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International University of Sarajevo

International Financial
Regulation

Case of India

Course: International Financial Environment


Student: Amina Ibišević 170 201 033
INTRODUCTION

Financial regulation
encompasses all laws and rules,
certain requirements,
restrictions, and guidelines to
describe the role of financial
institutions such as banks,
brokers, and investment
companies.
Characteristics of Financial Regulation

Maintenance of the health and safety of


the banking system

Avoidance of the corruption in the


overall payment system

Developing and building the strong


relationship with customers

Provision of a warranty for the safety of


deposit funds
Objectives of Financial Institution Regulation

• Maintaining the system stability


1.

• Maintaining the security and solvency of financial


2. institutions

• Consumer Protection
3.
INDIA
INDIA

India is the seventh largest country in the world with its total area of 3,287,263 km2
while it is the second one in the world by its population amounting to more than 1,3
billion people based on the latest data provided in 2016.
India: one of the fastest growing major economies, belongs to the list
of newly industrialized countries.
BANKING REGULATION IN INDIA

• Ancient India: various banking activities such as loans,


usury, and bills of exchange
• Colonial Rule of the Great Britan (1800s) –Modern banking
regulations
• Change: Nationalization of private banks in 1969
• Post reform Indian Financial System shows its strenght in
a maner how it survived after Southeast Asian crisis
(1990s) and financial recession (2007-2009)
BANKING REGULATION IN INDIA
Challenges to India
1. Non performing assets have extended to the degree that
it began to overcome operating earnings.

2. The access to loans from foreign lenders such as external


commercial borrowings.

Regulatory authorities in India have launched various targeted


regulations through the past few years.
Reserve Bank
of India (RBI)

Securities and
Export-Import
Exchange
Bank of India
Board of India
(EXIM)
(SEBI)

REGULATORY
AUTHORITIES
IN INDIA

National Bank
National for Agriculture
Housing Bank and Rural
(NHB) Development
(NABARD)

Small
Industries
Development
Bank of India
(SIDBI)
 Main responsibility is to control the monetary policy of the Indian rupee.
 It started with its operations in 1935.
 At the very beginning, it was owned entirely by private shareholders.
 The RBI became nationalized two years after the Indian independency.

“…to regulate the issue of Bank notes and keeping of reserves with a view to
securing monetary stability in India and generally to operate the currency
and credit system of the country to its advantage; to have a modern
monetary policy framework to meet the challenge of an increasingly
complex economy, to maintain price stability while keeping in mind the
objective of growth." (RBI)
 Securities and Exchange Board of India (SEBI) is the major regulator for the
securities market in India.
 It was set up in 1988, recognized as autonomous body and given statutory power in
1992.
 It has to meet the needs of three groups out of which market is composed: the issuers
of securities, the investors, and the market intermediaries.
National Bank for Agriculture and Rural Development (NABARD)
was established in 1981 with its headquarter in Mumbai. It is the
regulator for agricultural activities which has a responsibility to
promote sustainable agriculture.
Small Industries Development Bank of India (SIDBI) is a government owned and controlled
bank established in 1990. This is the essential institution for financing and development of
small, medium, and micro enterprises in India.
National Housing Bank (NHB) is a wholly owned subsidiary of RBI
established in 1997. Its primary objective is promotion of housing
finance, stabilization of housing finance market and set up to be in the
service of public housing needs.
Export-Import Bank of India (EXIM) is a financial institution providing
and coordinating the finance of export and import of goods and
services aiming to promote India’s international trade.
CONCLUSION
India is one of the biggest markets in the world and
taking into account the size and population fact, it seems
difficult to control and maintain the market in any sense,
especially to build and maintain financial stability in the
country. However, India is quite well performing its role
CONCLUSION
and succeeded to make some significant regulatory
developments in the previous years. According to certain
forecasts, India has possibility to move its already good
position in these terms even further ahead if it continues
moving in this trend.
REFERENCES
• Ali, J. R.; Aitchison, J. C. (2005), "Greater India", Earth-Science Reviews, 72 (3–4): 170–173,
doi:10.1016/j.earscirev.2005.07.005
• Banking Regulation 2017 | India | Laws and Regulations - Global Legal Insights. (n.d.). Retrieved March 29, 2018,
from https://www.globallegalinsights.com/practice-areas/banking-and-finance/global-legal-insights---banking-
regulation-4th-ed./india
• Eun, C. S., Resnick, B. G., Ng, K. K., Tee, P. L., & Marimuthu, M. (2011). International financial management.
Kuala Lumpur, Malaysia: McGraw-Hill (Malaysia).
• International Financial Service Centre (IFSC). (n.d.). Retrieved March 29, 2018, from
http://www.arthapedia.in/index.php?title=International_Financial_Service_Centre_(IFSC)
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9424?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1
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29, 2018, from https://economictimes.indiatimes.com/news/economy/policy/rbi-suggests-a-unified-regulator-for-
international-financial-services-centres/articleshow/56479173.cms
• Reserve Bank of India. (2018, March 27). Retrieved March 29, 2018, from
https://en.wikipedia.org/wiki/Reserve_Bank_of_India
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https://en.wikipedia.org/wiki/Securities_and_Exchange_Board_of_India
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https://www.marketcalls.in/market-regulations/understanding-financial-regulatory-bodies-in-india.html
• World Economic Outlook Database October 2017. (n.d.). Retrieved March 30, 2018, from
https://www.imf.org/external/pubs/ft/weo/2017/02/weodata/index.aspx