Various important measures taken by the Indian Government to improve the
condition of Indian stock market.
Measures
Allow foreign institutional
investors to invest in equity
and debt markets
Expanding the product range
offered by the stock
exchanges
Allowing Indian companies to 
issues ADRS and GDRS
Allow Indian nationals and
companies to invest abroad
Divestment of government
ownership
Strengthening of institutional
framework in primary and
secondary markets
Demutualization
BSE and NSE to set up and
Objective Status
Liberalization of stock  Foreign investment up to 49% will be
market to attract foreign allowed in these companies with a
investment in order to separate FDI cap of 26% and FII cap of
boost economic growth. 23% after approval from FIPB
 Outstanding limit for FII investment in
debt securities raised from USD1.75 bn to
USD2.0 bn and the same for the corporate
debt raised from USD0.5 bn to USD1.5 bn
Bring Indian market at SEBI approved new derivative products :
par with the mini-contracts on equity indices, options with
international standards longer life/tenure, volatility index and F&O
and diversify product contracts, Options on Futures, Bond Indices
portfolio. and F&O contracts, Exchange-Traded
Currency (Foreign-Exchange) Futures and
Options and Exchange Traded products to
cater to different investment strategies
Facilitate market  Mutual funds were allowed to invest in
integration and give ADRs/GDRs and foreign securities within
freedom to the the overall limit of USD4 bn
companies.  Venture capital funds were allowed to
 Access to more invest in foreign securities
funds for investment  Guidelines on issue of Indian Depository
Receipts (IDRs) were issued
Facilitate growth Providing minimum public shareholding of
through privatization 25% in all listed companies
 To ensure  SEBI permitted listed companies to send
transparency abridged annual report to the shareholders
 Investor protection  Exclusive email ID to be given by the
 Provide a standard primary market intermediaries for
framework for registering investor complaints
operations  Stock exchanges advised to update the
 Deregulation applicable VAR margin rates at least five
 Reduces the conflict times in a day
of interest  SEBI approved and notified the
Corporatization and Demutualization
Schemes of 19 stock exchanges
To capture all  BSE and NSE began maintaining a
maintain corporate bond
reporting platforms
Making PAN compulsory
Transactions necessarily
settled through the clearing
corporations/clearing house
Permit Gold Exchange Traded
Funds
Introduction of mutual fund
schemes
information relating to reporting platform for corporate bonds.
trading.  BSE and NSE jointly launched a common
Investor protection portal at www.corpfiling.co.in to
disseminate filings made by companies
listed in both the exchanges.
Strengthening KYC PAN made compulsory for all categories of
(Know Your Client) investors for opening a DEMAT account with
effect from Apr 1, 2006
Investor protection and It was made mandatory.
greater control.
Generate options for SEBI allowed the launch of Gold Exchange
companies and investors Traded Funds (GEFTs)
Minimize risk for  Mutual funds were allowed to invest in
investors and ensure ADRs/GDRs and foreign securities within
returns. the overall limit of USD4 bn
 Mutual fund trustees are required to
certify that the scheme approved by them
is a new product and is not a minor
modification of an existing
scheme/product
 SEBI Mutual Fund regulations were
amended so as to permit the launch of
Capital Protection Oriented schemes
 SEBI directed MFs to dispatch statement
of accounts to unit holders under
SIP/STP/SWP on every quarter.