The Securities and Exchange Board of India (frequently abbreviated SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992.
It was officially established by The Government of India in the year 1988 and given statutory powers in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI has its Headquarters are at the business district of Bandra 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, 1988 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 are nominated by Union Government of India, out of them at least 3 shall be whole-time members.
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.
The Board comprises
|Upendra Kumar Sinha||Chairman|
|Prashant Saran||Whole Time Member|
|Rajeev Kumar Agarwal||Whole Time Member|
|S Raman||Whole Time Member|
|Prakash Chandra||Joint Secretary, Ministry of Finance|
|V. K. Jairath magya||Member Appointed|
|Anand Sinha||Deputy Governor, Reserve Bank of India|
|Naved Masood||Secretary, Ministry of Corporate Affairs|
|Raje Kumar||Part Time Member|
List of former Chairmen:
|C. B. Bhave||18 February 2008||18 February 2011|
|M. Damodaran||18 February 2005||18 February 2008|
|G. N. Bajpai||20 February 2002||18 February 2005|
|D. R. Mehta||21 February 1995||20 February 2002|
|S. S. Nadkarni||17 January 1994||31 January 1995|
|G. V. Ramakrishna||24 August 1990||17 January 1994|
|Dr. S. A. Dave||12 April 1988||23 August 1990|
Functions and responsibilities
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto".
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 Mr. Justice J P Devadhar, a former judge of the Bombay High Court. A second appeal lies directly to the Supreme Court.
For the discharge of its functions efficiently, SEBI has been vested with the following powers:
- to approve by−laws of stock exchanges.sebi
- to require the stock exchange to amend their by−laws.
- inspect the books of accounts and call for periodical returns from recognized stock exchanges.
- inspect the books of accounts of a financial intermediaries.
- compel certain companies to list their shares in one or more stock exchanges.
- registration brokers.
there are two types of brokers.
1.circuit broker 2.merchant broker
- Technical Advisory Committee
- Committee for review of structure of market infrastructure institutions
- Members of the Advisory Committee for the SEBI Investor Protection and Education Fund
- Takeover Regulations Advisory Committee
- Primary Market Advisory Committee (PMAC)
- Secondary Market Advisory Committee (SMAC)
- Mutual Fund Advisory Committee
- Corporate Bonds & Securitization Advisory Committee
SEBI has enjoyed success as a regulator by pushing systematic 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 means, Settlement is done in 2 days after Trade date.SEBI has been active in setting up the regulations as required under law. SEBI did away with physical certificates that were prone to postal delays, theft and forgery, apart from making the settlement process slow and cumbersome by passing Depositories Act, 1996.
SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown 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.
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. 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 the finance ministry’s request 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 JusticeSS Nijjar and Justice HL Gokhale issued a notice to the Govt of India, SEBI chief UK 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 Minister about 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 Sahara Group, Reliance, Bank of Rajasthan and MCX.