Cooperative land mortgage banks are not included under this act.
🔵The act gives the RBI the power to issue new bank licences; have regulations over shareholding and the voting rights of shareholders.
🔵It also allows RBI to supervise the appointment of the boards and regulate the operations of banks.
🔵It also lays down the instructions for audits to be conducted by the RBI, control moratorium, mergers, and liquidation issue directives in the interests of public good and on banking policy.
🔵Cooperative Banks were included in this act under the 1965 amendment.
D. State Bank of India Act, 1955
Under the State Bank of India Act of 1955, the Reserve Bank of India acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the Imperial Bank of India became the State Bank of India. In 2008, the Government of India acquired the Reserve Bank of India's stake in the SBI to remove any conflict of interest between the two as the RBI is the country's topmost banking regulatory authority.
E. Deposit Insurance and Credit Guarantee Corporation Act, 1961
Under this Act, Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of the RBI was set up on 15th July 1978 to provide insurance of deposits and guaranteeing of credit facilities. DICGC insures saving deposits, fixed deposits, current deposits and recurring deposits up to a limit of Rs. 100,000. As per this act, all new commercial banks are required to be registered as soon as they are granted a license by the Reserve Bank of India.
F. Regional Rural Banks Act, 1976
Under this act, Regional Rural Banks were established to create an alternative channel to the cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector. This act was recommended by #M. Narasimham. They are jointly owned by the Government of India, the concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50 per cent, 15 per cent, and 35 per cent respectively.
G. Securities and Exchange Board of India Act, 1992
Under this act, the #Securities and Exchange Board of India (SEBI) was given Statutory powers on 30th January 1992. The Act was enacted for the regulation and development of the securities market in India. It was amended in the years 1995, 1999 and 2002 to meet the ever-evolving needs of the securities market.
H. Foreign Exchange Management Act, 1999
This act was enacted to consolidate and amend the law relating to foreign exchange in order to facilitate external trade and to promote orderly development and maintenance of foreign exchange market in India. This Act replaced the #Foreign Exchange Regulation Act (FERA), which had become incompatible with the pro-liberalization policies of the Government of India. The act paved the way for a new foreign exchange management regime that was consistent with the emerging framework of the #World Trade Organisation (WTO).
I. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI-2002):SARFAESI Act, 2002 enables banks and other financial institutions to auction residential or commercial properties to recover loans. #ARCIL, the first Asset Reconstruction Company (ARC) of India was set up under this act. The law does not apply to loans below ₹100,000 or where the remaining debt is below 20% of the original principal amount.
J. Prevention of Money Laundering Act, 2002
The act was enacted in order to prevent Money Laundering as well as to provide provisions for the confiscation of properties obtained from money laundering. This act was amended in 2005, 2009 and 2012. It involves the following:
🔴Punishment for Money laundering
🔴powers of attachment of tainted property
🔴the presumption in interconnected transactions
🔴Special court and FIU - Ind (Financial Intelligence Unit – India)
K. Fiscal Responsibility and Budget Management Act, 2003
#FRBMA Act was introduced to eliminate the revenue deficit of the country. It also aims to reduce India's fiscal deficit, improve economic management and the overall management of public funds by moving towards a balanced budget.
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