regulators of india
TRANSCRIPT
-
7/29/2019 Regulators of India
1/29
1
Securities and Exchange Board of India
The Securities and Exchange Board of India(frequently abbreviated SEBI) is the regulatorfor
the securities market in India. It was established on 12 April 1992 through the SEBI Act, 1992.
History
It was officially established by The Government of India in the year of 1992 with SEBI Act 1992
being passed by the Indian Parliament. SEBI is having it's Headquarter at the business district
ofBandra - Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western
Regional Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively.
Controller of Capital Issues was the regulatory authority before SEBI came into existence; it
derived authority from the Capital Issues (Control) Act, 1947.
Initially SEBI was a non statutory body without any statutory power. However in the year of
1995, the SEBI was given additional statutory power by the Government of India through an
amendment to the Securities and Exchange Board of India Act 1992. In April, 1998 the SEBI
was constituted as the regulator of capital markets in India under a resolution of the Government
of India.
The SEBI is managed by its members, which consists of following: a) The chairman who is
nominated by Union Government of India. b) Two members, i.e. Officers from Union Finance
Ministry. c) One member from The Reserve Bank of India. d) The remaining 5 members arenominated by Union Government of India, out of them at least 3 shall be whole-time members.
http://en.wikipedia.org/wiki/Regulatory_agencyhttp://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India_Act,_1992http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Bandra_Kurla_Complexhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Bandra_Kurla_Complexhttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India_Act,_1992http://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Regulatory_agency -
7/29/2019 Regulators of India
2/29
2
The office of SEBI is situated at SEBI Bhavan, Bandra Kurla Complex, Bandra East, Mumbai-
400051, with its regional offices at Kolkata, Delhi,Chennai & Ahmadabad. It has recently
opened local offices at Jaipur and Bangalore and is planning to open offices at Guwahati,
Bhubaneshwar, Patna, Kochi and Chandigarh in Financial Year 2013 - 2014.
Functions and responsibilities
SEBI has to be responsive to the needs of three groups, which constitute the market:
the issuers of securities the investors the market intermediaries.
SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-
executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial
capacity. Though this makes it very powerful, there is an appeal process to create accountability.
There is a Securities Appellate Tribunal which is a three-member tribunal and is presently
headed by a former Chief Justice of a High court - Mr. Justice NK Sodhi. A second appeal lies
directly to the Supreme Court.
Powers
For the discharge of its functions efficiently, SEBI has been invested with the necessary powers
which are:
1. to approve bylaws of stockexchanges.2. to require the stock exchange to amend their bylaws.3. inspect the books of accounts and call for periodical returns from recognized stock
exchanges.
http://en.wikipedia.org/wiki/Quasi-legislativehttp://en.wikipedia.org/wiki/Quasi-judicialhttp://en.wikipedia.org/wiki/Supreme_Court_of_Indiahttp://en.wikipedia.org/wiki/Supreme_Court_of_Indiahttp://en.wikipedia.org/wiki/Quasi-judicialhttp://en.wikipedia.org/wiki/Quasi-legislative -
7/29/2019 Regulators of India
3/29
3
4. inspect the books of accounts of a financial intermediaries.5. compel certain companies to list their shares in one or more stock exchanges.6. levy fees and other charges on the intermediaries for performing its functions.7. grant license to any person for the purpose of dealing in certain areas.8. delegate powers exercisable by it.9.prosecute and judge directly the violation of certain provisions of the companies Act.10.power to impose monetry penalties.
Major achievements
SEBI has enjoyed success as a regulator by pushing systemic reforms aggressively and
successively. SEBI is credited for quick movement towards making the markets electronic and
paperless by introducing T+5 rolling cycle from July 2001 and T+3 in April 2002 and further to
T+2 in April 2003. The rolling cycle of T+2[6]
means, Settlement is done in 2 days afterTrade
date. SEBI has been active in setting up the regulations as required under law.
SEBI has also been instrumental in taking quick and effective steps in light of the globalmeltdown and the Satyam fiasco. In October 2011, it increased the extent and quantity of
disclosures to be made by Indian corporate promoters. In light of the global meltdown, it
liberalised the takeover code to facilitate investments by removing regulatory structures. In one
such move, SEBI has increased the application limit for retail investors to Rs 2 lakh, from Rs 1
lakh at present.
Controversies
Supreme Court of India heard a Public Interest Litigation (PIL) filed by India Rejuvenation
Initiative that had challenged the procedure for key appointments adopted by Govt of India.
http://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India#cite_note-Discussion_Paper_Implementation_of_T.2B2_rolling_settlement-6http://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India#cite_note-Discussion_Paper_Implementation_of_T.2B2_rolling_settlement-6http://en.wikipedia.org/wiki/Settlement_(finance)http://en.wikipedia.org/wiki/Trade_datehttp://en.wikipedia.org/wiki/Trade_datehttp://en.wikipedia.org/wiki/Supreme_Court_of_Indiahttp://en.wikipedia.org/wiki/Public_Interest_Litigationhttp://en.wikipedia.org/wiki/India_Rejuvenation_Initiativehttp://en.wikipedia.org/wiki/India_Rejuvenation_Initiativehttp://en.wikipedia.org/wiki/Govt_of_Indiahttp://en.wikipedia.org/wiki/Govt_of_Indiahttp://en.wikipedia.org/wiki/India_Rejuvenation_Initiativehttp://en.wikipedia.org/wiki/India_Rejuvenation_Initiativehttp://en.wikipedia.org/wiki/Public_Interest_Litigationhttp://en.wikipedia.org/wiki/Supreme_Court_of_Indiahttp://en.wikipedia.org/wiki/Trade_datehttp://en.wikipedia.org/wiki/Trade_datehttp://en.wikipedia.org/wiki/Settlement_(finance)http://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India#cite_note-Discussion_Paper_Implementation_of_T.2B2_rolling_settlement-6 -
7/29/2019 Regulators of India
4/29
4
The petition alleged that, "The constitution of the search-cum-selection committee for
recommending the name of chairman and every whole-time members of SEBI for appointment
has been altered, which directly impacted its balance and could compromise the role of the SEBI
as a watchdog." On 21 November 2011, the court allowed petitioners to withdraw the petition
and file a fresh petition pointing out constitutional issues regarding appointments of regulators
and their independence.
The Chief Justice of India refused thefinance ministrysrequest to dismiss the PIL and said that
the court was well aware of what was going on in SEBI. Hearing a similar petition filed by
Bangaluru-based advocate Anil Kumar Agarwal, a two judge Supreme Court bench of Justice SS
Nijjarand Justice HL Gokhale issued a notice to the Govt of India, SEBI chiefUK Sinha and
Omita Paul, Secretary to the President of India.
Further, it came into light that Dr KM Abraham (the then whole time member of SEBI Board)
had written to the Prime Ministerabout malaise in SEBI. He said, "The regulatory institution is
under duress and under severe attack from powerful corporate interests operating concertedly to
undermine SEBI". He specifically said that Finance Minister's office, and especially his advisor
Omita Paul, were trying to influence many cases before SEBI, including those relating to SaharaGroup, Reliance, Bank of Rajasthan and MCX.
http://en.wikipedia.org/wiki/Chief_Justice_of_Indiahttp://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Public_Interest_Litigationhttp://en.wikipedia.org/w/index.php?title=SS_Nijjar&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=SS_Nijjar&action=edit&redlink=1http://en.wikipedia.org/wiki/HL_Gokhalehttp://en.wikipedia.org/wiki/UK_Sinhahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/Prime_Minister_of_Indiahttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/UK_Sinhahttp://en.wikipedia.org/wiki/HL_Gokhalehttp://en.wikipedia.org/w/index.php?title=SS_Nijjar&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=SS_Nijjar&action=edit&redlink=1http://en.wikipedia.org/wiki/Public_Interest_Litigationhttp://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Chief_Justice_of_India -
7/29/2019 Regulators of India
5/29
5
Reserve Bank of India
The Reserve Bank of India (RBI) is India'scentral banking institution, which controls
the monetary policy of the Indian rupee. It was established on 1 April 1935 during theBritish
Raj in accordance with the provisions of the Reserve Bank of India Act, 1934.The share capital
was divided into shares of100 each fully paid which was entirely owned by private
shareholders in the beginning. Following India's independence in 1947, the RBI was nationalised
in the year 1949.
The RBI plays an important part in the development strategy of the Government of India. It is a
member bank of the Asian Clearing Union. The general superintendence and direction of the
RBI is entrusted with the 21-member-strong Central Board of Directors
the Governor(currently Duvvuri Subbarao), four Deputy Governors, two Finance
Ministryrepresentative, ten Government-nominated Directors to represent important elements
from India's economy, and four Directors to represent Local Boards headquartered at Mumbai,
Kolkata, Chennai and New Delhi. Each of these Local Boards consist of five members who
represent regional interests, as well as the interests of co-operative and indigenous banks.
The bank is also active in promoting financial inclusion policy and is a leading member of
the Alliance for Financial Inclusion (AFI). View the bank on AFI's member map or read RBI
financial inclusion-related news.
http://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Asian_Clearing_Unionhttp://en.wikipedia.org/wiki/Governor_of_Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Duvvuri_Subbaraohttp://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://www.afi-global.org/http://www.afi-global.org/afi-network/membershttp://www.afi-global.org/institutions/reserve-bank-indiahttp://www.afi-global.org/institutions/reserve-bank-indiahttp://www.afi-global.org/institutions/reserve-bank-indiahttp://www.afi-global.org/institutions/reserve-bank-indiahttp://www.afi-global.org/afi-network/membershttp://www.afi-global.org/http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)http://en.wikipedia.org/wiki/Duvvuri_Subbaraohttp://en.wikipedia.org/wiki/Governor_of_Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Asian_Clearing_Unionhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/British_Rajhttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/Monetary_policyhttp://en.wikipedia.org/wiki/Central_bank -
7/29/2019 Regulators of India
6/29
6
History
19351950
The old RBI Building in Mumbai
The Reserve Bank of India was founded on 1 April 1935 to respond to economic troubles after
the First World War. It came into picture according to the guidelines laid down byDr. Ambedkar.
RBI was conceptualized as per the guidelines, working style and outlook presented by Dr
Ambedkar in front of the Hilton Young Commission. When this commission came to India underthe name of Royal Commission on Indian Currency & Finance, each and every member of this
commission were holding Dr Ambedkars book named The Problem of the Rupee Its origin
and its solution.
The Bank was set up based on the recommendations of the 1926 Royal Commission on Indian
Currency and Finance, also known as the HiltonYoung Commission. The original choice for the
seal of RBI was The East India Company Double Mohur, with the sketch of the Lion and Palm
Tree. However it was decided to replace the lion with the tiger, the national animal of India. The
Preamble of the RBI describes its basic functions to regulate the issue of bank notes, keep
reserves to secure monetary stability in India, and generally to operate the currency and credit
system in the best interests of the country.
http://en.wikipedia.org/wiki/World_War_Ihttp://en.wikipedia.org/wiki/B._R._Ambedkarhttp://en.wikipedia.org/wiki/Mohurhttp://en.wikipedia.org/wiki/File:Reserve-Bank-of-India.jpghttp://en.wikipedia.org/wiki/File:Reserve-Bank-of-India.jpghttp://en.wikipedia.org/wiki/File:Reserve-Bank-of-India.jpghttp://en.wikipedia.org/wiki/File:Reserve-Bank-of-India.jpghttp://en.wikipedia.org/wiki/Mohurhttp://en.wikipedia.org/wiki/B._R._Ambedkarhttp://en.wikipedia.org/wiki/World_War_I -
7/29/2019 Regulators of India
7/29
7
The Central Office of the RBI was initially established in Calcutta (now Kolkata), but was
permanently moved to Bombay (now Mumbai) in 1937. The RBI also acted as Burma's central
bank, except during the years of the Japanese occupation of Burma (194245), until April 1947,
even though Burma seceded from the Indian Union in 1937. After the Partition of India in 1947,
the Bank served as the central bank forPakistan until June 1948 when the State Bank of
Pakistan commenced operations. Though originally set up as a shareholders bank, the RBI has
been fully owned by the Government of India since its nationalization in 1949.
19501960
In the 1950s, the Indian government, under its first Prime MinisterJawaharlal Nehru, developed
a centrally planned economic policy that focused on the agricultural sector. The administration
nationalized commercial banks and established, based on the Banking Companies Act of 1949
(later called the Banking Regulation Act), a central bank regulation as part of the RBI.
Furthermore, the central bank was ordered to support the economic plan with loans.
19601969
As a result of bank crashes, the RBI was requested to establish and monitor a deposit insurance
system. It should restore the trust in the national bank system and was initialized on 7 December
1961. The Indian government founded funds to promote the economy and used the slogan
Developing Banking. The Government of India restructured the national bank market and
nationalized a lot of institutes. As a result, the RBI had to play the central part of control and
support of this public banking sector.
19691985
http://en.wikipedia.org/wiki/Japanese_occupation_of_Burmahttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/State_Bank_of_Pakistanhttp://en.wikipedia.org/wiki/State_Bank_of_Pakistanhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Jawaharlal_Nehruhttp://en.wikipedia.org/wiki/Jawaharlal_Nehruhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Pakistanhttp://en.wikipedia.org/wiki/State_Bank_of_Pakistanhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Japanese_occupation_of_Burma -
7/29/2019 Regulators of India
8/29
8
In 1969, the Indira Gandhi-headed government nationalized 14 major commercial banks. Upon
Gandhi's return to power in 1980, a further six banks were nationalized. The regulation of the
economy and especially the financial sector was reinforced by the Government of India in the
1970s and 1980s. The central bank became the central player and increased its policies for a lot
of tasks like interests, reserve ratio and visible deposits. These measures aimed at better
economic development and had a huge effect on the company policy of the institutes. The banks
lent money in selected sectors, like agri-business and small trade companies.
The branch was forced to establish two new offices in the country for every newly established
office in a town. The oil crises in 1973 resulted in increasing inflation, and the RBI restricted
monetary policy to reduce the effects.
19851991
A lot of committees analysed the Indian economy between 1985 and 1991. Their results had an
effect on the RBI. TheBoard for Industrial and Financial Reconstruction, theIndira Gandhi
Institute of Development Research and the Security & Exchange Board of India investigated the
national economy as a whole, and the security and exchange board proposed better methods for
more effective markets and the protection of investor interests. The Indian financial market was a
leading example for so-called "financial repression" (Mackinnon and Shaw). TheDiscount and
Finance House of India began its operations on the monetary market in April 1988; theNational
Housing Bank, founded in July 1988, was forced to invest in the property market and a new
financial law improved the versatility of direct deposit by more security measures and
liberalisation.
19912000
The national economy came down in July 1991 and the Indian rupee was devalued.[16]
The
currency lost 18% relative to the US dollar, and theNarsimahmam Committee advised
restructuring the financial sector by a temporal reduced reserve ratio as well as the statutory
http://en.wikipedia.org/wiki/Indira_Gandhihttp://en.wikipedia.org/wiki/1970s_energy_crisishttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Board_for_Industrial_and_Financial_Reconstructionhttp://en.wikipedia.org/wiki/Board_for_Industrial_and_Financial_Reconstructionhttp://en.wikipedia.org/wiki/Board_for_Industrial_and_Financial_Reconstructionhttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-17http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-17http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-17http://en.wikipedia.org/wiki/United_States_Dollarhttp://en.wikipedia.org/wiki/United_States_Dollarhttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-17http://en.wikipedia.org/wiki/Board_for_Industrial_and_Financial_Reconstructionhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/1970s_energy_crisishttp://en.wikipedia.org/wiki/Indira_Gandhi -
7/29/2019 Regulators of India
9/29
9
liquidity ratio. New guidelines were published in 1993 to establish a private banking sector. This
turning point should reinforce the market and was often called neo-liberal. The central bank
deregulated bank interests and some sectors of the financial market like the trust and property
markets. This first phase was a success and the central government forced a diversity
liberalisation to diversify owner structures in 1998.
The National Stock Exchange of India took the trade on in June 1994 and the RBI allowed
nationalized banks in July to interact with the capital market to reinforce their capital base. The
central bank founded a subsidiary companytheBharatiya Reserve Bank Note Mudran
Limitedin February 1995 to produce banknotes.
Since 2000
TheForeign Exchange Management Actfrom 1999 came into force in June 2000. It should
improve the foreign exchange market, international investments in India and transactions. The
RBI promoted the development of the financial market in the last years, allowed online
banking in 2001 and established a new payment system in 20042005 (National Electronic Fund
Transfer). The Security Printing & Minting Corporation of India Ltd., a merger of nine
institutions, was founded in 2006 and produces banknotes and coins.
The national economy's growth rate came down to 5.8% in the last quarter of 20082009 and the
central bank promotes the economic development.
http://en.wikipedia.org/wiki/Neoliberalismhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Online_bankinghttp://en.wikipedia.org/wiki/Online_bankinghttp://en.wikipedia.org/wiki/National_Electronic_Fund_Transferhttp://en.wikipedia.org/wiki/National_Electronic_Fund_Transferhttp://en.wikipedia.org/wiki/National_Electronic_Fund_Transferhttp://en.wikipedia.org/wiki/National_Electronic_Fund_Transferhttp://en.wikipedia.org/wiki/Online_bankinghttp://en.wikipedia.org/wiki/Online_bankinghttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Neoliberalism -
7/29/2019 Regulators of India
10/29
10
Structure
RBI runs a monetary museum in Mumbai
Central Board of Directors
The Central Board of Directors is the main committee of the central bank. The Government of
India appoints the directors for a four-year term. The Board consists of a governor, four deputy
governors, fifteen directors to represent the regional boards, one from the Ministry of Finance
and ten other directors from various fields. The Government nominated Arvind Mayaram, as a
director of the Central Board of Directors with effect from August 7, 2012 and vice R Gopalan,
RBI said in a statement on August 8, 2012.
Governors
The current Governor of RBI is Duvvuri Subbarao. The RBI extended the period of the present
governor up to 2013. There are four deputy governors, Deputy Governor K C Chakrabarty, Urjit
Patel, Shri Anand Sinha, and Shri H.R. Khan . Deputy Governor K C Chakrabarty's term has
been extended further by 2 years. Subir Gokarn was replaced by Mr. Urjit Patel in january 2013.
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Duvvuri_Subbaraohttp://en.wikipedia.org/wiki/File:MonetaryMuseumRBIPlaque.JPGhttp://en.wikipedia.org/wiki/File:MonetaryMuseumRBIPlaque.JPGhttp://en.wikipedia.org/wiki/File:MonetaryMuseumRBIPlaque.JPGhttp://en.wikipedia.org/wiki/File:MonetaryMuseumRBIPlaque.JPGhttp://en.wikipedia.org/wiki/Duvvuri_Subbaraohttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Government_of_India -
7/29/2019 Regulators of India
11/29
11
Supportive bodies
The Reserve Bank of India has ten regional representations: North in New Delhi, South in
Chennai, East in Kolkata and West in Mumbai. The representations are formed by five members,appointed for four years by the central government and servebeside the advice of the Central
Board of Directorsas a forum for regional banks and to deal with delegated tasks from the
central board. The institution has 22 regional offices.
TheBoard of Financial Supervision (BFS), formed in November 1994, serves as a CCBD
committee to control the financial institutions. It has four members, appointed for two years, and
takes measures to strength the role of statutory auditors in the financial sector, external
monitoring and internal controlling systems.
The Tarapore committee was set up by the Reserve Bank of India under the chairmanship of
former RBI deputy governor S. S. Tarapore to "lay the road map" to capital account
convertibility. The five-member committee recommended a three-year time frame for complete
convertibility by 19992000.
On 1 July 2007, in an attempt to enhance the quality of customer service and strengthen the
grievance redressal mechanism, the Reserve Bank of India created a new customer service
department.
Offices and branches
The Reserve Bank of India has 4 zonal offices.[28]It has 19 regional offices at most state capitals
and at a few major cities in India. Few of them are located
in Ahmedabad, Bangalore, Bhopal,Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyder
abad, Jaipur, Jammu, Kanpur, Kolkata,Lucknow, Mumbai, Nagpur, Patna,
http://en.wikipedia.org/wiki/Tarapore_committeehttp://en.wikipedia.org/wiki/Capital_account_convertibilityhttp://en.wikipedia.org/wiki/Capital_account_convertibilityhttp://en.wikipedia.org/w/index.php?title=Customer_service_department&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Customer_service_department&action=edit&redlink=1http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-29http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-29http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-29http://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Bangalorehttp://en.wikipedia.org/wiki/Bhopalhttp://en.wikipedia.org/wiki/Bhubaneswarhttp://en.wikipedia.org/wiki/Chandigarhhttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Guwahatihttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Jaipurhttp://en.wikipedia.org/wiki/Jammuhttp://en.wikipedia.org/wiki/Kanpurhttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Nagpurhttp://en.wikipedia.org/wiki/Patnahttp://en.wikipedia.org/wiki/Patnahttp://en.wikipedia.org/wiki/Nagpurhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Lucknowhttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Kanpurhttp://en.wikipedia.org/wiki/Jammuhttp://en.wikipedia.org/wiki/Jaipurhttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Hyderabad,_Indiahttp://en.wikipedia.org/wiki/Guwahatihttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Chandigarhhttp://en.wikipedia.org/wiki/Bhubaneswarhttp://en.wikipedia.org/wiki/Bhopalhttp://en.wikipedia.org/wiki/Bangalorehttp://en.wikipedia.org/wiki/Ahmedabadhttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-29http://en.wikipedia.org/w/index.php?title=Customer_service_department&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Customer_service_department&action=edit&redlink=1http://en.wikipedia.org/wiki/Capital_account_convertibilityhttp://en.wikipedia.org/wiki/Capital_account_convertibilityhttp://en.wikipedia.org/wiki/Tarapore_committee -
7/29/2019 Regulators of India
12/29
12
and Thiruvananthapuram. Besides it has 09 sub-offices
atAgartala, Dehradun, Gangtok, Kochi, Panaji, Raipur, Ranchi, Shillong, Shimla and Srinagar.
The bank has also two training colleges for its officers, viz. Reserve Bank Staff College at
Chennai and College of Agricultural Banking at Pune. There are also fourZonal TrainingCentres at Mumbai,Chennai, Kolkata and New Delhi.
Main functions
Reserve Bank of India regional office, Delhi entrance with the Yakshini sculpture depicting"Prosperity through agriculture".
[29]
The RBI Regional Office in Delhi.
http://en.wikipedia.org/wiki/RBI_Thiruvananthapuramhttp://en.wikipedia.org/wiki/Agartalahttp://en.wikipedia.org/wiki/Dehradunhttp://en.wikipedia.org/wiki/Gangtokhttp://en.wikipedia.org/wiki/Kochihttp://en.wikipedia.org/wiki/Panajihttp://en.wikipedia.org/wiki/Raipurhttp://en.wikipedia.org/wiki/Ranchihttp://en.wikipedia.org/wiki/Shillonghttp://en.wikipedia.org/wiki/Shimlahttp://en.wikipedia.org/wiki/Srinagarhttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Zonal_Training_Centrehttp://en.wikipedia.org/wiki/Zonal_Training_Centrehttp://en.wikipedia.org/wiki/Zonal_Training_Centrehttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Yakshinihttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-30http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-30http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-30http://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:RBIDelhi.JPGhttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/File:Reserve_bank_of_India_Headquarters.jpghttp://en.wikipedia.org/wiki/Delhihttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-30http://en.wikipedia.org/wiki/Yakshinihttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Chennaihttp://en.wikipedia.org/wiki/Zonal_Training_Centrehttp://en.wikipedia.org/wiki/Zonal_Training_Centrehttp://en.wikipedia.org/wiki/Zonal_Training_Centrehttp://en.wikipedia.org/wiki/Punehttp://en.wikipedia.org/wiki/Srinagarhttp://en.wikipedia.org/wiki/Shimlahttp://en.wikipedia.org/wiki/Shillonghttp://en.wikipedia.org/wiki/Ranchihttp://en.wikipedia.org/wiki/Raipurhttp://en.wikipedia.org/wiki/Panajihttp://en.wikipedia.org/wiki/Kochihttp://en.wikipedia.org/wiki/Gangtokhttp://en.wikipedia.org/wiki/Dehradunhttp://en.wikipedia.org/wiki/Agartalahttp://en.wikipedia.org/wiki/RBI_Thiruvananthapuram -
7/29/2019 Regulators of India
13/29
13
The regional offices ofGPO (in white) and RBI (in sandstone) at Dalhousie Square, Kolkata.
Bank of Issue
Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue bank
notes of all denominations. The distribution of one rupee notes and coins and small coins all over
the country is undertaken by the Reserve Bank as agent of the Government. The Reserve Bank
has a separate Issue Department which is entrusted with the issue of currency notes. The assets
and liabilities of the Issue Department are kept separate from those of the Banking Department.
Monetary authority
The Reserve Bank of India is the main monetary authority of the country and beside that the
central bank acts as the bank of the national and state governments. It formulates, implements
and monitors the monetary policy as well as it has to ensure an adequate flow of credit to
productive sectors.
Regulator and supervisor of the financial system
http://en.wikipedia.org/wiki/General_Post_Office,_Kolkatahttp://en.wikipedia.org/wiki/B._B._D._Baghhttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/File:Kolkata_BBD_Bagh1.jpghttp://en.wikipedia.org/wiki/File:Kolkata_BBD_Bagh1.jpghttp://en.wikipedia.org/wiki/File:Kolkata_BBD_Bagh1.jpghttp://en.wikipedia.org/wiki/File:Kolkata_BBD_Bagh1.jpghttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/B._B._D._Baghhttp://en.wikipedia.org/wiki/General_Post_Office,_Kolkata -
7/29/2019 Regulators of India
14/29
14
The institution is also the regulator and supervisor of the financial system and prescribes broad
parameters of banking operations within which the country's banking and financial system
functions.Its objectives are to maintain public confidence in the system, protect depositors'
interest and provide cost-effective banking services to the public. The Banking Ombudsman
Scheme has been formulated by the Reserve Bank of India (RBI) for effective addressing of
complaints by bank customers. The RBI controls the monetary supply, monitors economic
indicators like the gross domestic product and has to decide the design of the rupee banknotes as
well as coins.
Managerial of exchange control
The central bank manages to reach the goals of the Foreign Exchange Management Act, 1999.
Objective: to facilitate external trade and payment and promote orderly development and
maintenance of foreign exchange market in India.
Issuer of currency
The bank issues and exchanges or destroys currency notes and coins that are not fit for
circulation. The objectives are giving the public adequate supply of currency of good quality and
to provide loans tocommercial banks to maintain or improve the GDP. The basic objectives of
RBI are to issue bank notes, to maintain the currency and credit system of the country to utilize it
in its best advantage, and to maintain the reserves. RBI maintains the economic structure of the
country so that it can achieve the objective of price stability as well as economic development,
because both objectives are diverse in themselves.
http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Gross_domestic_product -
7/29/2019 Regulators of India
15/29
15
Banker of Banks
Nagpurbranch holds most of India's gold deposits
RBI also works as a central bank where commercial banks are account holders and can deposit
money.RBI maintains banking accounts of all scheduled banks.[31]
Commercial banks create
credit. It is the duty of the RBI to control the credit through the CRR, bank rate and open market
operations. As banker's bank, the RBI facilitates the clearing of cheques between the commercial
banks and helps inter-bank transfer of funds. It can grant financial accommodation to schedule
banks. It acts as the lender of the last resort by providing emergency advances to the banks. Itsupervises the functioning of the commercial banks and take action against it if need arises.
Ministry of Finance (India)
The Ministry of Finance is an important ministry within the Government of India. It concerns
itself with taxation, financial legislation, financial institutions, capital
markets, centre and statefinances, and the Union Budget.
http://en.wikipedia.org/wiki/Nagpurhttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-32http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-32http://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-32http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Central_governmenthttp://en.wikipedia.org/wiki/State_governmenthttp://en.wikipedia.org/wiki/Union_budget_of_Indiahttp://en.wikipedia.org/wiki/File:Nagpur_Reserve_Bank.JPGhttp://en.wikipedia.org/wiki/File:Nagpur_Reserve_Bank.JPGhttp://en.wikipedia.org/wiki/File:Nagpur_Reserve_Bank.JPGhttp://en.wikipedia.org/wiki/File:Nagpur_Reserve_Bank.JPGhttp://en.wikipedia.org/wiki/Union_budget_of_Indiahttp://en.wikipedia.org/wiki/State_governmenthttp://en.wikipedia.org/wiki/Central_governmenthttp://en.wikipedia.org/wiki/Taxationhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Reserve_Bank_of_India#cite_note-32http://en.wikipedia.org/wiki/Nagpur -
7/29/2019 Regulators of India
16/29
16
The following cadre controlling authority of the Civil Services (including Indian Revenue
Service, Indian Economic Service, Indian Cost Accounts Service and Indian Civil Accounts
Service) are under the administration and supervision of the Finance Ministry.
P. Chidambaram is the current Finance Minister following Prime MinisterManmohan Singh'sbrief stint, which in turn came afterPranab Mukherjeeleft the office to be elected the
13th President of India.
History
R. K. Shanmukham Chetty was the first Finance Minister of independent India. He presented the
first budget of independent India on November 26, 1947.[1]
Organizational Structure
The Union Finance Ministry of India comprises five departments.
Department of Economic Affairs
The Department of Economic Affairs (DEA) is the nodal agency of the Union Government to
formulate and monitor country's economic policies and programmes having a bearing on
domestic and international aspects of economic management. A principal responsibility of this
Department is the preparation of the Union Budget annually (excluding the Railway Budget).
Other main functions include:
Formulation and monitoring of macroeconomic policies, including issues relating to fiscalpolicy and public finance, inflation, public debt management and the functioning of Capital
Market including Stock Exchanges. In this context, it looks at ways and means to raise
internal resources through taxation, market borrowings and mobilization of small savings;
Monitoring and raising of external resources through multilateral and bilateral OfficialDevelopment Assistance, sovereign borrowings abroad, foreign investments and monitoring
foreign exchange resources including balance of payments;
http://en.wikipedia.org/wiki/Civil_Services_of_India#Central_Civil_Services_.28CCS.29http://en.wikipedia.org/wiki/Indian_Revenue_Servicehttp://en.wikipedia.org/wiki/Indian_Revenue_Servicehttp://en.wikipedia.org/wiki/Indian_Economic_Servicehttp://en.wikipedia.org/wiki/P._Chidambaramhttp://en.wikipedia.org/wiki/Manmohan_Singhhttp://en.wikipedia.org/wiki/Pranab_Mukherjeehttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/R._K._Shanmukham_Chettyhttp://en.wikipedia.org/wiki/Ministry_of_Finance_(India)#cite_note-clatp248-1http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)#cite_note-clatp248-1http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)#cite_note-clatp248-1http://en.wikipedia.org/wiki/Ministry_of_Finance_(India)#cite_note-clatp248-1http://en.wikipedia.org/wiki/R._K._Shanmukham_Chettyhttp://en.wikipedia.org/wiki/President_of_Indiahttp://en.wikipedia.org/wiki/Pranab_Mukherjeehttp://en.wikipedia.org/wiki/Manmohan_Singhhttp://en.wikipedia.org/wiki/P._Chidambaramhttp://en.wikipedia.org/wiki/Indian_Economic_Servicehttp://en.wikipedia.org/wiki/Indian_Revenue_Servicehttp://en.wikipedia.org/wiki/Indian_Revenue_Servicehttp://en.wikipedia.org/wiki/Civil_Services_of_India#Central_Civil_Services_.28CCS.29 -
7/29/2019 Regulators of India
17/29
17
Production of bank notes and coins of various denominations, postal stationery, postalstamps; and Cadre management, career planning and training of the Indian Economic
Service (IES).
Pranab Mukherjee, FormerFinance Minister of India with US President George W. Bush .
Department of Expenditure
The Department of Expenditure is the nodal Department for overseeing the public financial
management system in the Central Government and matters connected with State finances. The
principal activities of the Department include pre-sanction appraisal of major schemes/projects
(both Plan and non-Plan expenditure), handling the bulk of the Central budgetary resources
transferred to States, implementation of the recommendations of the Finance and Central Pay
Commissions, overseeing the expenditure management in the Central Ministries/Departments
through the interface with the Financial Advisors and the administration of the Financial Rules /
Regulations / Orders through monitoring of Audit comments/observations, preparation of Central
Government Accounts, managing the financial aspects of personnel management in the Central
Government, assisting Central Ministries/Departments in controlling the costs and prices of
public services, assisting organizational re-engineering through review of staffing patterns and
O&M studies and reviewing systems and procedures to optimize outputs and outcomes of public
expenditure. The Department is also coordinating matters concerning the Ministry of Finance
including Parliament-related work of the Ministry. The Department has under its administrative
control the National Institute of Financial Management (NIFM), Faridabad.
http://en.wikipedia.org/wiki/Pranab_Mukherjeehttp://en.wikipedia.org/wiki/Finance_Minister_of_Indiahttp://en.wikipedia.org/wiki/US_Presidenthttp://en.wikipedia.org/wiki/George_W._Bushhttp://en.wikipedia.org/wiki/File:Bush_meets_Pranab_Mukherjee.jpghttp://en.wikipedia.org/wiki/File:Bush_meets_Pranab_Mukherjee.jpghttp://en.wikipedia.org/wiki/File:Bush_meets_Pranab_Mukherjee.jpghttp://en.wikipedia.org/wiki/File:Bush_meets_Pranab_Mukherjee.jpghttp://en.wikipedia.org/wiki/George_W._Bushhttp://en.wikipedia.org/wiki/US_Presidenthttp://en.wikipedia.org/wiki/Finance_Minister_of_Indiahttp://en.wikipedia.org/wiki/Pranab_Mukherjee -
7/29/2019 Regulators of India
18/29
18
The business allocated to the Department of Expenditure is carried out through its Establishment
Division, Plan Finance- I and II Divisions, Finance Commission Division, Staff Inspection Unit,
Cost Accounts Branch, Controller General of Accounts and the Central Pension Accounting
Department of Revenue
The Department of Revenue functions under the overall direction and control of the Secretary
(Revenue). It exercises control in respect of matters relating to all the Direct and Indirect Union
Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) and
the Central Board of Excise and Customs (CBEC). Each Board is headed by a Chairman who is
also ex-officio Special Secretary to the Government of India ( Secretary level). Matters relating
to the levy and collection of all Direct taxes are looked after by the CBDT whereas those relating
to levy and collection of Customs and Central Excise duties and other Indirect taxes fall within
the purview of the CBEC. The two Boards were constituted under the Central Board of Revenue
Act, 1963. At present, the CBDT has six Members and the CBEC has five Members. The
Members are also ex-officio Secretaries to the Government of India. Members of CBDT are as
follows:
1 Member (Income Tax)
2 Member (Legislation and Computerisation)
3 Member (Revenue)
4 Member (Personnel & Vigilance)
5 Member (Investigation)
6 Member (Audit & Judicial)
http://en.wikipedia.org/wiki/Central_Board_of_Direct_Taxeshttp://en.wikipedia.org/wiki/Central_Board_of_Excise_and_Customshttp://en.wikipedia.org/wiki/Central_Board_of_Excise_and_Customshttp://en.wikipedia.org/wiki/Central_Board_of_Direct_Taxes -
7/29/2019 Regulators of India
19/29
19
Department of Financial Services
The Department of Financial Services covers Banks, Insurance and Financial Services provided
by various government agencies and private corporations. It also covers pension reforms and
Industrial Finance and Micro, Small and Medium Enterprise Sector.
Department of Disinvestments
Initially set up as an independent ministry (The Ministry of Disinvestment) in December 1999,
The Department of Disinvestments came into existence in May 2004 when the ministry was
turned into a department of the Ministry of Finance. The department took up all the functions of
the erstwhile ministry which broadly was responsible for systematic policy approach to
disinvestment andprivatisation ofPublic SectorUnits (PSUs).
Ministry of Corporate Affairs (India)
The Ministry of Company Affairs (MCA) is an Indian government ministry. It is charged with
administering the Companies Act 1956 and other acts related to Indian private sector. It is
responsible mainly forregulation of Indian enterprises in Industrial and Services sector. The
current minister of corporate affairs is Sachin Pilot.
The ministry administers the following acts:
The Companies Act 1956 (basic law governing the creation, existence, and dissolution ofcompanies, and the relationships between the shareholders, the company, the public, and the
government. The Competition Act 2002 The Monopolies and Restrictive Trade Practices Act 1969 The Chartered Accountants Act 1949 [As amended by the Chartered Accountants
(Amendment) Act, 2006]
http://en.wikipedia.org/wiki/Privatisationhttp://en.wikipedia.org/wiki/Public_Sectorhttp://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Ministry_(government_department)http://en.wikipedia.org/wiki/Companies_Acthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Sachin_Pilothttp://en.wikipedia.org/wiki/Companies_Act_1956http://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Shareholderhttp://en.wikipedia.org/wiki/Companies_Act_1956http://en.wikipedia.org/wiki/Sachin_Pilothttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Companies_Acthttp://en.wikipedia.org/wiki/Ministry_(government_department)http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Public_Sectorhttp://en.wikipedia.org/wiki/Privatisation -
7/29/2019 Regulators of India
20/29
20
The Company Secretaries Act 1980 [As amended by The Company Secretaries(Amendment) Act, 2006]
Cost and Works Accountants Act 1959 [As Amended By The Cost And Works Accountants(Amendment) Act, 2006]
Companies (Donation to National) Fund Act 1951 Partnership Act 1932 Societies Registration Act 1860 The Companies Amendment Act, 2006IRDA
IRDA may refer to:
Insurance Regulatory and Development Authority, the administrative agency of Governmentof India for insurance sector supervision and development
Infrared Data Association, in information and communications technology, a standard forcommunication between devices (such as computers, PDAs and mobile phones) over short
distances using infrared signals
Intermittent rhythmic delta activity, a type of abnormal brain wave Iskandar Regional Development Authority, a key entity to the successful implementation of
Iskandar Development Region, Malaysia
Irda (Dragonlance), a fictional species in theDragonlance series International Reborn Doll Artists, a group promoting the making ofreborn dolls
http://en.wikipedia.org/wiki/Insurance_Regulatory_and_Development_Authorityhttp://en.wikipedia.org/wiki/Infrared_Data_Associationhttp://en.wikipedia.org/wiki/Intermittent_rhythmic_delta_activityhttp://en.wikipedia.org/wiki/Iskandar_Regional_Development_Authorityhttp://en.wikipedia.org/wiki/Irda_(Dragonlance)http://en.wikipedia.org/wiki/Reborn_dollhttp://en.wikipedia.org/wiki/Reborn_dollhttp://en.wikipedia.org/wiki/Irda_(Dragonlance)http://en.wikipedia.org/wiki/Iskandar_Regional_Development_Authorityhttp://en.wikipedia.org/wiki/Intermittent_rhythmic_delta_activityhttp://en.wikipedia.org/wiki/Infrared_Data_Associationhttp://en.wikipedia.org/wiki/Insurance_Regulatory_and_Development_Authority -
7/29/2019 Regulators of India
21/29
21
National Pension Scheme
PFRDA Logo with original colours
The National Pension System (NPS) is a defined contribution based pension system launched by
Government of India with effect from 1 January 2004. Like most other developing countries,
India does not have a universal social security system to protect the elderly against economic
deprivation. As a first step towards instituting pension reforms, Government ofIndia moved
from a defined benefit pension to a defined contribution based pension system. Apart from
offering wide gamut ofinvestment options to employees, this scheme would help government of
India to reduce its pension liabilities. Unlike existing pension fund of Government of India that
offered assured benefits, NPS has defined contribution and individuals can decide where to
invest their money. The scheme is structured into two tiers:
Tier-I account: This NPS account does not allow premature withdrawal and is available from1 May 2009
Tier-II account: The tier-II NPS account permits withdrawal.
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/File:PFRDA_Logo.pnghttp://en.wikipedia.org/wiki/File:PFRDA_Logo.pnghttp://en.wikipedia.org/wiki/File:PFRDA_Logo.pnghttp://en.wikipedia.org/wiki/File:PFRDA_Logo.pnghttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Governmenthttp://en.wikipedia.org/wiki/Government_of_India -
7/29/2019 Regulators of India
22/29
22
Since 1 April 2008, the pension contributions of Central Government employees covered by the
National Pension System (NPS) are being invested by professional Pension Fund Managers in
line with investment guidelines of Government applicable to non-Government Provident Funds.
A majority of State Governments have also shifted to the defined contribution based National
Pension System from varying dates. 27 State/UT Governments have notified the NPS for their
new employees. Of these, 6 states have already signed agreements with the intermediaries of the
NPS architecture appointed by Pension Fund Regulatory and Development Authority (PFRDA)
for carrying forward the implementation of the National Pension System. The other States are in
the process of finalization of documentation.
Regulator
Pension Fund Regulatory and Development Authority (PFRDA) is the prudential regulator
for the NPS. PFRDA was established by the Government of India on 23 August 2003 to promote
old age income security by establishing, developing and regulating pension funds. PFRDA has
set up a Trust under the Indian Trusts Act, 1882 to oversee the functions of the PFMs. The NPS
Trust is composed of members representing diverse fields and brings wide range of talent to the
regulatory framework.
Coverage and eligibility
NPS was made available to all citizens ofIndia on voluntary basis and is mandatory for
employees of central government (except armed forces) appointed on or after 1 January 2004.
All Indian citizens between the age of 18 and 55 can join the NPS.
Tier-I is mandatory for all Govt. servants joining Govt. service on or after 1.1.2004. In Tier I,
Govt. servants will have to make a contribution of 10% of his Basic Pay, DP and DA which will
be deducted from his salarybill every month. The Govt. will make an equal matching
contribution. Since 1 April 2008, the pension contributions of Central Government employees
covered by the NPS are being invested by professional Pension Fund Managers in line
http://en.wikipedia.org/wiki/Government_of_Indiahttp://en.wikipedia.org/wiki/Pension_fundhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Armed_forceshttp://en.wikipedia.org/wiki/Salaryhttp://en.wikipedia.org/wiki/Salaryhttp://en.wikipedia.org/wiki/Armed_forceshttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Pension_fundhttp://en.wikipedia.org/wiki/Government_of_India -
7/29/2019 Regulators of India
23/29
23
with investment guidelines of Government. However, there will be no contribution from the
Government in respect of individuals who are not Government employees. The contributions and
returns thereon would be deposited in a non-with drawable pension account.
In addition to the above pension account, each individual can have a voluntary tier-II with
drawable account at his option. Government will make no contribution into this account. These
assets would be managed in the same manner as the pension. The accumulations in this account
can be withdrawn anytime without assigning any reason. Its estimated that 8 crore citizens of
India are eligible to join the NPS.
Operational structure
NPS is designed to leverage network ofbankbranches and post offices to collect contributions
and ensure that there is seamless transfer of accumulations in case of change of employment
and/or location of the subscriber. It offers a basket of investment choices and Fund
managers. Dhirendra Swarup is one of the founders.
There will be one or more CRA, several PFMs to choose from which will offer different
categories of schemes. The participating entities (PFMs, CRA etc.) would give out easily
understood information about past performance & regularNAVs, so that the individual would
able to make informed choices about which scheme to choose. PFMs would share this common
CRA infrastructure. The PFMs would invest the savings people put into their PRAs, investing
them in three asset classes, equity (E),government securities (G) and debt instruments that
entail credit risk(C), including corporate bondsand fixed deposits.
Contribution guidelines
The following contribution guidelines have been set by the PFRDA:
http://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Post_officehttp://en.wikipedia.org/wiki/Dhirendra_Swaruphttp://en.wikipedia.org/wiki/Net_asset_valuehttp://en.wikipedia.org/wiki/Government_securitieshttp://en.wikipedia.org/wiki/Credit_riskhttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Corporate_bondhttp://en.wikipedia.org/wiki/Credit_riskhttp://en.wikipedia.org/wiki/Government_securitieshttp://en.wikipedia.org/wiki/Net_asset_valuehttp://en.wikipedia.org/wiki/Dhirendra_Swaruphttp://en.wikipedia.org/wiki/Post_officehttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Pensionhttp://en.wikipedia.org/wiki/Investment -
7/29/2019 Regulators of India
24/29
24
Minimum amount per contribution: Rs. 500 per month Minimum number of contributions: 1 in a year Minimum annual contribution: Rs 6,000 in each subscriber account.
If the subscriber is unable to contribute the minimum annual contribution, a default penalty ofRs.100 per year of default would be levied and the account would become dormant. In order to
re-activate the account, subscriber will have to pay the minimum contributions, along with
penalty due. A dormant account will be closed when the account value falls to zero.
Investment options
Under the investment guidelines finalized for the NPS, pension fund managers will manage three
separate schemes, each investing in a different asset class. The three asset classes are equity,
government securities and credit risk-bearing fixed income instruments. The subscriber will have
the option to actively decide as to how the NPS pension wealth is to be invested in three asset
classes:
1. E Class: Investment would primarily be in Equity market instruments. It would invest inIndex funds that replicate the portfolio of either BSE Sensitive index or NSE Nifty 50
index.
2. G Class: Investment would be in Government securities like GOI bonds and State Govt.bonds
3. C Class: Investment would be in fixed income securities other than GovernmentSecurities
* Liquid Funds of AMCs regulated by SEBI with filters suggested by the Expert Group
* Fixed Deposits of scheduled commercial banks with filters
* Debt securities with maturity of not less than three years tenure issued by bodies
Corporate including scheduled commercial banks and public financial institutions
Credit Rated Public Financial Institutions/PSU Bonds
Credit Rated Municipal Bonds/Infrastructure Bonds
http://en.wikipedia.org/wiki/Asset_classhttp://en.wikipedia.org/wiki/Equity_markethttp://en.wikipedia.org/wiki/Equity_markethttp://en.wikipedia.org/wiki/Asset_class -
7/29/2019 Regulators of India
25/29
25
In case the subscriber does not exercise any choice as regards asset allocation, the
contribution will be invested in accordance with the Auto choice option. In this option the
investment will be determined by a predefined portfolio. At the lowest age of entry (18
years) the auto choice will entail investment of 50% of pension wealth in E Class, 30% in
C Class and 20% in G Class. These ratios of investment will remain fixed for all
contributions until the participant reaches the age of 36. From age 36 onwards, the weight in
E and C asset class will decrease annually and the weight in G class will increase
annually till it reaches 10% in E, 10% in C and 80% in G class at age 55. The
following table will illustrates this auto choice more clearly-
Class Till the of age 35 years At age 55 Years
E 50% 10%
C 30% 10%
G 20% 80%
Investment charges
NPS levies extremely low Investment management charge of 0.00010% on net AUM (Asset
Under Management). This is extremely low as compared to charges levied by mutual
funds or other investment products. Initial charge of opening the account would be Rs. 470.
From second year onwards the minimum charge would be Rs. 350 a year. As per the offer
document of NPS, annual and transaction charges would be reduced once the number of
accounts in CRA reaches 10 lakh.
http://en.wikipedia.org/wiki/Asset_allocationhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Asset_allocation -
7/29/2019 Regulators of India
26/29
26
Withdrawal norms
If subscriber exits before 60 years of age, he/she has to invest 80% of accumulated saving to
purchase a life annuity from IRDA regulate life insurer. The remaining 20% may be
withdrawn as lump sum. On exit after age 60 years from the pension system, the subscriber
would be required to invest at least 40% of pension wealth to purchase an annuity. In case of
Government employees, the annuity should provide for pension for the lifetime of the
employee and his dependent parents and his spouse at the time of retirement. If subscriber
does not exit the system at or before 70 years, account would be closed with the benefits
transferred to subscriber in lump sum. If a subscriber dies, the nominee has the option to
receive the entire pension wealth as a lump sum.
Tax treatment
The offer document of NPS does not specify the tax benefits in elaborate manner. It specifies
Tax benefits would be applicable as per Income Tax Act, 1961 as amended from time to
time. As per current provisions, withdrawals under the NPS attract tax under the EET
(exempt-exempt-taxable) system, which means that while contributions and returns to the
NPS are exempt up to a limit, withdrawals would be taxed as normal income (EET).
To make the National Pension System more attractive Government has announced two major
Income tax concessions for contributions made in National Pension System in the budget
2011.
While the NPS subscribers are directly benefited from one of these Income tax concessions,
the second one is beneficial to the employers who contribute for NPS each month equivalent
to employees contribution in Tier I.
http://en.wikipedia.org/wiki/Life_annuityhttp://en.wikipedia.org/wiki/Lump_sumhttp://en.wikipedia.org/wiki/Lump_sumhttp://en.wikipedia.org/wiki/Life_annuity -
7/29/2019 Regulators of India
27/29
27
Income tax concession to Employees under NPS:
So far, the contribution made by a National Pension System subscriber in Tier I scheme is
deductible from the total income under Section 80CCD of the Income Tax Act. Like wise,
the contribution made by the employer for the employee in Tier I of National Pension
System is also deductible under Section 80CCD. However, the aggregate deduction under
Section 80C, 80CCC and 80CCD is fixed at Rs.1 lakh.
So, if the NPS subscriber is already having other eligible deductions such as LIC premium,
PPF, bank or NSC deposits, ELSS etc., under Section 80C, 80CCC and Section 80CCD.,
deduction allowed under Section 80CCD in respect of National Pension System may not be
of much useful as the overall limit of savings eligible for deduction is pegged at Rs. 1 lakh.
Further, contribution made by the National Pension System should also be included in the
Total income of NPS subscriber as far as calculation of income tax is concerned, while full
deduction of the same from income under Section 80CCD may not be possible as other
savings made by the subscriber covers the overall limit of Rs.1 lakh under Section 80CCD.
Hence, for a NPS subscriber contribution for NPS by the Government is taxable in most of
the cases.
For example, if an employee receives a salary of Rs.40,000 (pay+da), 10% of the same
(Rs.4000) is paid by him as contribution towards NPS. The Government will also be paying
Rs.4000 in this case in NPS fund of the said employee. Until now, an amount of Rs.96,000
(Rs.48,000+Rs.48000) could be deductible from the total income as far as this employee is
concerned under Section 80CCD.
-
7/29/2019 Regulators of India
28/29
28
However, if the said employee has been paying LIC premium of Rs.20,000 per year, he will
be allowed to deduct only Rs.4000 in respect of the same under Section 80CC as total ceiling
of Rs.1,00,000 under Section 80CCE will apply in this case. So, an eligible deduction of
Rs.16,000 could not be availed under Section 80CCD. In other words, employer contribution
to NPS to an extent of Rs.16,000, which is already included in the income is taxable in this
case.
However, the Finance Act, 2011 amended section 80CCE so as to provide that the
contribution made by the Central Government or any other employer to the pension scheme
under section 80CCD shall be excluded from the limit of one lakh rupees provided under
section 80CCE. This proposal is effective from the assessment year 2012-13 (financial year
2011-12) and would totally exempt employer's contribution in NPS from levying income tax
on the employee.
Income tax concession to Employers under NPS:
The Finance Act, 2011 amended section 36 so as to provide that any sum paid by the
assessee as an employer by way of contribution towards a pension National Pension
System(NPS) to the extent it does not exceed ten per cent of the salary of the employee, shall
be allowed as deduction in computing the income under the head Profits and gains of
business or profession.
This amendment will be effective from 1 April 2012 and will be applicable to the assessment
year 2012-13 (for the income earned in the financial year 2011-12) and subsequent years.
Past investment returns
-
7/29/2019 Regulators of India
29/29
The NPS architecture has been managing money since April 2008. Rs.2100 crore is invested
as corpus of Central Government employees. In 2008-09, as per unaudited results of the
Pension Funds, the average weighted return on the corpus have been over 14.5% with the
individual returns of three Pension Funds varying from 12% to 16% on the NPS corpus
during the year 2008-09, weighted average return being over 14.5 per cent. According to the
latest data released by the government in Parliament on Aug 23, 2011, return on investment
is as low as 1.8% in case of those private sector employees, who opted for investments in
government securities, the safest of the categories. The performance of the three pension
fund managers for the central government employees indicate that the returns on subscribers'
contributions under NPS ranged between 8% and 16% during 2008-09 and 2010-11.
Swavalamban Yojana As mentioned in the operating guidelines issued by MoF,
"Government will contribute Rs. 1000 per year to each NPS account opened in the year
2010-11 and for the next three years, that is, 2011-12, 2012-13 and 2013-14. As a special
case and in recognition of their faith in the NPS, all NPS accounts opened in 2009-10 will be
entitled to the benefit of Government contribution under this scheme as if they were opened
as new accounts in 2010-11 subject to the condition that they fulfill all the eligibility criteria
prescribed under these guidelines."
Accordingly, the basic eligibility criteria for joining the Swavalamban Yojana for a
subscriber is given below: Permanent Retirement Account should be opened in the year
2009-10 or 2010-11 and Minimum contribution should be Rs. 1,000 per annum (Financial
year) in Tier I account and maximum contribution should be Rs. 12,000 per annum
(Financial year) in both Tier I as well as Tier II account together.