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SPEEDY Railway Book (English)

Financial Regulation Sector in India for Upcoming Bank Exams




India’s financial sector is diversified and expanding rapidly.  It comprises Commercial banks, insurance companies, Non-Banking Financial Companies, Cooperatives, Pension’s Funds, Mutual Funds and other smaller financial entities.
Ours  is  a  bank  subordinate  financial  sector  and  commercial  banks  account  for over 60 % of the total assets of the financial system followed by the Insurance. Other  bank  intermediaries  include  regional  rural  banks  and  cooperative  banks  that goal under  serviced  rural  and  urban  populations.   Many Non -Banking Finance Companies (NBFC) operate in specialized portion (leasing, micro finance, factoring, infrastructure finance), though some can accept deposits.  Pension  provision  covers 12  percent  of  the  working  population  and  consists  of  civil  service  preparation,  a compulsory  scheme  for  formal  private  sector  employees,  and  private  scheme  offered through insurance companies.
Ministry of Finance, Government of India superintends the financial sector in India. Every year the finance ministry presents the annual budget on 28th February. The Reserve Bank of India is a pinnacle institution in controlling banking system in the country. Its Monetary Policy acts as a major instrument in India's financial market.

The Financial Sector in India:

  • The Regulators –
  • The Players –
Brokers, firms, banks, financial institutions, foreign, institutional investors, mutual fund managers, investors, exchanges, depositories, custodians, registrars;
  • The Markets –
Commodities, equity, debt, foreign exchange;

Reserve Bank of India (RBI):

  1. Establishment – 1st April, 1935 as per the RBI Act, 1934 on the recommendation of Hilton Young Commission;
  2. Headquarter – Mumbai
  3. Governor – Dr. Urjit Patel
  4. Nationalization – 1st January, 1949
  5. Sector – Banking, Finance and Monetary Policy

Function of RBI:
  • Sole authority to issue Bank notes in India;
  • Credit control is a major weapon of the RBI used to control demand and supply of money in the economy;
  • All banks operating in the country have accounts with the RBI;
  • Transfer funds and settle inter-bank transaction;
  • It implements, formulates and monitors of monetary policy as well has it has to ensure the adequate flow of credits to productive sectors;

Security and Exchange Board of India (SEBI):

  1. Establishment – 2nd April, 1992
  2. Headquarter – Bandra Kulna Complex, Bandra, Mumbai
  3. Chairman – Upendra Kumar Sinha
  4. Sector – Securities (Stock) and Capital Market

Function of SEBI:
  • It regulates the stockbrokers and sub-brokers;
  • Checks Trading of securities;
  • To promote Research and Investigation;
  • Regulates Capital Market;
  • Prohibiting fraudulent and unfair trade practices relating to securities markets;

Insurance Regulatory and Development Authority of India (IRDAI):

  1. Establishment – Indian Parliament known as IRDA Act 1999and was amended in 2002.
  2. Headquarter – Hyderabad                                                                                                 
  3. Chairman – Mr. T.S. Vijayan                                                                                                 
  4. Sector – Insurance

Function of IRDAI:
  • Supervision of the functioning of the companies and intermediaries including review of company annual statements;
  • Enforcement of Discipline;
  • Licensing of insurance intermediaries such as agents, third party administrator, broker and surveyors and loss assessors;

National Bank of Agriculture and Rural Development (NABARD):

  1. Establishment – 12th July, 1982
  2. Headquarter – Mumbai                                                                                                     
  3. Chairman – Dr. Harsh Kumar Bhanwala
  4. Sector – Financing Rural Development

Function of NABARD:
  • To promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.
  • NABARD refinances the financial institutions which finances the rural sector;
  • It provides training facilities to the institutions working in the field of rural upliftment;
  • NABARD partakes in development of institutions which help the rural economy;

Pension Fund Regulatory and Development Authority (PFRDA):

  1. Establishment – 23rd August, 2003
  2. Headquarter – New Delhi                                                                                                  
  3. Chairman – Shri Hemant G Contractor
  4. Sector – Pension

Function of PFRDA:
  • Promoting professional organization connected with the pension system;
  • Collecting data and requiring intermediaries to collect such data and undertaking, commission studies, research and projects;
  • Regulating national pension system and the pension schemes;
  • Registration and regulating intermediaries;

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