Role of Securities Exchange Board of India (SEBI)

Checks on malpractices and protect the interest of investors

Role of Securities Exchange Board India (SEBI)

You all must have heard about the Securities Exchange Board of India (SEBI). As a banking aspirant, it is necessary for you to have knowledge about SEBI. Not only this, the general awareness and banking awareness section in banking exams feature questions based on the regulatory authorities. One of the major regulatory authorities is the Securities Exchange Board of India (SEBI).

Let’s move on to read more about SEBI, its role and objective and key functional areas. This post intends to equip you with all the relevant information about the SEBI. This will help you in banking entrance exams and group discussions.

 Overview of SEBI

  • Securities Exchange Board of India (SEBI) was established in 1988 to regulate the functions of securities market.
  • SEBI promotes orderly development in the stock market.
  • SEBI was set up with the main idea to keep a check on malpractices and protect the interest of investors.

Now, let us gain more insights into the objectives and functions of SEBI.

Objectives of SEBI

The objectives of SEBI are:

  • To regulate activities in stock exchange and ensure safe investments
  • To prevent fraudulent practices by striking a balance between business and its statutory regulations

Functions of SEBI

The three main functions of SEBI are as follows:

  1. Protective function
  2. Developmental function

iii. Regulatory function

  1. Protective functions are performed by SEBI to protect interest of investors and provide safe investments. This entails:
  • Checks on prices rigging: Price rigging refers to manipulating the prices of securities.
  • Prevents insider trading: Insider refers to directors, promoters of the company. These people have sensitive information which they can use to make profit. SEBI keeps a stringent check whether insiders are buying securities of the company.
  • Prohibits fraudulent and unfair practices: SEBI does not allow companies to make misleading statements.
  1. Developmental functions are performed by the SEBI to develop activities in stock exchange to increase the business in stock exchange. Under this category, following functions are performed by SEBI:
  • Promoting training of intermediaries of the securities market
  • Promote activities of stock exchange by adopting flexible methods such as internet trading
  • Initial public offer of primary market is permitted through stock exchange.
  1. Regulatory functions are performed by SEBI to regulate the business in stock exchange.
  • SEBI registers and regulates the working of mutual funds and other investment options.
  • SEBI regulates takeover of the companies.
  • SEBI conducts inquiries and audit of stock exchanges.

Now, let’s understand the organizational structure of SEBI.

Organizational Structure of SEBI

  • SEBI is a corporate sector divided into five departments. Each department is headed by an executive director.
  • The current chairman of SEBI is U.K. Sinha.
  • The head office of SEBI is in Mumbai and it has branch office in Kolkata, Chennai and Delhi.
  • There are two advisory committees to deal with primary and secondary markets.

After reading this post, you must have got a fair idea about the Securities Exchange Board of India (SEBI). Stay tuned for more updates on general awareness articles.