ndian inan ial ar et 11.13
security market of India is regulated by SEBI. India QuAsi-regulAtory Agencies
has developed a regulated ‘forward market’ also
Several other government bodies perform
where hunderds of commodities and derivatives
quasi-regulatory functions—National Bank for
are traded on spot and non-spot basis—regulated
Agriculture and Rural Development (NABARD),
by FMC which merged into SEBI by late 2015.
Small Industries Development Bank of India
(SIDBI), and National Housing Bank (NHB).
FInancIal regulatIon NABARD supervises regional rural banks as well
India has a multiple regulatory architecture in as state and district cooperative banks. NHB
the financial sector. The design has developed regulates housing finance companies, and SIDBI
complexities over the time due to: the number regulates the state finance corporations (SFCs).
of regulatory, quasi-regulatory, non-regulatory-
but-still-regulating bodies; overlapping ambiguous centrAl ministries
operational design and their influence.24 A brief Certain ministries of the GoI also involved in
overview of the financial regulatory framework is policy making in the financial system. Ministry
being give here. of Finance (MoF) is most prominently involved,
through its representatives on the Boards of SEBI,
regulAtory Agencies IRDA and RBI. MoF and Ministry of Small Scale
India has product-wise regulators—Reserve Industries have representatives on SIDBI Board,
Bank of India (RBI) regulates credit products, and Ministry of Urban Development is represented
savings and remittances; the Securities and on the NHB Board. MoF representatives are
Exchange Board of India (SEBI) regulates also on Boards of public sector banks (PSBs)
investment products; the Insurance Regulatory and Development Financial Institutions (DFIs).
and Development Authority (IRDA) regulates Forward Market Commission (FMC), which used
insurance products; and the Pension Fund to regulate the commodity exchanges and brokers,
Regulatory and Development Authority (PFRDA) under the Ministry of Consumer Affairs, shifted
regulates pension products. The Forward Markets to the Ministry of Finance in 2014 (merged with
Commission (FMC) regulates commodity-based the SEBI, MoF by September, 2015).
exchange-traded futures (which was merged with
the SEBI by late 2015). stAte governments
Certain entities, primarily engaged in one Through the Registrar of Cooperatives, who
product (i.e., the insurance companies) also offer are under the departments of agriculture and
other products making it difficult for product- cooperation, the state governments regulate the
based regulation (this came to light in the PFRDA- cooperative banking institutions in their respective
IRDA controversy of early 2010s). Thus, most states. The state government have also sometimes
regulation turns out to be entity-based. Another claimed a regulatory role in certain other cases.
example is of cooperative banks, which, except in Though it never became an open battle, the
terms of their ownership structure, are very much Andhra Pradesh government’s Ordinance
like other banks—they take deposits and give directing operations of Micro Finance Institutions
loans. Still, their regulation is largely left to the (MFIs)—many of them NBFCs registered with
Registrar of Cooperatives. and regulated by RBI—falls into this space.
24. Financial Sector Legislative Reforms Commission Such actions by state government have been
report, March 2013, N. Delhi. matters of contention in the past as well, and