An Assignment Submitted to

University of Mumbai for partial completion of the Degree of

Master in Commerce (Banking and Finance) Part I Semester I
Under the Faculty of Commerce

By
Ms. NISHMITA PUJARI
B035
45210210003

For the subject

Financial Markets and Institutions

Guided by
PROF. PRATHAMESH TAWADE

Assignment title
“FINANCIAL REGULATORS OF INDIA”
Submitted to

SVKM’s NARSEE MONJEE COLLEGE OF COMMERCE &

ECONOMICS(Autonomous)

Swami Bhaktivedant Marg, Bhagubai Mafatlal Complex, Vile

Parle West

Mumbai- 400056

DECEMBER 2021
 DECLARATION

I, Nishmita Pujari student of M. Com Part I (Banking and Finance)– Semester I (2021-
2022) hereby declare that I have completed this assignment on,
“FINANCIAL REGULATORS OF INDIA”
The information submitted is True and Original to the best of my knowledge.

SIGNATURE OF THE STUDENT SIGNATURE OF THE GUIDE

 ACKNOWLEDGEMENT

To list all who have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me a

chance to do this project.

I would like to express my sincere gratitude towards my Project guide Prof.

PRATHAMESH TAWADE whose guidance made the project successful.

I would like to thank my college library, for having provided various reference
books and magazines related to my project.

Lastly, I would also like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my Parents and
my Peers who supported me throughout my project.
 INDEX

Sr.
No. TOPIC Page no.
1 1-2
Introduction
2 3-25
Regulators of the Financial System
2.1 4-11
RBI
2.2 12-15
SEBI
2.3 16-19
IRDA
2.4 20-22
NABARD
2.5 23-25
PFRDA
3 26
Summary
4 27
Bibliography
 1. INTRODUCTION

India’s financial system is diverse. What exactly is a financial system?

‘A Financial system is a set of institutions such as banks, insurance companies, and
stock exchanges, that permit the exchange of funds’ – Investopedia. The financial
system includes sets of rules and regulations that is set by the regulators in the system.
A financial system, which is inherently strong, displays efficiency and flexibility,
plays a very crucial role in building a market-driven, productive, and competitive
economy. It is obvious that a mature system helps in creating higher levels of
investments and promotes growth in the economy with its depth and coverage.

The Financial system in India Comprises of financial institutions, financial markets,

financial instruments, and services. India also has a financial system that is controlled
by independent regulators in the sectors of insurance, banking, capital markets and
various services sectors. Some of the features of the Indian Financial system are as
follows,
i. Plays an important role in the development of the country.
ii. Links investors and savers.
iii. Helps in formation of capital.
iv. Facilitates expansion of capital markets.
v. Encourages saving and investment.

The Indian Financial system constitutes of the following,

1. Financial Institutions
2. Financial Markets
3. Financial Instruments
4. Financial Services.

Now, the financial system is regulated by independent regulatory bodies in different

fields such as banking, capital market, insurance, commodity market and pension
funds. The government of India still plays an important role in influencing the
regulatory framework at least to some extent.

1
In India, the regulation of banks and financial institutions are governed by the banking
regulation act, 1949. It was initially passed as banking companies act, 1949, and came
in to affect from March 16, 1949. The name was then changed to Banking regulation
Act from March 1, 1966. It is applicable in Jammu and Kashmir from 1956.

About the Banking Regulation act 1949:

The long title of the act is “An act to consolidate and amend the law related to
banking”. The act gives RBI, the central bank of the country the authority to license
banks and have the power to set regulations over the shareholding, monitor the
operations of the banks, lay down audit instructions, control moratorium, mergers,
liquidations, and the authority to impose penalties.

In 2020, Finance Minister Nirmala Sitharaman introduced a bill to amend the act. The
bill sought to bring all the cooperative banks under the Reserve Bank of India. It
sought to bring 1,482 urban and 58 multi-state cooperative banks under the
supervision of the RBI. The bill was passed by the Parliament.

The act does not apply to primary agriculture credit societies, cooperative land and
mortgage banks and any other cooperative society.

The objective of the act is to prevent banking failures by prescribing minimum capital
requirements.

To ensure balanced developments of banking companies, to safeguard the interest of

depositors, to facilitate strengthening the banking system of the country.

2
 2. REGULATORS OF THE FINANCIAL SYSTEM OF INDIA

Who are the regulators in a financial system of a country? Well, according to

Investopedia, ‘Federal and state governments have a myriad of agencies in place that
regulate and oversee financial markets and companies. These agencies each have a
specific range of duties and responsibilities that enable them to act independently of
each other while they work to accomplish similar objectives.’
The objective of the regulators is to monitor the functioning of the financial markets
and institutions and make sure that they prevent any frauds from happening and
disrupting the economy of the country, they must make sure that there is fairness in
the operations of the financial institutions.

Here, In India, we have Five main financial regulators, they are as follows,
1. RBI (Reserve Bank of India)
2. SEBI (Security Exchange Board of India)
3. IRDA (Insurance Regulatory and Development Authority)
4. PFRDA (Pension Fund Regulatory and Development Authority)
5. NABARD (National bank for rural and agricultural development)

3
 2.1

RBI is the Central Bank of India. What is a Central Bank of India? According to
Investopedia, A central bank is a financial institution that is given privileged control
over the production and distribution of money and credit for a nation or a group of
nations. It is responsible for overseeing the monetary system and policy of a nation or
group of nations, regulating its money supply, and setting interest rates.

The Reserve Bank of India was set up on the basis of the recommendations of the
Hilton Young Commission. The Reserve Bank of India Act, 1934 provides the
statutory basis of the functioning of the Bank, which commenced operations on April
1, 1935. The Central office of the Reserve bank was initially established in Calcutta
but was permanently moved to Mumbai in 1937

The bank was previously constituted to mainly the following functions:

- To Regulate the issue of banknotes,

- To Maintain reserves with a view to securing monetary stability,
- To operate the credit and currency system of the country to its advantage.

The bank then had to shift its focus due to liberalization on various other core
central banking functions such as Monetary Policy, Bank Supervision and
Regulation, and Overseeing the Payments System and onto developing the
financial markets.

4
 Functions of the Reserve bank of India

The Reserve Bank of India is performing various functions related to

monetary management, banking operations, foreign exchange, developmental
works and do researches on problem of economy. The major functions
performed by the Reserve Bank of India are as follows,

Supervisor
of Financial
system

Banker to Foreign
government Exchange
Management

Role of RBI

t
Monetary Banker’s
policy Bank

Issuer of
Currency

1. Issue of Currency: As it the central bank of the Country, it is entrusted

with the sole authority of issue of currency notes after keeping certain
minimum reserve consisting of gold reserve worth Rs. 115 Crores and
foreign exchange worth Rs. 85 Crore.
2. Banker to Government: The RBI works as a banker to the government
and therefore all the funds of both the Central and the State Government
are kept with the RBI. It also acts as an agent of the government and
manages its public debt.
3. Bankers Bank: The RBI is also working as the banker of the other
scheduled banks in the country. It regulates the whole banking system of
the country, keep certain percentage of their deposits as minimum reserve,

5
 works as the lender of the last resort to its banks and operates as clearing
houses for all other banks.
4. Credit Control: The RBI is trusted with the sole authority to control
credit created by the commercial banks such as quality and quantitative
credit control measures like variation in bank rates, open market
operations and selective credit controls.
5. Custodian of the Foreign Exchange Reserves: The RBI has the
authority to determine the exchange rate between the INR and foreign
Currencies. It also has to maintain relations with the IMF (International
Monetary Fund).
6. Developmental Functions: The RBI also works as a development agency
by developing various sister organizations like Agricultural Refinance
development corporation
 Organization Structure Of RBI

Central Board of Directors

GOVERNOR

DEPUTY GOVERNORS

EXECUTIVE DIRECTORS

PRINCIPAL CHIEF GENERAL MANAGER

GENERAL MANAGERS

DEPUTY GENERAL MANAGER

ASSISTANT GENERAL MANAGER

MANAGERS

ASSISTANT MANAGERS

SUPPORT STAFF
6
The Central Bank’s affairs are governed by Central Board of Directors. This board is
appointed by the Government of India for a period of 4 Years according to the Reserve Bank
of India Act. The full-time officials include a governor and not more than four deputy
governors.

The Current Governor of RBI is Shri Shaktikanta Das who is a retired 1980 batch Indian
Administrative Service (IAS) officer of Tamil Nadu cadre. Currently serving as the 25th
governor of the Reserve Bank of India.

Sir C.D Deshmukh was the first native Indian Governor.

The Current deputy Governors of RBI includes Shri M.K Jain, Dr. M.D Patra, Shri M.
Rajeshwar Rao, Shri T. Rabi Shankar.

 Regulatory and Promotional Role of RBI

A central bank of a country plays many important roles in the economy. Similarly, the
Reserve Bank of India has been playing a vital role in the economy of the country in
regulatory and promotional activities. A lot of responsibilities are entrusted with the RBI both
in regulatory and promotional areas. Following are some of the regulatory and promotional
activities performed by the RBI,

 Credit Regulation: The central bank of the country plays the role of controlling the
credit money created by the commercial banks through its qualitative and quantitative
methods of credit control thus maintaining a balance in the supply of money in the
country.

 Control over Commercial banks: Another regulatory role performed by the RBI is
to have control over the functioning of the commercial banks. It also enforces certain
prudential norms and rational banking principles that are to be followed by the banks.

 Mobilizing the savings: The RBI mobilizes saving through its member commercial
banks to and other financial institution. RBI also guides the commercial banks to
extend their banking network to the rural areas of the country and to encourage
banking habits in them. These strategies have helped the country to attain the greater

7
 degree of monetization of the economy and has also helped in reducing the activities
of private moneylenders and indigenous bankers.

 Regulating the volume of currency: The RBI issues and controls the entire volume
of currency in the country through its ISSUE DEPARTMENT. While regulating the
volume of the currency the RBI gives the priority of the demand for the currency and
the stability of the economy equally.

 Institutional Credit to agriculture: The RBI is trying to increase the flow of

institutional credit to agriculture from the very beginning. The RBI set up ARDC
(Agricultural Refinance and Development Corporation) in 1963 to achieve the
objective meeting the long-term credit requirement of rural areas. On July 1982, the
set-up NABARD and ARDC was merged with it to look after its agricultural credit
functions

 Advisory Functions: The RBI also provides advisory functions to both the central
and state governments on both financial matters and also on general economic
problems

 Monetary Policy and the instruments of monetary policy

The monetary authority (RBI) formulates, implements and monitors the
monetary policy.
Monetary policy is the process by which a monetary authority of a country
controls the supply of money in the economy by its control over interest rates
in order to maintain price stability and achieve high economic growth. Some
of the objectives of monetary authority are as follows,

Maintain Price stability: The monetary policy has to regulate the

supply of money in order to have a control over inflation. So, one of
the main objectives of the monetary policy is to maintain price
stability in the country.

8
 Promote saving and investment habits: By regulating the high rate
of interest and checking on inflation the aim of monetary policy is to
encourage saving habits among the people in India.

To ensure sustainability of the priority sector by providing credit:

Monetary policy aims at providing more funds to priority sector by
lowering interest rates for these sectors. Priority sector includes
agriculture, small- scale industry, weaker sections of societies.

Regulate and expand banking: RBI regulates the banking system of

the economy. RBI has expanded banking to all parts of the
country. With the help of monetary policy, RBI issues directives to
different banks for setting up rural branches for promoting agricultural
credit. Besides that, government has also set up cooperative banks and
regional rural banks.

To Promote employment: By providing loans to the productive

sectors, small-medium entrepreneurs, special loans to the unemployed
youth, monetary policy helps in promoting employment.

To encourage exports and substitute imports: By providing

concessional loans to export oriented and import substitution units,
monetary policy encourages such industries and thus help to improve
the position of balance of payments.

 Instruments of Monetary Policy

The instruments of monetary policy are tools or devices that are used by the
monetary authority in order to attain the objectives given above. There are
two main elements of the monetary policy,
 Quantitative Measures which include Bank rate, open market
operations, Cash Reserve Ratio (CRR), Statutory liquidity ratio (SLR)
- Bank Rate: This rate is the re-discounting rate that RBI
extends to banks against securities such as bill of exchange,

9
 commercial papers, and any other securities. In the past few
years, repo rate has rather acted as a guide line for banks to set
their interest rates then bank rate. The Current bank rate as
of November 2021 is 4.25%
- Open Market Operations: It refers to the buying and selling
of government securities by RBI in order to regulate money
supply. If RBI decides to indue liquidity or more funds in the
economy, it will buy government securities and inject funds.
Whereas, if it wants to curb the money in the system it will sell
the securities to the banks, reducing the amount of cash that
the banks have. The RBI announced that on 10th February
2021 it conducted a purchase of Government securities
under Open market operation (OMO) for an aggregate amount
of 20,000 Crores.
- Cash Reserve Ratio (CRR): This ratio implies the percentage
of a bank’s total deposits that needs to be kept as cash with the
RBI. The RBI has the right to change the ratio to a limit.
Again, A high percentage of CRR means the banks have less
to lend to the people as loans thereby curbing the liquidity.
Whereas, a low CRR does the opposite. The RBI may reduce
or raise CRR as the situation may demand. The Current CRR
is 4.00%
- Statutory liquidity Ratio (SLR): This is the percentage of
banks total deposits that needed to be invested in securities that
are approved by the government. The lesser the SLR, the more
the banks have liquidity to lend outside. The securities maybe
in the form of cash, gold, and unencumbered securities. The
Banks have to report the RBI very alternate Friday their SLR
maintenance and have to pay penalties for failing to maintain
SLR as mandated. The Current SLR rate prescribed by RBI
is 18.00%

10
 In addition to these measures, RBI also uses many qualitative tools
to regulate credit flow and cost of credit to the economy and
specific sectors in it.

 Qualitative Measures includes Rationing of credit, moral suasion,

Direct action, Regulation in consumer credit, margin requirements,
and RBI guidelines.
- Rationing of Credit: The RBI controls the Credit granted or
allocated by the commercial banks. This rationing is done to
ensure that the allocation is done to ensure proper distribution
of funds and to avoid unwanted wastages. It means that it has
to provide the banks a limit to lend loans to certain sectors
based on the priorities. For example, the RBI has raised the
limit of lending higher to the agricultural sector to promote the
flow of credit in that sector.
- Moral Suasion: Moral suasion is just as a request by the RBI
to the commercial banks to take certain actions and measures
in certain trends of the economy. RBI may request commercial
banks not to give loans for unproductive purposes which do
not add to economic growth but increase inflation.
- Direct action: This step is taken by the central bank against
the banks that don’t fulfill the requirements prescribed by the
bank. RBI will charge a penal rate of interest over the bank
rate.
- Consumer Credit Regulation: This refers to the issuing rules
regarding down payments and maximum maturities of
installment of credit for purchase of goods.
- Margin Requirements: This refers to the difference between
the securities offered and amount borrowed by the banks.
- RBI Guidelines: RBI issues oral, written statements, appeals,
guidelines, warnings to the banks.
-

11
 2.2

The full form of SEBI is Securities and Exchange board of India. It is in the 29th year of
existence as of 2021 since 1992. It was first established in 1988 as a non-statutory body.
From just being a silent spectator to the market watchdogs, SEBI has indeed come a very
long way. The head office of SEBI is located at Bandra Kurla Complex.

About the first existence on 12th April, 1988, it replaced the Controller of capital Issues
department of the Government. SEBI had very limited powers at that time with a negligible
jurisdiction. The 1992 scam elevated SEBI from a regulatory authority to the level of
statutory authority. It took almost four years for the government to bring about a separate
legislation in the name of Securities and Exchange Board of India Act 1992 conferring
statutory powers. The Act, charged to SEBI with comprehensive powers over practically all
aspects of capital market operations. Thus after 1992, SEBI was known as a statutory
authority and its jurisdiction extended to the whole of India except the states of Jammu and
Kashmir.

 Structure of SEBI

SEBI has a corporate framework which consists of various departments each of which is
managed by a department head. However, the organizational structure of the statutory body
comprises the Board (5 members) and 24 departments that together work towards the
regulation and surveillance of the financial market of the country.

Currently the 5 Members of the board are as follows,

 Shri Ajay Tyagi

 Shri G. Mahalingam
 Ms. Madhabi Puri Buch
 Shri S.K. Mohanty
 Shri Ananta Barua

12
Following the board, the organization is further divided into 24 Departments that work under
the jurisdiction of the Ministry of Finance as one single entity.

They are as follows:

1. Commodity and derivatives market regulation department: This department s-is

responsible for the maintenance and surveillance over the working of commodity
derivative segments of recognized stock exchanges and supervise their operations

2. Corporation Finance Department: This department is required to work around

the following areas,
- Listing and issuing of securities
- Schemes including mergers, divisions, accumulations, reduction in finances
- Governance of corporate organizations and auditing criteria
- Restructuring of corporate organizations through Takeovers, mergers,
buybacks
- Delisting of securities
3. Corporate Finance Investigation Department: This department has
responsibilities of investigating matters related to financial fraud, diversion of
funds, non-compliance with rules and misconduct of fiscal matters.
4. Department of Economic and Policy analysis: This department deals with
matters of statistics and publication and regulatory research.
5. Department of debt and hybrid securities: It is concerned with matters related to
corporate bonds, debt securities, and shares.
6. Enforcement Department- 1: This department looks after appeals reported
against SEBI in the Securities Appellate Tribunal (SAT).
7. Enforcement Department-2: The functions are similar to enforcement department
1.
8. Enquires and Adjudication department: The department of enquires and
adjudication is concerned about quasi-judicial issues and adjudicates upon those
matters that are reported against the violators as per the jurisdiction of SEBI.
9. General services department: The general services department is concerned with
the internal working of the organization.
10. Recovery and Refund Department: This department looks after procuring
recoveries from defaulters who fail to pay dues.
13
11. Human Resource department: The department looks after human resources and
conducts recruitment processes for the organization.
12. Division of Foreign Portfolio Investors and Custodians: This department looks
after the foreign investors who invest in the securities markets and deal with the
custody of securities in the international sphere.
13. Information technology department: The department conducts technological
operations in the organization.
14. Integrated Surveillance Department: This department is concerned with the
monitoring of all domains of the securities market
15. Investigation department: The investigations department is concerned with the
investigation and inspection matters of suspectable breach in the securities market.
16. Investment Management Department: This department deals with the
management of financial investments in the securities market.
17. Legal affairs market: The department is required to provide legal consultation to
the board of the organization.
18. Market Intermediaries Regulation and supervision department: this domain
works in line of supervision of market mediators and regulates all their operations
from registration to inspections.
19. Market Regulation Department: The department regulates the infrastructure of
market institutions like stock exchanges and supervises the functioning of them all
around.
20. Office of International affairs: The office of international affairs promotes the
regulation of the securities markets in regards with the foreign bodies like SEBI. It
also works for the protection of investors by engaging with foreign regulatory
bodies and organizations.
21. Office of investor Assistance and education: The department focuses to impart
investor education and guide investors in the right direction. It is also required to
assist investors and will deal with complaints related to the transfer of securities,
company listings and governance matters.
22. Office of the Chairman: The office Is headed by the SEBI Chairman- Shri Ajay
Tyagi. It has 2 divisions headed by the office communications division and
executive assistant.
23. Regional Offices: The Regional offices are required to work along with the
organizations visions and report to the regional heads.

14
 24. Vigilance Department: This department is headed by the Chief vigilance officer.
The role of the department is to detect the mis happenings in the organization, put
an end to corruption within the organization, and take preventive measures for the
same.

 Powers of SEBI
When it comes to the powers of SEBI, there are 3 main powers of the organization.
- Quasi-Judicial: The first and most important power of the organization is that it has
partial judicial powers in declaring judgements in fraudulent matters that occur in the
securities market.
- Quasi-Executive: The organization has the power to incorporate rules and implement
legal actions in order to establish fairness and transparency in the market. It can also
take steps against the violators.
- Quasi-Legislative: The third power of SEBI falls in the legislative domain. The
organization has the power to formulate laws and regulations and frame guidelines in
order to protect the rights of investors and keep violations away.

 Roles and responsibilities of SEBI

With the vision to protect the interests of the investors and objective to develop the
markets of securities, SEBI has various responsibilities as discussed below,
- The Primary role of SEBI is to preserve the rights of the investors in the securities
market and promote the development of securities in the domain
- It is also responsible for providing a fair and transparent platform to share brokers,
sub-brokers, bankers, agents, merchants, advisors and other professionals to take part
in the market and regulate its operations.
- SEBI also has the responsibility of preventing any kind of frauds and misconducts in
the securities market. It also responsible for the prohibition of insider trading in the
sphere.
- The organization is also required to impart investor education, trading regulations and
educate investors about the investor’s meditators too
- It is responsible for the surveillance of shareholding and take-over of companies, or
even merger in the corporate sphere. Another role of SEBI in the capital market is to
take care of research and development of the market round the clock.

15
 2.3

The concept of Insurance dates back to about 6000 years where individuals needed some
kind of safety net. When the need was realised the concept of insurance was born. The
dictionary meaning of Insurance states, “an arrangement by which an organization undertakes
to provide a guarantee of compensation for specifies loss, damage, illness, or death in return
for payment of a specified premium”

With an increasing need of this concept of security, it gave rise to life insurance at first which
was then followed by general insurance. Thus to institute a standalone body to oversee the
functioning of the growing insurance industry a regulatory body called IRDA was set up.

The Insurance Regulatory and development Authority of India (IRDA) is a statutory

body set up for the protection of rights and interests of the policyholders. They are
responsible to regulate, promote and ensure orderly growth of the Insurance Industry in India.

 History of IRDA:

In 1991, the Government of India begin the economic reforms programme and financial
sector reforms

In 1993, The committee on reforms in the Insurance sector, headed by Shri R. N Malhotra
who was also the retired Governor of India set up to recommend reforms in Insurance sector

In 1994, The Malhotra Committee recommends reforms after studying the insurance sector
and taking inputs from all the stakeholders

In 1996, an Interim body called the Insurance Regulatory Authority was set up.

In 1999, The Insurance Regulatory and development Authority Act, 1999 was enacted.

On 19th April 2000, The IRDA was formed as an Autonomous Regulatory Body.

So, since 2000, IRDA has been serving as an independent Regulatory authority for the
industry of insurance in India. It has to instil confidence among the policyholders in the
financial viability of the Insurance Companies. It has been playing a fundamental role in the

16
insurance sector with a commitment to discharge its rules for orderly growth of insurance
sector. Now, we move on to the structure and composition of IRDA.

 Structure and composition of IRDA

The IRDA is a 10 Member body appointed by the Government of India consisting of

- Chairman
- Five Full-Time members
- Four Part-Time members

The Insurance Advisory Committee (IAC) consists of not more than 25 members
excluding ex-officio members to represent the interests of Commerce, industry, transport,
agriculture, consumer fora, surveyors, agents, intermediaries, organizations engaged in safety
and loss prevention, research bodies and employee’s association in the Insurance sector.

T.S Vijayan is the current Chairman of the institution

The Whole Time Members Include R.K Nair, M Ramprasad, D.D Singh

Anup Wadhawan, S.B Mathur, Prof. V.K Gupta and CA K. Raghu are the Part-time
Members.

The Departments of IRDA can be classified into 5 broad categories

1. Registration Licensing and Regulation Supervision: The departments like

Actuarial Department, Agency Distribution, Finance and Accounts (Life) Department,
Finance and Accounts (Non-Life) Department, Heath Department, Intermediaries
Department, Investment department, Life Insurance Department and Non- Life
insurance Department.
2. Support Services: Includes Accounts Departments, Administration Department,
Corporate Services Department, Human Resources Department, Information
Technology Department, Internal Audit Department, Vigilance Department, Legal
Department, Official Language Implementation Department
3. Market Conduct, Off-site Monitoring, On-site Monitoring:
Inspections and compliance Department

17
4. Policyholder’s Protection, Grievance Redressal, Consumer Education: Consumer
Affairs Department
5. Research and development: Sectoral Development Department.

 Entities which the IRDA regulates: The entities which the IRDA regulates are
without a doubt the Insurers. The different types of Insurers are Life Insurers, Non-
life Insurers Including Specialized Insurers that is Standalone Health Insurance
Companies, Agricultural Insurance company, Export Credit and Guarantee
corporation, Reinsurers
 The Regulatory Framework for the insurers: Includes
Registration/Renewal/cancellation of registration, Opening and closing of Offices,
Clearance of insurance products, monitoring of advertisements, publicity materials of
products, Solvency Requirements, Investment Norms, Accounting norms,
Reinsurance requirements, policyholder protection regulations, corporate governance
guidelines, other regulations, Penalties for non-compliance or violations.
 Protection to the Policy holders: It includes the following regulatory framework
1. IRDA (Protection of Policyholders' Interests) Regulations, 2002
2. Redressal of Public Grievance Rules, 1998

3. Guidelines for Grievance Redressal

The channels for the complaints include the following,

 Insurer channels
 Portal, emails, letters, call centre etc.
 IRDA channels
 IGMS (Integrated Grievance Management System) Registering a
 complaint at www.igms.irda.gov.in
 IGCC (IRDA Grievance Call Centre) Calling Toll Free Number 155255 or
 1800 425 4732
 E-mail to complaints@irda.gov.in
 Letter to Consumer Affairs Department, Insurance Regulatory and
 Development Authority, 3-5-817/818, United India Towers, 9th Floor,
 Hyderguda, Basheerbagh, Hyderabad - 500 004

18
  Fax 040-66789768

There is an insurance Ombudsman who is approached if the customers grievances are not
solved by the insurance company. It is necessary to register the complaint with insurer first
and if it is not resolved, approach other fora such as Ombudsman. The person with the
grievance has to Complaint in writing to the concerned Ombudsman as per the jurisdiction
under RPG Rules, 1998.

 Complaint on grounds as per RPG Rules, 1998

- Any partial or total repudiation of claims by an insurer
- Any dispute about premium paid or payable in terms of the policy
- Any dispute on the legal construction of the policies as far as it relates to claims
- Delay in settlement of claims
- Non-issue of any insurance document after payment of premium

 Developmental Role of IRDA in the insurance sector

- IRDA has the responsibility of encouraging people to get insurance in order to
be safe from the unfortunate events. It also helps the insurance companies of
the country by regulating them. IRDA has been working in a collaborative
manner with other financial sector regulators such as RBI, SEBI, PFRDA and
FMC to further the cause of financial literacy and inclusion in the country.
- It also has the role of assisting in advance growth of the insurance industry in
an organised manner for the benefit of the common man.
- It has to Enforce high standards of integrity and competency among policy
holders.
- It has to ensure that the claims are settled efficiently.
- It has to promote fairness and transparency of insurance in financial markets.
- It has to ensure an optimum level of self-regulatory is maintained in the
insurance industry.
- It builds a reliable management system in order to ensure high standards are
maintained and financial stability is observed by the policy providers.

The Indian economy is growing which further promotes the entry of new
insurance players in the market. To keep the pace of growth even-handed, IRDA

19
 needs to maintain standards of quality. It will contribute to strengthening the
financial capacity of a country as a whole.

2.4

National Bank for agriculture and rural development (NABARD) is an apex body for overall
regulation of regional rural banks in India. It is under the jurisdiction of ministry of finance,
Government of India.

NABARD was established on the recommendations of B. Sivaramman committee on 12th of

July 1982 for the implementation of the National bank for agriculture and Rural development
Act 1981. With its establishment, the agricultural credit department (ACD) and Rural
planning and Credit cell (RPCC) of Reserve bank of India, and Agricultural Refinance and
development Corporation (ARDC) were replaced. NABARD also has International
Associates such as world bank affiliated organisations and global development agencies
working in the field of agriculture and rural development. NABARD’s Affairs are governed
by a Board of Directors appointed by the Government of India in Consonance with
NABARD Act.

DR. G.R Chintala is the Current Chairman of NABARD

 VISION: Development Bank of the nation for fostering Rural Prosperity

 MISSION: Promote sustainable and equitable agriculture and rural development
through participative financial and non-financial interventions, innovations,
technology and institutional development for securing prosperity

 Organizational Set up: NABARD has its head office at Mumbai and it has 31
Regional offices located in states and Union Territory, a cell at SRINAGAR, 04
Training establishments in the northern, eastern, southern parts of India and 414

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 District Development Managers functioning at District level. NABARD has 2243
professionals supported by 1130 other staff as of 31 March 2021.

 Functions of NABARD: The major functions of NABARD include promotion and

development, refinancing, financing, planning, monitoring and supervision. The non-
credit related functions are as follows,

- Credit planning and Monitoring, coordination with various agencies and

institutions
- Assist in policy formulation of Government of India as well as the RBI and
State governments on matters related to agriculture credit and rural
development.
- Promotional and developmental initiatives in the areas of farm, off-farm,
micro finance, financial inclusion, Convergence with govt sponsored
programmes.
- Supporting the financial inclusion efforts of regional Rural banks and
Cooperative banks.
- Capacity Building of personnel and Board members of credit cooperatives and
staff of rural financial institutions.
- Support to research and development, rural innovations. Etc
- Thrust on promotion of livelihood opportunities and micro enterprises.

The credit related functions include,

- Refinance to rural financial institutions for investment credit (long term loan)
and production and marketing credit (short term loan) purposes for farm and
off- farm activities in rural areas.
- Loans to state governments for developing rural infrastructure and
strengthening of the cooperative credit structure.
- Loans for warehousing infrastructure to state government/central government,
Owned/assisted entities, cooperatives, farmers producers’ organizations,
primary agriculture societies, companies, individual entrepreneurs etc.
- Direct lending to cooperatives and producers’ organization, NGO’s, MFI’s,
Farmer’s collectives etc. under natural resource management.

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 - Pass through agency of select government of India capital investment subsidy
schemes.
 The partner institutions of NABARD related to credit are as follows,
- Scheduled Commercial Banks
- State Governments
- State Owned Bodies and Corporations
- Regional Rural Banks
- State Cooperative banks
- District Central cooperative banks
- State cooperative agriculture and rural development banks
- Scheduled Urban Cooperative banks
- Non-banking finance companies

The development-oriented clients of NABARD are as follows,

- Rural Finance Institutions

- NGO’s and Voluntary Agencies
- Development and self-employment training institutions
- Self-help Group’s
- Rural Innovators
- Joint liability Groups
- Research Organizations

 The government of India encourages farmers in taking up projects in selected areas by

subsiding a portion of the total project costs. All these projects aim at enhancing
capital investment, sustained income flow and employment areas of national
importance. NABARD has been a proud channel partner of the government in some
of these schemes given below,
- Dairy entrepreneurship Development scheme
- Commercial Production units of organic inputs
- Agri clinic and Agri Business centres scheme
- National livestock mission
- New agricultural marketing infrastructure.

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 2.5

About PFRDA

The government of India in the year 1999, commissioned a national project titled ‘OASIS’
which is an acronym for Old age security and income security to examine policy related to
old age income security in India. On the recommendation of the OASIS report, the
government introduced a new defined contribution Pension system for the new entrants to
central/state government service.

On 23rd August, 2003, Interim Pension Fund Regulatory and Development Authority was
established to promote, develop and regulate pension sector in India. The contributory
pension system was notified by the GOI on 22nd December 2003, today known as the
National Pension System (NPS) with effect from 1st January, 2004. On 29th October 2015,
RBI allowed NRI’s to subscribe to NPS.

The Pension Fund Regulatory and Development Authority act was passed on 19th September,
2013. PRFDA is regulating NPS, which is subscribed by Employees of Government, and by
employees of Private institutions including the unorganized sector. The PFRDA is ensuring
the orderly growth and development of pension market.

Structure
- The authority consists of a chairperson and not more than six members, of whom at
least three shall be whole-time members, to be appointed by the Central Government.
The Current Chairperson is Shri Supratim Bandyopadhyay
Functions of PFRDA
- The aim of PFRDA is to “Promote old age income security by establishing,
developing and regulating pension funds, to protect the interest =s of

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 subscribers to schemes of pension funds and for matters connected therewith
or incidental thereto.
- It has to promote pension scheme in the country by fostering mandatory as
well as voluntary pension schemes in order to serve old age income needs of
retired person
- PFRDA performs the function of appointing various intermediate agencies
like Pension fund managers, central record keeping agency etc.
- Educating the general public and stakeholders about the importance of pension
- Addressing grievances related to pension schemes in the country
- Addressing and resolving disputes between various intermediaries like banks
and between customers and intermediaries

Intermediaries of PFRDA
PFRDA is divided into three sub-divisions, each of which performs to task to add on
the holistic responsibility of PFRDA towards the Indian citizen.
 Central Record Keeping Agency (CRA): The CRA performs the functions of
Administration and record keeping of all information of customers who are registered
under the NPS.
Issuing of PRAN that is Permanent Retirement Account number for customers who
availed savings plans under NPS scheme.
Monitoring Contributions of NPS subscribers and updating the same.
Furnishing periodic and updated PRAN statements to all subscribers on a regular
basis.
Overseeing the settlement of funds that have been invested and the subsequent units
allotted to subscribers.
 Pension Fund Managers: They are mandated to invest and manage funds of
subscribers enrolled in the NPS. They have to maintain books and records of the
investment and flow of funds. They also have to construct the portfolio of the
customers who choose auto-allocation of funds. They have to report to PFRDA on
regular basis.
 Point of Presence Agencies: The third and the most public-facing entity of the
PFRDA is the Point of Presence Agencies. Following are the functions that it
performs.

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 Receive and analyse the duly filled application form along with KYC documentation,
furnished by customers who register for the NPS scheme
To verify KYC documents as and when required
To collect and verify NPS contributions made by subscribers via various channels like
cash, Demand Draft, cheques and so on
 Trustee bank: It receives funds for NPS from all over the country via zonal and
regional offices. It verifies amounts paid by the zonal offices
Funds that are transferred with discrepancy are returned to zonal offices or bank
involved and correct transfers are sought.
Reconciles daily balances in accordance with CRA.
 Custodian: Does the job of maintaining accounts of securities and assets held by the
customers.
Maintains and reconciles records of services.
Informing the actions to be taken by the issuer of securities.
Collecting accrued benefits on securities and assets
 Nodal Offices: Nodal offices are an important link in the spread and reach of the NPS
schemes. These are the numerous links that join up to make the robust PFRDA.
 Aggregators: Aggregators can be understood as the most prominent and first point of
contact between subscriber and the NPS.
They are responsible for carrying out the changes in any of the KYC information as
requested by the subscriber. This may include changes in name, contact, information
etc.
Grievance handling in cases where subscriber raises a complaint or grievance against
any of the intermediaries of the PFRDA.

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 3. SUMMARY

To summarize, It is no doubt that Every component in the financial system is regulated by

one or the other regulators and it is as essential as it sounds. Regulations are needed in order
to handle crises better, to avoid fraudulent activities in the system, to have transparency in the
system. To sum it all up,

 The RBI prints currency and distributes it across the country. It controls credit by
using monetary tools which help control liquidity in the economy and inflation at bay.
It also manages the country’s foreign reserves.

 The SEBI is the capital market watchdog. It has to encourage investment in the
country by protecting the interests of the investors. It imposes fines and punishments
on the entities that do not follow the standards set by it. It has the power to change the
laws on the stock exchanges and its functioning.

 The IRDA has to monitor the Insurance sector of the company. It regulates the
insurance premiums as well as the products that the insurance companies offer to the
customers. It also has to function as a complaint redressal

 The NABARD has to promote the growth of agricultural sector by providing them
enough credit for the development of the rural areas. It subsidizes the project rates and
is backed by the GOI. It provides various schemes that help different kinds of
entrepreneurs in the rural areas.

 The PFRDA regulates the Pension Fund sector. Its main objective is to provide
income security to the senior citizens. It also has the task to increase the awareness of
pension scheme in the country.

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 4. BIBILIOGRAPHY
 Websites Referred
- https://www.bankbazaar.com/saving-schemes/pension-fund-regulatory-
and-development-authority.html
- https://www.google.com/amp/s/groww.in/blog/financial-regulatory-
bodies-in-india/amp/
- https://www.analyticssteps.com/blogs/what-sebi-structure-functions
- https://www.nabard.org/profile.aspx?Id=1343&cId=9
- https://en.wikipedia.org/wiki/List_of_regulators_in_India
- https://www.policyholder.gov.in/uploads/CEDocuments/IRDA
%20Brochure.pdf
 Book Referred
- Financial Awareness by Disha Publications

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