“A STUDY ON THE ROLE OF SEBI DEVELOPMENT IN

INDIAN STOCK MARKET”

A Project Submitted

University Of Mumbai For partial completion of degree of

Bachelor of Management Studies

Under the Faculty of Commerce

By

Mayuri Santosh Sawant

Under the guidance of

Ms. Sonali Bare

MODERN EDUCATION SOCIETY’S

D.G. RUPAREL COLLEGE OF ARTS, SCIENCE, AND COMMERCE

MATUNGA (WEST), MUMBAI-400016

APRIL, 2023
 CERTIFICATE

This is to certify that Ms. Mayuri Santosh Sawant student of TYBMS Semester VI of
the D. G. Ruparel College of Arts, Science and Commerce has successfully completed
the project report on “A Study on the role of SEBI Development in Indian Stock
Market” under the guidance of Ms. Sonali Bare for the academic year 2022-23.

_________________ _________________

INTERNAL EXAMINER EXTERNAL EXAMINER

(MS. SONALI BARE)

_________________ _________________

DR. NEETA TATKE SEAL OF THE COLLEGE

( VICE PRINCIPAL)

Date of Submission: ___/___/___

Place: Mumbai
 Declaration by learner

I the undersigned Mr. Your full name here by, declare that the work embodied in this
project work titled “A Study on the role of SEBI Development in Indian Stock
Market” forms my own contribution to the research work carried out under the
guidance of Ms. Sonali Bare is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma to this or
any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Mayuri Santosh Sawant

Certified By

________________

MS. Sonali Bare

(Project Guide)

Date: ___/___/____

Place: Mumbai

.
 ACKNOWLEDGEMENT

To list who all 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 chance to do
this project.

I would like to thank my I/C Principal, Dr. Dilip Maske for providing the necessary
facilities required for completion of this project.

I take opportunity to thank our Coordinator Dr. Neeta Tatke for her moral support
and guidance.

I would like to express my sincere gratitude towards my Project Guide Ms. Sonali
Bare whose guidance and care 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 like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
 INDEX

CHAPTE TOPIC PAGE

R NO.
EXECUTIVE SUMMARY 7
1 INTRODUCTION 9
1.1 HISTORY 11
1.2 SEBI GUIDELINES 13
1.3 FUNCTIONS OF SEBI 16
1.4 FEATURES OF SEBI 20
1.5 FEATURES AND REGULATIONS OF THE ACT 21
1.6 SCOPE OF ACT 22
1.7 PURPOSE AND ROLE OF SEBI 24
1.8 ORGANISATIONAL STRUCTURE OF SEBI 25
1.9 ESTABLISHMENT OF SEBI 28
1.10 REASONS FOR THE ESTABLISHMENT OF SEBI 29
1.11 INCORPORATION OF BOARD 30
1.12 MANAGEMENT OF THE BOARD 31
1.13 REGSITRATION CERTIFICATE 36
1.14 POWERS OF SEBI 38
1.15 ADVANTAGES OF SEBI 43
1.16 DISADVANTAGES OF SEBI 46
1.17 MISSION OF SEBI 47
1.18 PREAMBLE OF SEBI 47
1.19 ROLE OF SEBI IN REGULATING MARKET 50
1.20 CAPITAL MARKET TRADED UNDER SEBI 52
2 RESEARCH METHODOLOGY 65
2.1 INTRODUCTION OF THE PROJECT 66
2.2 OBJECTIVE OF THE PROJECT 66
2.3 SCOPE OF THE STUDY 66
2.4 LIMITATIONS OF THE STUDY 67
2.5 NEED FOR THE STUDY 68
2.6 RESEARCH DESIGN 69
2.7 SOURCES OF THE DATA 70
2.8 SAMPLING DESIGN 71
2.9 TOOLS OF PRESENTATION & ANALYSIS 72
3 LITERATURE REVIEW 73
4 ANALYSIS/CASE STUDY 76
5 ANALYSIS SURVEY 80
6 CONCLUSION 91
7 BIBLIOGRAPHY 93
8 ANNEXURE 94

LIST OF FIGURES

FIGURE TITLE PAGE

NO. NO.
FIG 5.1 Gender of the participant 73
FIG 5.2 Age of the participant 74
FIG 5.3 Occupation of the participant 75
FIG 5.4 Do you invest in securities market? 76
FIG 5.5 In which market would you like invest in Future? 77
FIG 5.6 Do you have investment in? 78
FIG 5.7 How frequently do you trade in primary market? 79
FIG 5.8 How frequently do you trade in secondary market? 80
FIG 5.9 SEBI have proper control over broker activities? 81
FIG 5.10 Have you ever complained to SEBI/Stock 82
exchange/any market intermediary like sub
brokers/share transfer brokers?
FIG 5.11 SEBI giving proper security to their investors? 83

EXECUTIVE SUMMARY
Indian securities markets have undergone many changes during the last decade.
Exponential growth in trading volumes is pushing existing trading systems and
processes to capacity and increasing settlement risk. With Indian market moving to a
T+3 rolling settlement cycle in line with global markets, SEBI is continuing its efforts
to increase the efficiency and transparency in Indian markets. This would result in
lowering of trade costs and make Indian markets a more attractive destination for
global investors. Indeed it has been SEBI endeavor to make the Indian markets, one of
the most competitive and efficient markets of the world.

The move from a 5 day settlement period to a three day period requires firms to
streamline trading processes by way of a foolproof, faster, cost effective and
universally acceptable mode of communication among market participants. With
changes happening in rapid succession, derivatives markets looking to expand, the
settlement risk are increasing and this is pushing the need for Straight. Through
Processing (STP) and making it a pre-requisite for success of smooth functioning of
securities market with a settlement period of T +3 or less.

Straight-through Processing (“STP”) involves electronically capturing and processing

transactions in one pass, from the point of first “deal” to final settlement. Current
practices involve costly multiple data re-entry from paper documents and other
sources that are susceptible to errors, discrepancies, delays and possible fraud. STP
enables orders to be processed, confirmed cleared and settled in a shorter time period,
more cost effectively and with fewer errors than under traditional methods such as
phone, fax, email etc. that require human intervention. It is the human element that
slows the trade processes, introduces errors and delays settlement.

Broadly the benefits of STP can be listed as:

 Reduced Settlement Cycle

Reducing the settlement cycle, the time between execution to settlement, will
eliminate many of the risks associated with trade processing. Achieving
seamlessness will be an enabler for these shorter settlement cycles to assist
both domestic and cross-border trades in Indian securities. You cannot get
T+1 without seamless connectivity.

 Transparency/ Audit ability

 Managing trades within a single automated process will improve the
transparency of the trade status for all parties and will enable organizations
(and possibly the regulator) to monitor the process in terms of effectiveness,
adherence to regulation and will enhance problem resolution.

 Redeem Counterparty Risk

Once a trade has been executed there is an element of uncertainty between all
parties on the status of the trade and, indeed, whether the trade will settle until
it is matched at the exchange. We see in many markets that, for a great
proportion of the trades, matching does not take place until settlement date,
leaving no time to repair the trade for settlement on time. Trades agreed by all
parties and set-up ready for settlement will also reduce the exposure in the
event of counter party failure.

 Reduce Operational Risk

Automating the process from execution through to settlement will, by
definition, reduce the manual processes and provide a more timely and
accurate process. In avoiding the delays and errors in this manual process you
and your trading counterparts will substantially reduce the exceptions.
Exception processing is costly.

 More timely exception processing

Whilst STP will not eliminate all the errors, the point that is often missed is
that the earlier the trade is processed the earlier the exception will be
identified. This will enable the timely resolution of any problems on the trade
date to avoid settlement failure and the costly process of resolution, correction
and interest claims.

 Performance Measurement
It is often said that you cannot manage what you cannot measure. This is true
of the trade process and counterparty performance. Management of
information throughout the process will be the key to determine success, not
only in your own process, but also that of your counterparts. Measure against
an industry code of practices and peer groups will help to create the discipline
 in the market. We should not discount the possibility of publishing
performance tables - a case of naming and shaming - to further concentrate the
mind.

 Improve attractiveness of Indian market

Markets throughout the world are continually looking for new investment
opportunities. Foreign Investment into India will be determined, not only, on
investment opportunity but also on the operational efficiency and risk profiles
of the Indian market. Introducing a process with regulatory oversight will only
enhance India's profile and therefore its attractiveness to foreign investment.

CHAPTER 1

INTRODUCTION:
What Is SEBI?

Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-
statutory body for regulating the securities market. It became an autonomous body on
30th January 1992 and was accorded statutory powers with the passing of the SEBI
Act 1992 by the Indian Parliament. SEBI has it’s headquarters 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. It has opened local offices at Jaipur and Bangalore and has also opened
offices at Guwahati, Bhubaneshwar, Patna, Kochi and Chandigarh in financial year
2013-2014.

Controller of Capital Issues was the regulatory authority before SEBI came into
existence; it derived authority from the Capital Issues (Control) Act, 1947.

After the amendment of 1999, collective investment schemes were brought under
SEBI except NIDHI, chit funds and cooperatives.

Madhabi Puri Buch took charge of chairman on 1 March 2022, replacing Ajay Tyagi,
whose term ended on 28th February 2022. Madhabi Puri Buch is the first woman
chairperson of SEBI.

Majorly, SEBI controls the issuers of securities, the investors and the market
intermediaries. The Board draft regulations and statutes under its legislative authority,
also pass rulings and orders under its judicial capacity and operate investigations in its
executive limits. SEBI works as a barrier to avoid malpractices related to the stock
market by establishing a code of conduct and promoting the healthy functioning of the
stock exchange. Initially, SEBI didn’t have the authority to regulate the stock
exchange, but in 1992 the Union Government gave statutory powers to SEBI through
the SEBI Act, 1992.

As per the SEBI Act 1922, the power and functions of the board encompass the
regulations of Stock Exchanges and other securities markets, registration and
regulation of the working stock brokers, sub-brokers, bankers to an issue (a public
offer of capital), trustees of trust deeds, regsitrars to an issue, merchant bankers, under
writers, portfolio managers, investment advisors and such other intermediaries who
may be associated with the stock market in any way; registration and regulations of
mutual funds, promotion and regulation of self-regulatory organizations, prohibiting
Fraudulent and unfair trade practices and insider trading in securities markets,
regulating susbtanial acquisition of shares and takeover of companies, calling for
information from, undertaking inspection, conducting inquiries and audits of stock
exchanges, intermediaries and self-regulatory organizations of the securities market,
performing such functions and exercising such powers as contained in the provisions
of the Capital Issues (Control) Act,1947.

The Securities Contracts (Regulation) Act,1956 levying various fees and other
charges, conducting necessary research for above purposes and performing such other
functions as may be prescribes from time to time.

The capital market had witness a heavy growth during 1980’s. This ever expending
investor population and market capitalization led to variety of malpractices on the part
of companies, brokers merchant brokers, investment consultants involved in
Securities Market. Such malpractices and unfair practices have eroded investor
confidence and multiplied investor grievances. The example of malpractices include
existence of self-styled merchant bankers, unofficial private placement, rigging of
prices unofficial premium in new issues, non-adherence of provisions of the
companies act, violation of rules and regulation of stock-exchange listing
requirements, delay in delivering shares etc.

SEBI as the watchdog of the industry has an important and crucial role in the market
in ensuring that the market participants perform their duties in accordance with the
regulatory norms.

1.1 History:
The structure and processes of the SEBI have been developed over the year. In 1602
when Amsterdam stock exchange was admitted by the East India Company for
dealings in it’s own securities the establishment of the native share and stock Brokers
Association (now remand as Bombay Stock Exchange) in 1875 in the existing India
undoubtedly marked a beginning of the stock exchange in India despite being the first
ever stock exchange in Asia. The earliest legislative efforts to regulate the securities
market in India was made by the Bombay Securities Contracts Act 1925, which was
to regulate and control certain contracts acts for purchase and sale of securities in the
city of Bombay.

Securities and Exchange Board of India (SEBI) was first established in the year 1988
AQF as a non-statutory body for regulating the securities market. It became an
autonomous body by The Government Of India on 12th May 1992 and given statutory
powers in 1992 with SEBI Act 1992 being passed by the Indian Parialment.

SEBI was a non-statutory body without any statutory power. However, in 1992, 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.

SEBI or the Securities and Exchange Board of India was first established as a no-
statutory body in the year 1988. It was established with the aim to regulate the Indian
securities and capital markets. SEBI gained statutory powers and was declared an
autonomous body when the SEBI Act of 1992 was passed by the parliament on 30th
January 1992.

SEBI is a regulatory body under the Ministry of Finance division of government of

India. SEBI has its head office located in Bandra Kurla Complex, Mumbai. The SEBI
has regional offices in North, South, West, and East regions of the country. These
offices are situated in New Delhi, Chennai, Ahmedabad, and Kolkata respectively.

Before SEBI, the Indian financial markets were regulated by the Controller of Capital
Issue which was established under the Capital Issues Act of 1947.

1.2 SEBI Guidelines:

REGULATION OF BUSINESS IN THE STOCK EXCHANGES

Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of
stock exchanges. The SEBI has been inspecting the stock exchanges once every year
since 1995-96. During these inspections, a review of the market operations,
organizational structure and administrative control of the exchange is made to
ascertain whether:

 the exchange provides a fair, equitable and growing market to investors

 the exchange’s organization, systems and practices are in accordance with the
Securities Contracts (Regulation) Act (SC(R) Act), 1956 and rules framed
thereunder
 the exchange has implemented the directions, guidelines and instructions
issued by the SEBI from time to time
 the exchange has complied with the conditions, if any, imposed on it at the
time of renewal/ grant of its recognition under section 4 of the SC(R) Act,
1956.

Based on the observations/suggestions made in the inspection reports, the exchanges

are advised to send a compliance report to SEBI within one month of the receipt of
the inspection report by the exchange and thereafter quarterly reports indicating the
progress made by them in implementing the suggestions contained in the inspection
report. The SEBI nominee directors and public representatives on the governing
board/council of management of the stock exchanges also pursue the matters in the
meetings of the governing board/council of management. If the performance of the
exchanges whose renewal of recognition is due, is not found satisfactory, the SEBI
grants further recognition for a short period only, subject to fulfillment of certain
conditions.

During the year, renewal of recognition was granted to three stock exchanges. The
renewal of recognition to Saurashtra - Kutch Stock Exchange was renewed for a
further period of one year only as the exchange failed to rectify the deficiencies
pointed out in the inspection report and renewal of recognition of Jaipur Stock
Exchange was granted only for a period of one year as the exchange has not started
Screen Based Trading. The renewal of recognition of Vadodara stock Exchange was
granted for a further period of three years.

During the year 1997-98,inspection of stock exchanges were carried out with a special
focus on the measures taken by the stock exchanges for investors protection. Stock
exchanges were, through inspection reports, advised to effectively follow-up and
redress the investors’ complaints against members/listed companies. The stock
exchanges were also advised to expedite the disposal of arbitration cases within four
months from the date of filing.

During the earlier years’ inspections, common deficiencies observed in the

functioning of the exchanges were delays in post trading settlement, frequent clubbing

of settlements, delay in conducting auctions, inadequate monitoring of payment of

margins by brokers, non-adherence to Capital Adequacy Norms etc. It was observed
during the inspections conducted in 1997-98 that there has been considerable
improvement in most of the areas, especially in trading, settlement, collection of
margins etc.

New Stock Exchanges

In December 1996, the SEBI had taken a policy decision, in public and trade interest,
that grant of recognition to new stock exchanges would be considered subject to
fulfillment of the following conditions:

 The exchange would begin trading only after introduction of On-Line Screen
Based Trading
 The exchange makes rules, regulations and bye-Laws with adequate
provisions for investor protection, with the approval of the SEBI and thereafter
strictly follows them
 The exchange establishes a Clearing House within 6 months from the date of
recognition

The SEBI received several applications for recognition of new stock exchanges. As
on April 01, 1997, the number of such pending applications/representations for new
stock exchanges was 6. During the current year 1997-98, 4 new applications were
received. Out of a total of 10 applications/representations, 3 were closed and 2 were
granted ‘in-principle recognition’ during the year 1997-98. As on March 31, 1998,

only 5 applications were pending which are under consideration of the SEBI.

The Inter-Connected Stock Exchange of India Limited (ISE)

The Inter-Connected Stock Exchange of India Limited (ISE) is being promoted by 14

regional stock exchanges to set up a new national level stock exchange. The ISE will
set up an Inter-Connected Market System (ICMS) which would provide a national
market in addition to the trading facility at the regional stock exchanges. The
proposed stock exchange has a broader objective of protecting the regional stock
exchanges as the consolidation of the market would increase the order flow to the
regional stock exchanges and help in their survival and also benefit the investors by
offering them a national reach with greater liquidity. The fourteen stock exchanges
participating in the Inter-Connected Stock Exchange of India are:

1. Bangalore Stock Exchange

2. Bhubaneshwar Stock Exchange
3. Cochin Stock Exchange
4. Coimbatore Stock Exchange
5. Guwahati Stock Exchange
6. Hyderabad Stock Exchange
7. Jaipur Stock Exchange
8. Ludhiana Stock Exchange
9. Madhya Pradesh Stock Exchange
10. Magadh Stock Exchange
11. Mangalore Stock Exchange
12. Saurashtra Kutch Stock Exchange
13. Uttar Pradesh Stock Exchange
14. Vadodara Stock Exchange

SEBI Guidelines means Securities and Exchange Board of India (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021 or as amended from time to
time. SEBI Guidelines means the rules and regulation by the Securities and Exchange
Board of India, as applicable to the Company from time to time.

In 1988, SEBI was founded as a non-statutory organization with the responsibility of

monitoring stock market activity. The SEBI Act of 1922 made SEBI a statutory body
with independent jurisdiction. The Act gave SEBI the power to oversee and actively

enforce regulations governing the capital markets.

The SEBI Act 1992 covers the following areas:

 Composition and actions of the SEBI Board members

 Powers and Functions of the Board
 Fund sources of SEBI, as in grants made available by the Union Government
 Rules on Penalties and legal pathways
 Defines the judicial authority of SEBI
 The extent of powers of the Union Government to supersede SEBI

SEBI also has to adhere to a list of SEBI guidelines, pertaining to areas such as:

 Employee Stock Option schemes

 Disclosure and Investor Protection norms
 Legal Proceedings
 Anti-money laundering norms
 Listing and delisting of securities
 Opening of trading terminals overseas

The most valuable regulations promoted by SEBI are:

Regulations on the Issue of Capital and Disclosure Requirements 2009

These regulations helped with the issues related to capital and disclosure by
improving the trading in securities of the listed companies and investors in India.

Regulations on Sustainable Acquisition of Shares and Takeovers, 2011

These regulations of SEBI were established to solve difficulties related to the legal
and fair acquisition of shares and takeovers.

Regulations on Prohibition of Insider Training, 2015

These regulations introduced new provisions for prohibiting the insider training of
securities and tries to protect the laws for lawful and fair trading in India.

The Equity Listing Agreement

These provisions were a reminder of the clauses which mainly dealt with the
mandatory compliances to be made between the stock exchange of India and the listed
companies.
1.3 Functions Of SEBI

SEBI basically protects the interest of the investors in the security market, promotes
the development of the security market and regulates the business. The functions of
the Security and Exchange Board of India can primarily be categorized into three
parts:

Protective Function

These functions are performed by SEBI to protect the interest of investor and provide
safety of the investment Protective functions are used to protect the interest of
investors and other financial participants. These functions are:

Checks Price Rigging:-

 Price rigging refers to manipulating the prices of securities with the main
objective of inflating or depressing the market price of securities. SEBI
prohibits such practice because this can defraud and cheat the investors.
The malpractices which create unreasonable fluctuations in the price of the
securities with the help of increasing or decreasing the market price of
stocks which results in an immense loss for the investors or traders are
known as price rigging. To prevent price rigging, SEBI keeps active
surveillance on the factors which can promote price rigging.

Prohibits Insider trading:

 Insider is any person connected with the company such as directors,

promoters etc. These insiders have sensitive information which affects the
prices of the securities. This information is not available to people at large
but the insiders get this privileged information by working inside the
company and if they use this information to make a profit, then it is known
as insider trading, e.g., the directors of a company may know that company
will issue Bonus shares to its shareholders at the end of the year and they
purchase shares from market to make a profit with bonus issue. This is
 known as insider trading. SEBI keeps a strict check when insiders are
buying securities of the company and takes strict action on insider trading.
When the people working in the market like director, promoters or
employees working in the company starts to buy or sell the securities
because they have access to the confidential price which results in affecting
the price of the security is known as insider trading. SEBI restricted
companies to buy their own shares from the secondary market and also
regulates regular check-ups to prevent insider trading and avoid
malpractices.

 SEBI prohibits fraudulent and Unfair Trade Practices:

 SEBI does not allow the companies to make misleading statements which
are likely to induce the sale or purchase of securities by any other person.
SEBI established rules and regulations and a certain code of conduct in the
securities market to restrict fraudulent and unfair trade practices.

 SEBI undertakes steps to educate investors so that they are able

to evaluate the securities of various companies and select the
most profitable securities.
 Providing awareness/financial education for investors: SEBI conducts
seminars both online and offline to educate the investors about insights into
the financial market and money management.

SEBI promotes fair practices and code of conduct in security market by

taking following steps:

 SEBI has issued guidelines to protect the interest of debenture-holders wherein

companies cannot change terms in a midterm.
 SEBI is empowered to investigate cases of insider trading and has provisions
for stiff fine and imprisonment.
 SEBI has stopped the practice of making a preferential allotment of shares
unrelated to market prices.
Regulatory Functions

Regulatory functions are generally used to check the functioning of the financial
business in the market. They establish rules to regulate the financial intermediaries
and corporates for the efficiency of the market. These functions are:

 SEBI has framed rules and regulations and a code of conduct to regulate the
intermediaries such as merchant bankers, brokers, underwriters, etc.

 These intermediaries have been brought under the regulatory purview and
private placement has been made more restrictive.

 SEBI registers and regulates the working of stock brokers, sub- brokers, share
transfer agents, trustees, merchant bankers and all those who are associated
with stock exchange in any manner.

 SEBI registers and regulates the working of mutual funds etc.

 SEBI regulates takeover of the companies.

 SEBI conducts inquiries and audit of stock exchanges.

 SEBI designed guidelines and code of conduct for efficient working of

financial intermediaries and corporate.

 Established ruled for taking over a company.

 Conducts regular inquiries and audits of stock exchanges.

 Regulated the process of Mutual Funds.

  Registration of brokers, sub-brokers and merchant-bankers is controlled by
SEBI.

 Levying of fees is regulated by SEBI.

 Restrictions on private placement.

Development Functions

The development functions are the steps taken by SEBI to improve the security of the
market through technology. The functions are:

SEBI promotes training of intermediaries of the securities market.

SEBI tries to promote activities of stock exchange by adopting a flexible and

adaptable approach in following way:-

SEBI has permitted internet trading through registered stock brokers.

SEBI has made underwriting optional to reduce the cost of issue.

The even initial public offer of primary market is permitted through the stock
exchange.

By providing training sessions to the intermediaries of the market.

By promoting fair trading and restrictions on malpractices of any kind.

By introducing the DEMAT format.

By promoting self-regulating organizations.

By introducing online trading through registered stock brokers.

By providing discount brokerage.

1.4 Features Of SEBI

SEBI is an organization that is responsible for maintaining an environment that is free
from malpractices to restore the confidence of the general public who invest their
hard-earned money in the market. SEBI controls the bylaws of every stock exchange
in the country. SEBI keeps an eye on all the books of accounts related to the stock
exchange and financial intermediaries to check their irregularities. The features of the
Security and Exchange Board of India are given below:

Quasi-Judicial

SEBI is allowed to conduct hearings and can pass judgments on unethical cases and
fraudulent trade practices. This feature of SEBI helps to protect transparency,
accountability, reliability, and fairness in the capital market.

Quasi-Legislative

SEBI is allowed to draft legislatures with respect to the capital market. SEBI drafts
rules and regulations to protect the interests of the investors. For eg: SEBI LODR or
Listing Obligation and Disclosure Requirements. This helps in consolidating and
streamlining the provisions of existing listing agreements for several segments of the
financial market like equity shares. This helps in protecting the market from
malpractices and fraudulent trading activities happening at the bay.

Quasi-Executive

SEBI covers the implementation of the legislation. They are allowed to file a
complaint against any person who violates their rules and regulations. They also have
the power to inspect all the books and records to check for wrongdoings.
1.5 Features And Regulations Of The Act

SEBI is an organization that is responsible for maintaining an environment that is free

from malpractices to restore the confidence of the general public who invest their
hard-earned money in the market. SEBI controls the bylaws of every stock exchange
in the country. SEBI keeps an eye on all the books of accounts related to the stock
exchange and financial intermediaries to check their irregularities. SEBI Act defines
and gives powers to the body. The SEBI Act is divided into seven chapters that
provide the rules and regulations associated with the capital market.

 The First Chapter is an introductory or preliminary chapter of the Act

which provides the title, extent, and definitions of the terms used in the
Act.

 The Second Chapter is the establishment of the Securities and Exchange

Board of India. This chapter deals with management, employees, meetings,
and the office of the board. This provides the necessary details of the board
established by this Act.

 The Third Chapter is the transfer of assets, liabilities, etc. of the existing
Security and Exchange Board to the Board, which means it declares the
provisions to be used to transfer the assets in the case of the formation of a
new board.

 The Fourth Chapter is the powers and functions of the Board. This chapter
helps in mentioning the powers and functions of the board which are given
by the Act. The Board is bound to follow the instructions given by the act
and is not allowed to exploit their powers.

 The Fifth Chapter is the Registration Certificate. It deals with the

documentation involved in the registration of the stockbrokers, sub-
brokers, and share transfer agents, etc.
  The Sixth Chapter is finance, accounts, and audits. This chapter controls all
the grants given by the Central Government, funds and accounts, to ensure
the productivity of the board as well as the capital market.

 The Seventh Chapter miscellaneous, which discusses other topics that are
relevant to the board and the market. To help the board from avoiding
mistakes.

The laws and regulations of the Security and Exchange Board of India are very
important and must be followed seriously by the people who are entitled or registered
with the stock exchange and capital market of India. The SEBI Act, 1992 is the
supreme power of the securities market of India and has the authority to make laws
and regulations. And these rules and regulations are applied to all the listed
companies, their board of directors, key managerial personnel of such companies,
investors, and all the other companies who are associated with the security market
sector.

1.6 Scope Of Act

The Preamble of the SEBI Act, 1992 provides that SEBI came into force to cover two
objectives:

 To protect the interests of investors in Securities.

 To promote the development and regulations of the securities market.

All the provisions and regulations are made to achieve their goal of improving the
market and to reach their goal. SEBI acts like a mini-state as it works includes
executive, judiciary and legislature. Section 11 of the SEBI Act allows the board to
work on its objective.

SEBI Controls:

 The regulations of the stock exchange and capital market.

 Prohibition of fraudulent and unfair trade.

  Improving education and training of intermediaries of the securities
market.

 Promoting investors and registering intermediaries.

 Regulating substantial acquisition of shares and takeovers of companies.

 Calling for information and records.

 Conducting inquiries of audits and stock exchanges.

SEBI is India’s capital market regulator and is trying to benefit the investors by:

 Increasing the trading volumes

 Syncing with the Global Markets

 Hedging
SEBI helped the market participants by consolidating their settlement functions at a
single clearing meeting and by reducing the effective trading cost for investors. The
board improved the market by allowing the contributions of the foreign participants
through certain background checks before entering the Indian Market.

The functions of SEBI as per the Act include:

 To promote and regulate orderly development of capital markets, to protect

investors in securities and to provide services and facilities for such
protection.

 To ensure fair dealing in securities and to prevent fraudulent activities and

insider trading.

 To develop efficient, reliable and transparent stock exchange mechanism

for clearance and settlement of securities transactions.
  To promote and to regulate the market for derivative products like,
securities futures contracts, options and swaps including collective
investment schemes such as mutual funds, depositories etc.

 To develop self-regulatory organizations in order to check fraudulent

activities in securities markets.

1.7 Purpose and Role of SEBI

SEBI helps in creating a healthy environment to facilitate an effective mobilization

between the market participants and investors. It helps in locating the resources with
the help of the securities market. SEBI establish rules and regulations, policy
framework and infrastructure to meet the needs of the market.

The SEBI is the regulatory authority established under Section 3 of SEBI Act 1992 to
protect the interests of the investors in securities and to promote the development of,
and to regulate, the securities market and for matters connected therewith and
incidental thereto.

The financial market majorly comprises of three group:

The Issuer of Securities

Issuers are the group that works in the corporate department to easily raise funds from
the various sources of the market. So, SEBI helps the issuers by providing them a
healthy and open environment to work efficiently.

Investors

The investors are the soul of the market as they keep the market alive by providing
accurate supplies, correct information, and protection to the people on a daily basis.
SEBI helps investors by creating a malpractice free environment to attract and protect
the money of the people who invested in the market.
Financial Intermediaries

The intermediaries are the people who act as middlemen between the issuers and the
investors. SEBI helps in creating a competitive professional market which gives a
better service to the issuers and the investors. They also provide efficient
infrastructure and secured financial transactions.

1.8 Organizational Structure Of SEBI

The members of the Security and Exchange Board of India are:

 The Chairman who is appointed by the Union Government of India.

 Two members who are selected from the officers of the Union Finance
Ministry.

 One member who is appointed from the Reserve Bank of India.

 The other five members are appointed by the Union Government of India,
out of five three must be whole-time members.

Dr. S.A. Dave was the first Chairman of SEBI who was appointed on 10th April
1988. Madhabi Puri Buch is the present Chairman appointed on 1 st March 2022,
replacing Ajay Tyagi, whose term ended on 28th February 2022. Madhabi Puri Buch is
the first woman chairperson of SEBI.

List Of Chairmen in SEBI On Date

 NAME FROM TO
Madhabi Puri 1st March 2022 Present
Buch
Ajay Tyagi 10th February 2017 28th February 2022
U K Sinha 18th February 2011 10th February 2017
C.B.Bhave 18th February 2008 18th February 2011
D. Damodaran 18th February 2005 18th February 2008
G.N.Bajpai 20th February 2002 18th February 2005

D.R.Mehta 21st February 1995 20th February 2002

S.S.Nadkarni 17th January 1994 31st January 1995
G.V.Ramkrishnan 24th August 1990 17th January 1994
Dr. S.A Dave 12th April 1988 23rd August 1990

1.9 Establishment Of SEBI

The Securities and Exchange Board Of India (SEBI) was established in 1988. It got a
legal status in 1992. SEBI was primarily set up to regulate the activities of the
merchant banks, to control the operations of mutual funds, to work as a promoter of
the stock exchange activities and to act as a regulatory authority of new issue
activities of companies. The SEBI was set up with a fundamental objective, to protect
the interest of investors in securities market and for matters connected therewith or
incidental thereto.

With the announcement of their forms package in 1991, the volume of business in
both the primary and secondary segment of the capital market has been increased
enormously till now. A multicore securities scam rocked the Indian Financial System
in 1992 (Harshad Mehta Scam). Then existing regulatory framework was found to be
fragmented and inadequate and hence, a need for an autonomous, statutory, and
integrated organization to ensure the smooth functioning of capital market was felt To
fulfill this need, the Securities and Exchange Board of India (S.E.B.I), which was
already inexistence since April 1988, was conferred statutory powers to regulate the
capital market.

The SEBI got legal teeth through an ordinance issued on 30th January 1992. The
ordinance conferred wide ranging powers on the SEBI, including the authority to
prohibit insider training and regulate substantial acquisition of shares and takeover of
businesses. The function of market development includes containing risk; board
basing, maintaining market integrity and promoting long-term investment. The SEBI
Act, 1992 which establishes the SEBI with four-fold objectives of protection of the
interest of investors insecurities, development of the securities market, regulation of
the securities market and matters connected there with and incidental thereto.

The Securities and Exchange Board of India (SEBI) regulate the capital market i.e…,
the market for equity and debt securities. The SEBI has full autonomy and authority
to regulate and develop the capital market. The government has framed rules under
the securities contracts (regulation) Act (SCRA), the SEBI Act and the Depositories
Act.

The SEBI has framed regulations under the SEBI Act and the Depositories Act for
registration and regulation of all market intermediaries, for prevention of unfair trade
practices, and insider trading. As everyone could know that these i.e. the Government
and the SEBI issue notifications, guidelines and circulars which need to be complied
with by market participants. All the rules and regulations are administered by the
SEBI.

1.10 Reasons for the Establishment of SEBI

During the fall of the 1970s and the rise of the 1980s, the people of India were
preferring to work in the Capital Market as the market was trending. Without any
authority, problems like unofficial private placements, the rigging of prices, unofficial
self-styled merchant bankers started violating the rules and regulations of the stock
exchange which caused delays in the delivery of shares.

The Government felt an immediate need to establish a regulatory body to regulate its
working and to find solutions for all the problems the market was going through, as
the people were losing interest in the market. This led to the establishment of the
Security and Exchange Board of India.

ESTABLISHMENT OF THE SECURITIES & EXCHANGE BOARD

OF INDIA (SEBI)

 Establishment & incorporation of Board

 Management of the Board
 Collective Investment Scheme.
 Power to issue directions.
 Investigation.
 Cease and desist proceedings.
 Registration certificate
 Prohibition of manipulative and deceptive devices, inside
 trading and substantial acquisition of securities or control.
 Prohibition of manipulative and deceptive devices, insider trading and
substantial acquisition of securities or control

1.11 Establishment and incorporation of Board

 With effect from such date as the Central Government may, by notification,
appoint, there shall be established, for the purposes of this Act, a Board by the
name of the Securities and Exchange Board of India.

 The Board shall be body corporate by name aforesaid, having perpetual

succession & common seal, with power subject to provisions of this Act, to
acquire, hold & dispose of property, both movable & immovable, and to
contract, and shall, by the said name, sue or is used

 The head office of the Board shall be at Bombay.

 The Board may establish offices at other places in India.

 1.12 Management of the Board

 The Board shall consist of the following members namely:-

 A Chairman

 Two members from amongst the officials of the (Ministry) of the

Central Government dealing with Finance and administration of
the Companies Act, 1956.

 One member from amongst the officials of the Reserve Bank.

 Five other members of whom at least three shall be the whole-time members
to be appointed by the Central Government.

 The general superintendence, direction and management of the affairs of the

Board shall vest in a Board of members, which may exercise all powers and
do all acts and things which may be exercised or done by the Board.

 Save as otherwise determined by regulations, the Chairman shall also have

powers of general superintendence and direction of the affairs of the Board
and may also exercise all powers and do all acts and things which may be
exercised or done by that Board.

 The Chairman and members referred to in clauses (a) and (d) of sub-section
(1) shall be appointed by the Central Government and the members referred to
in clauses (b) and (c) of that sub- section shall be nominated by the Central
Government and the Reserve Bank] respectively.

 The Chairman and the other members referred to in clauses (a) and (d) of sub-
section (1) shall be persons of ability, integrity and standing who have shown
capacity in dealing with problems relating to securities market or have special
knowledge or experience of law, finance, economics, administration or in any
 other discipline which, in the opinion of the Central Government, shall be
useful to the Board.

Power to issue directions

 In the interest of investors, or orderly development of securities market.

 To prevent the affairs of any intermediary or other persons referred to in
section 12 being conducted in a manner detrimental to the interest of investors
or securities market.
 To secure the proper management of any such intermediary or person, it may
issue such directions.
 Referred to in section 12, or associated with the securities market.
 Any company in respect of matters specified in section 11A, as may be
appropriate in the interests of investors in securities and the securities market.

Investigation

Where the Board has reasonable ground to believe that –

o The transactions in securities are being dealt with in a manner detrimental to

the investors or the securities market.

Any intermediary or any person associated with the securities market has
violated any of the provisions of this Act or the rules or the regulations made
or directions issued by the Board thereunder It may, at any time by order in
writing, direct any person (hereafter in this section referred to as the
Investigating Authority) specified in the order to investigate the affairs of such
intermediary or persons associated with the securities market and to report
thereon to the Board.

o Without prejudice to the provisions of sections 235 to 241 of the Companies

Act, 1956. it shall be the duty of every manager, managing director, officer
and other employee of the company and every intermediary referred to in
section 12 or every person associated with the securities market to preserve
 and to produce to the Investigating Authority or any person authorised by it in
this behalf, all the books, registers, other documents and record of, or relating
to, the company or, as the case may be, of or relating to, the intermediary or
such person, which are in their custody or power.
o The Investigating Authority may require any intermediary or any person
associated with securities market in any manner to furnish such information to,
or produce such books, or registers, or other documents, or record before it or
any person authorized by it in this behalf as it may consider necessary if the
furnishing of such information or the production of such books, or registers, or
other documents, or record is relevant or necessary for the purposes of its
investigation.
o The Investigating Authority may keep in its custody any books, registers,
other documents and record produced under sub-section (2) or sub-section (3)
for six months and thereafter shall return the same to any intermediary or any
person associated with securities market by whom or on whose behalf the
books, registers, other documents and record are produced:
o Provided that the Investigating Authority may call for any books, register,
other document and record if they are needed again.
o Provided further that if the person on whose behalf the books, registers, other
documents and record are produced requires certified copies of the books,
registers, other documents and record produced before the Investigating
Authority, it shall give certified copies of such books, registers, other
documents and record to such person or on whose behalf the books, registers,
other documents and record were produced.
o Any person, directed to make an investigation under sub-section (1) may
examine on oath, any manager, managing director, officer and other employee
of any intermediary or any person associated with securities market in any
manner, in relation to the affairs of his business and may administer an oath
accordingly and for that purpose may require any of those persons to appear
before it personally.
 o Notes of any examination under sub-section (5) shall be taken down in writing
and shall be read over to, or by, and signed by, the person examined, and may
thereafter be used in evidence against him.

If any person fails without reasonable cause or refuses –

 To produce to the Investigating Authority or any person authorised by it in this

behalf any book, register, other document and record which it is his duty under
sub-section (2) or sub-section (3) to produce.
 To furnish any information which is his duty under sub-section (3) to furnish.
 To appear before the Investigating Authority personally when required to do
so under sub-section (5) or to answer any question which is put to him by the
Investigating Authority in pursuance of that sub-section.
 To sign the notes of any examination referred to in sub-section (7).
 Where in the course of investigation, the Investigating Authority has
reasonable ground to believe that the books, registers, other documents and
record of, or relating to, any intermediary or any person associated with
securities market in any manner, may be destroyed, mutilated, altered, falsified
or secreted, the Investigating Authority may make an application to the
Judicial Magistrate of the first class having jurisdiction for an order for the
seizure of such books, registers, other documents and record.
 After considering the application and hearing the Investigating Authority, if
necessary, the Magistrate may, by order, authorize the Investigating Authority-
 To enter, with such assistance, as may be required, the place or places where
such books, registers, other documents and record are kept.
 To search that place or those places in the manner specified in the order.
 To seize books, registers, other documents and record, it considers necessary
for the purposes of the investigation
 The Investigating Authority shall keep in its custody the books, registers, other
documents and record seized under this section for such period not later than
the conclusion of the investigation as it considers necessary and thereafter
shall return the same to the company or the other body corporate, or, as the
case may be, to the managing director or the manager or any other person,
from whose custody or power they were seized and inform the Magistrate of
 such return Provided that the Investigating Authority may, before returning
such books, registers, other documents and record as aforesaid, place
identification marks on them or any part thereof

 Save as otherwise provided in this section, every search or seizure made under
this section shall be carried out in accordance with the provisions of the Code
of Criminal Procedure, 1973(2 of 1974), relating to searches or seizures made
under that Code.

Cease and desist proceedings

If the Board finds, after causing an inquiry to be made, that any person has violated,
or is likely to violate, any provisions of this Act, or any rules or regulations made
thereunder, it may pass an order requiring such person to cease and desist from
committing or causing such violation:

Provided that the Board shall not pass such order in respect of any listed public
company or a public company (other than the intermediaries specified under section
12) which intends to get its securities listed on any recognized stock exchange unless
the Board has reasonable grounds to believe that such company has indulged in
insider trading or market manipulation.

1.13 REGISTRATION CERTIFICATE

Registration of stock brokers, sub-brokers, share transfer agents, etc.

No stock-broker, sub- broker, share transfer agent, banker to an issue, trustee of

trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager,
investment adviser and such other intermediary who may be associated with securities
market shall buy, sell or deal in securities except under, and in accordance with, the
conditions of a certificate of registration obtained from the Board in accordance with
the [regulations] made under this Act:

Provided that a person buying or selling securities or otherwise dealing with the
securities market as a stock- broker, sub-broker, share transfer agent, banker to an
issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter,
portfolio manager, investment adviser and such other intermediary who may be
associated with securities market immediately before the establishment of the Board
for which no registration certificate was necessary prior to such establishment, may
continue to do so for a period of three months from such establishment or, if he has
made an application for such registration within the said period of three months, till
the disposal of such application.

No depository, [ participant,] custodian of securities, foreign institutional investor,

credit rating agency or any other intermediary associated with the securities market as
the Board may by notification in this behalf specify, shall buy or sell or deal in
securities except under and in accordance with the conditions of a certificate of
registration obtained from the Board in accordance with the regulations made under
this Act

Provided that a person buying or selling securities or otherwise dealing with the
securities market as a depository, custodian of securities, foreign institutional investor
or credit rating agency immediately before the commencement of the Securities Laws
(Amendment) Act, 1995, for which no certificate of registration was required prior to
such commencement, may continue to buy or sell securities or otherwise deal with the
securities market until such time regulations are made under clause (d) of sub-section
(2) of section 30

No person shall sponsor or cause to be sponsored or carry on or cause to be carried

on any venture capital funds or collective investment schemes including mutual funds,
unless he obtains a certificate of registration from the Board in accordance with the
regulations:

 Every application for registration shall be in such manner and on payment of

such fees as may be determined by regulations.

 The Board may, by order, suspend or cancel a certificate of registration in

such manner as may be determined by regulations.

Prohibition of manipulative and deceptive devices, insider trading & substantial

acquisition of securities or control.

 Use or employ, in connection with the issue, purchase or sale of any securities
listed or proposed to be listed on a recognized stock exchange, any
 manipulative or deceptive device or contrivance in contravention of the
provisions of this Act or the rules or the regulations made thereunder.

 Employ any device, scheme or artifice to defraud in connection with issue or

dealing in securities which are listed or proposed to be listed on a recognized
stock exchange.
 Engage in any act, practice, course of business which operates or would
operate as fraud or deceit upon any person, in connection with the issue,
dealing in securities which are listed or proposed to be listed on a recognized
stock exchange, in contravention of the provisions of this Act or the rules or
the regulations made thereunder.
 Engage in insider trading.
 Deal in securities while in possession of material or non-public information or
communicate such material or non-public information to any other person, in a
manner which is in contravention of the provisions of this Act or the rules or
the regulations made thereunder
 Acquire control of any company or securities more than the percentage of
equity share capital of a company whose securities are listed or proposed to be
listed on a recognized stock exchange in contravention of the regulations made
under this Act.
1.14 Powers of SEBI

When it comes to stock exchanges, SEBI has the power to regulate and approve any
laws related to functions in the stock exchanges.

It has the powers to access the books of records and accounts for all the stock
exchanges and it can arrange for periodical checks and returns into the workings of
the stock exchanges.

It can also conduct hearings and pass judgments if there are any malpractices detected
on the stock exchanges.

When it comes to the treatment of companies, it has the power to get companies listed
and de-listed from any stock exchange in the country.

It has the power to completely regulate all aspects of insider trading and announce
penalties and expulsions if a company is caught doing something unethical.

It can also make companies list their shares in more than one stock exchange if they
see that it will be beneficial to investors.

Powers relating to stock exchanges and intermediaries :-

SEBI has wide powers regarding the stock exchanges and intermediaries dealing in
securities. It can ask information from the stock exchanges and intermediaries
regarding their business transactions for inspection or scrutiny and other purpose.

Power to impose monetary penalties :-

SEBI has been empowered to impose monetary penalties on capital market
intermediaries and other participants for a range of violations. It can even impose
suspension of their registration for a short period.

Power to initiate actions in functions assigned :-

SEBI has a power to initiate actions in regard to functions assigned. For example, it
can issue guidelines to different intermediaries or can introduce specific rules for the
protection of interests of investors.

Power to regulate insider trading:-

SEBI has power to regulate insider trading or can regulate the functions of merchant
bankers.

Powers under Securities Contracts Act:-

For effective regulation of stock exchange, the Ministry of Finance issued a

Notification on 13 September, 1994 delegating several of its powers under the
Securities Contracts (Regulations) Act to SEBI. SEBI is also empowered by the
Finance Ministry to nominate three members on the Governing Body of every stock
exchange.

Owner to regulate business of stock exchanges:-

SEBI is also empowered to regulate the business of stock exchanges, intermediaries

associated with the securities market as well as mutual funds, fraudulent and unfair
trade practices relating to securities and regulation of acquisition of shares and
takeovers of companies.

Power of search and seizure:

Under Section 10 SEBI is empowered to search any premises or place where it
believes that any books of accounts, documents, vouchers, computer disc or storage
devices used in connection with securities market is kept and seize them if necessary.
Section 11 of the Act gives it power to issue search warrants for any place or premises
occupied by a person reasonably suspected of having committed an offence
punishable under the Act, etc.

Power of arrest is another power of SEBI :

Under Section 12 any officer of SEBI or any other police officer not lower in rank
than that of an Assistant Superintendent of Police, may arrest without warrant any
person who has committed an offence punishable under the Act

Power for service or attachment:

Under section 14 SEBI or any officer authorized by it in this behalf can serve a copy
of order made by it on the concerned person through its officers and also attach their
property pending disposal of any proceedings under the Act.

Appointment of officials, etc.:

In terms of Section 19, SEBI may appoint its officers, employees and others as
deemed necessary for the discharge of functions under the Act. It can also co-opt any
officer of Government or Law enforcement agency as an officer of SEBI.

Power to make regulations:

The Board may, with the previous approval of Central Government, by notification in
Official Gazette, make rules consistent with the Act for carrying out the purposes of
the Act. These rules are called ‘Securities and Exchange Board of India (Futures
Trading) Regulations, 2004’.

Granting sanctions is a power of SEBI :

Under Section 21 SEBI may grant sanction to commence any proceedings before
Appellate Tribunal or it even by itself -for sanctioning prosecution under the Act. It
keeps a comprehensive record of all proceedings before it.

Recovery of dues:

Under Section 28 the Board has been given the power to recover from any person any
sum which he is liable to pay under this Act and any other sum payable by him under
this Act or rules made thereunder. The Board may file a suit for recovery in a Civil
Court. The Civil Court will not have Jurisdiction to entertain any suit instituted for
recovery of money due to SEBI, without the previous sanction of SEBI.

Power of Central Government:

Under Section 30(1) the Board has been given powers and functions as are
exercisable by a civil court under the Code of Civil Procedure, 1908 (5 of 1908) in
respect of the following matters, namely:
 (a) Summoning and enforcing the attendance of any person
(b) requiring discovery and production of any document;
(c) receiving evidence on affidavits;

Section 30 (2-A) provides for attachment proceedings under the Code. Under Section
30 (3) the Board has been empowered to issue a search warrant and if it considers it
necessary so, for compelling the attendance of any person.

Advantages And Disadvantages Of SEBI

In 1988, the Securities and Exchange Board of India (SEBI) was established to
regulate the securities market's activities. It encourages the stock market to develop in
an orderly and healthy manner. However, SEBI did not previously have total authority
over stock market transactions. It was merely left as a watchdog to keep an eye on
things but was powerless to control or regulate them. Because of this, SEBI received
legal character in May 1992 and is now a body corporate with a distinct legal
existence and perpetual succession.

As the volume of stock market transactions increased, so did the number of stock
market frauds, including price rigging, share delivery delays, and violations of stock
exchange laws and regulations. The existence of these unethical actions caused
customers to lose trust and confidence in the stock market. As a result, the Indian
government decided to create SEBI, a regulating body or agency.

1.15 Advantages of SEBI:

1. Short-term likelihood of increased returns

2. Purchased stock in the listed company and became a
shareholder
3. Unparalleled liquidity
4. A regulatory agency that protects the interests of the public
1. Short-term likelihood of increased returns
Compared to other investment options like PPF and fixed deposits,
investing in the stock market has the potential to produce higher inflation-
beating returns in a shorter amount of time. By sticking to the
fundamentals of the stock market, such as planning the trade and
 conducting due diligence, people can significantly increase their chances
of securing superior returns.
2. Purchased stock in the listed company and became a shareholder
Regardless of how few shares you purchase, you gain proportionate power
over the company's stakes the instant you do.
3. Unparalleled liquidity
Stock investing offers a level of liquidity that is practically unmatched
compared to other investment strategies. Of course, investors can quickly
determine whether to buy or sell a security. People can always sell their
shares and get access to the cash if they need a quick flush of liquidity.
4. A regulatory agency that protects the interests of the public
India's Securities and Exchange Board controls and oversees the stock
market. The responsibility of SEBI is to oversee all developments and
protect the interests of all parties. Again, this goes a long way toward
protecting their interests in the face of any fraudulent behaviour or
business, for that matter.
Some other advantages of SEBI are as follows:
 Promotes healthy and orderly growth of securities market and protects
investors.
 Helps in maintaining steady flow of savings into capital market
 Helps in regulating security market and ensures fair practice by issuers to help
them raise resources at minimum cost.
 Promotes efficient services by brokers, merchant bankers and other
intermediaries to make them professional and competitive.
 Helps and contributes in promoting investor education, training of
intermediaries and it conducts research and provide information to market
participants.
 SEBI operated to develop the capital market.

1.16 Disadvantages of SEBI

1. Volatility risks are rising

 2. The profit margins can be eroded by the brokerage
1. Volatility risks are rising
Investment in equities entails its risks because of how volatile and
dynamic markets are. Within a single day, share prices frequently
experience peaks and troughs. Although the odds of a major failure are
few, it can take years for the market to recover from the worst effects
of a crisis. These swings are frequently unpredictable and can, as a
result, put assets at risk.
2. The profit margins can be eroded by the brokerage
An investor must pay the broker a set percentage of the purchase price
or sale price of each share they choose to buy or sell. Profitability
could thus be put in danger.
Some other disadvantages of SEBI are as follows:
 No dent on price manipulation.
 Poor rate of conviction and very few cases of exemplary penal action.
 No due process for framing/changing regulations.
 Waking up to trouble spots too late in the day
 Turning a blind eye in bullish market.
 Implementation of existing disclosure norms inadequate.
 Regulatory bias towards corporate sector and large investors.
 Indications of extraneous pressures, including government.
 No disclosure norms for mergers, demergers, asset sell-offs, inter-corporate
transactions.

1.17 MISSION OF SEBI

Securities & Exchange Board of India (SEBI) formed under the

SEBI Act, 1992 with the prime objective of

1. Protecting the interests of investors in securities.

2. Promoting the development.
3. Regulating the securities market and for matters connected there with
or incidental there to. Focus being the greater investor protection, SEBI
has become a vigilant watchdog.
1.18 PREAMBLE

The Indian securities market has a history of nearly 150 years. However, the modern
era in the Indian securities market and its transformation began with the economic
reforms in the early 1990s when the government initiated a systemic shift to a more
open economy with greater reliance on market forces in which the private sector
began to play an important role. The Indian securities market gained greater
importance and the SEBI Act, 1992 established the Securities and Exchange Board of
India (SEBI) as a statutory authority to oversee the securities market in India. SEBI is
mandated with three principal objectives:

1. To protect the interests of investors in securities

2. To promote the development of the securities market.
3. To regulate the securities market.

In response to the growing securities market in India, SEBI as a regulator has been
making continuous efforts to meet the changing requirements and fulfil the mandated
objectives. Due to consistent efforts, today, SEBI has evolved standards of
transparency and accountability. It follows a consultative approach while framing
regulations and adheres to the principles of natural justice in all its enforcement
actions. Among others, some of the important measures taken by SEBI include:

1. Preparation and notification of various regulations for intermediaries from

time to time.
2. Review and amendment of these Rules and Regulations to adapt to the
dynamic Indian market environment from time to time.
3. Enforcement actions against market manipulators and non -compliant market
intermediaries.
4. Upgrading technological capacity and expertise as per the need of the
respective departments to adapt to the changing securities market landscape
such as creation of data warehouse to enhance capability and capacity for
effective regulatory oversight.
5. Developing infrastructural facilities and planning for manpower.
6. Enhance knowledge base for employees by way of providing appropriate
training, conducting monthly and weekly lectures on current issues primarily
related to the securities market.
 7. Organizational restructuring in 2003.

As a part of the continuous efforts by SEBI, recently a decision has been taken by
SEBI to widen its reach by opening Regional Offices and Local Offices at the State
Capitals. To begin with, SEBI is planning to open Local Offices in 3 cities namely,
Guwahati, Hyderabad and Lucknow.

In addition to the above, SEBI has set up an International Advisory Board to assess
the trends in global markets and to guide the activities towards meeting the emerging

challenges and organizing a Brain Storming Program to develop medium and long
term roadmap for SEBI.

In this context, SEBI has decided to revisit its organizational capabilities to meet the
needs of the dynamic market environment and thereby developing a structured
mechanism to plan ahead, implement new measures, evaluate them and continuously
review and update the same.

1.19 ROLE OF SEBI IN REGULATING/DEVELOPMENT OF

STOCK MARKET
It’s a goal to provide and build a market zone in which they can strongly
generate fund operations. SEBI always gives first preference to protect investor’s
wealth in the stock market. The listing companies made into mandatory for
give first preference to protect investor’s wealth in the stock market. The listing
companies made into mandatory for
providing investment information and disclosure of information on a regular
basis for giving more clarity on investment activities. SEBI always protects
investor’s rights and interest through accurate and authentic way by providing
investing information and disclosure of information on a continuous basis for
generating more clarity on stock market activities. For the market
intermediaries on a continuous basis providing training and development regarding
investment activities, and it always offers a competitive, professionalized advantage
and expanding the market operations with an adequate and efficient way so as to
render better service to investors and issuers.

 Regulation of Stock Exchanges:-

 The first objective of SEBI is to regulate stock exchanges so that efficient
services may be provided to all the parties operating there.

 Protection to the Investors:-

The capital market is meaningless in the absence of the investors. Therefore, it
is important to protect the interests of the investors. The protection of the
interests of the investors means protecting them from the wrong information
given by the companies in their prospectus, reducing the risk of delivery and
payment, etc. Hence, the foremost objective of the SEBI is to provide security
to the investors.

 Checking the Insider Trading:-

Insider trading means the buying and selling of securities by those people’s
directors Promoters, etc. who have some secret information about the
company and who wish to take advantage of this secret information.
This hurts the interests of the general investors. It was very essential to check
this tendency. Many steps have been taken to check inside trading through the
medium of the SEBI.

 Control over Brokers:-

It is important to keep an eye on the activities of the brokers and other
middlemen in order to control the capital market. To have a control over them,
it was necessary to establish the SEBI.

 To Require report of Portfolio Management Activities: -

SEBI has also power to require report of portfolio management to check the
capital market performance. Recently, SEBI sent the letter to all Registered
Portfolio Managers of India for demanding report.

 To Control the Merger, Acquisition and Takeover the companies:

Many big companies in India want to create monopoly in capital market. So,
these companies buy all other companies or deal of merging. SEBI sees
 whether this merge or acquisition is for development of business or to harm
capital market.

 Regulates Merchant Banking :-

SEBI has laid down regulations in respect of merchant banking activities in
India. The regulations are in respect of registration, code of conduct to be
followed, and submission of half-yearly results and so on.

 Dematerialisation Of Shares :-
Demat of shares has been introduced in all the shares traded on secondary
stock markets as well as those issued to public in primary markets. Even bonds
and debentures are allowed in demat form.

 Guidelines On Capital Issues :-

SEBI has framed necessary guidelines in connection with capital issues. The
guidelines are applicable to First Public Issue of New Companies, First Public
Issue by Existing Private/ Closely held Companies, Public Issue by Existing
Listed Companies.

 Regulates Working Of Mutual Funds :-

SEBI regulates the working of mutual funds. SEBI has laid down rules and
regulations that are to be followed by mutual funds. SEBI may cancel the
registration of a mutual fund, if it fails to comply with the regulations.

 Monitoring Of Stock Exchanges:-

To improve the working of stock markets, SEBI plays an important role in
monitoring stock exchanges. Every recognized stock exchange has to furnish
to SEBI annually with a report about its activities during the previous year.

 Investors Grievances Redressal :-

SEBI has introduced an automated complaints handling system to deal with
investor complaints. It assist investors who want to make complaints to SEBI
against listed companies.

1.20 CAPITAL MARKET TRADED UNDER GUIDELINES

OF SEBI
The capital market is a market for long–term funds both equity and debt-and
funds raised within and outside of the country.
The primary market refers to the long-term flow of funds from the surplus
sector to the government and corporate sector (through primary issues) and to
banks and non-banks financial intermediaries (through secondary issues). A
primary issue of the corporate sector leads to capital information (creation of
net fixed assets and incremental change in inventories).
The secondary market is a market for outstanding securities.
Unlike primary issues in the primary market which result in capital
information, the secondary market facilitates only liquidity and marketability
of outstanding debt and equity instruments.
Table 1: Types of Capital Market
 Capital Market in India
After the securities are issued in the primary market, they are traded in the secondary
market by the investors. The stock exchanges along with a host of other
intermediaries provide the necessary platform for trading in secondary market and
also for clearing and settlement. The securities are traded, cleared and settled within
the regulatory framework prescribed by the Exchanges and the SEBI. Till recently, it
was mandatory for the companies to list their securities on the regional stock
exchange nearest to their registered office, in order to provide an opportunity to
investors to invest/trade in the securities of local companies.

However, following the withdrawal of this restriction, the companies have an option
to choose from any one of the existing stock exchanges in India to list their securities.
Due to the earlier regulation requiring companies to get listed first at the regional
stock exchange, there are in all 23 exchanges operating today in the country. With the
increased application of information technology, the trading platforms of all the stock
exchanges are accessible from anywhere in the country through their trading
terminals.

Roles and responsibilities of SEBI in Indian capital market

SEBI’s efforts are to create effective surveillance mechanism for the securities
market, and encourage responsible and accountable autonomy on the part of all
players and observe the rules of the game. Throughout its 27year existence as a
statutory body, SEBI has sought to balance the two objectives by constantly
reviewing and reappraising its existing policies and programmes, formulating new
policies and crafting new regulations in areas hitherto unregulated, and implementing
them to ensure growth of the market.

 Dematerialisation has pushed the process further. SEBI has taken several steps
for the smooth-cum-speedy development of both primary and secondary
markets from time to time for the development of all areas.

 Improvements have been made in the clearance and settlement system. A

major step in this direction has been the establishment of depositories- NSDL
and CDSL—and a clearing corporation—NSCCL.

 The SEBI has introduced an array of reforms in the primary and secondary
markets and catalysed modernization of the market infrastructure to prepare
the market for the twenty-first century. Computerised trading has led to
reduction in the scope for price-rigging and manipulation, since a paper trail
can easily lead the regulators now to the doorsteps of the guilty.

 SEBI has many powers for stopping fraud in capital market. It can ban on the
trading of those brokers who are involved in fraudulent and unfair trade
practices relating to stock market. It imposes the penalties on capital market
intermediaries if they involve in insider trading.
  The development of mutual funds was given a major impetus, with the
revision of mutual funds regulations which now provide greater operational
flexibility to the fund managers and increase their accountability and
supervision. Recently, it has introduced KYC norms and not charging on any
entry-load on investments made by investors on NFOs or on any existing
schemes. SEBI is trying its level best for availability of ULIPs at very normal
and cheaper rates.

 SEBI uses his powers to audit the performance of different Indian stock
exchange for bringing transparency in the working of stock exchanges.

Primary Market

The primary market is the part of the capital market that deals with issuing of new
securities. Companies, governments or public sector institutions can obtain funds
through the sale of a new stock or bond issues through primary market. This is
typically done through an investment bank or finance syndicate of securities dealers.

The process of selling new issues to investors is called underwriting. In the case of
a new stock issue, this sale is an initial public offering (IPO). Dealers earn a
commission that is built into the price of the security offering, though it can be found
in the prospectus. Primary markets create long term instruments through which
corporate entities borrow from capital market. Once issued the securities typically
trade on a secondary market such as a stock exchange, bond market or derivatives
exchange. a stock exchange, bond market or derivatives exchange.

SEBI Guidelines for Primary Market

 IPO spending
 Offer for Sale conditions
 Monitoring of funds raised through IPO
 Lock-in period for Anchor investors
 Changes to preferential issues
 Changes to IPO allocation norms
  Other Primary Market and Secondary Market changes

IPO Spending

Companies filing their Draft Red Herring Prospectus (DRHP) for an IPOwill have
more flexibility with capital allocations. SEBI has announced that for companies
aiming for inorganic growth through mergers and acquisitions but have not identified
a target, 25% of the raised amount can be used for the same. Further, a 35% quota has
been granted for general corporate purposes and inorganic growth combined.

On the other hand, if the company has identified its strategic investment opportunity,
no limits will be applied.

Offer for Sale Condition

The majority shareholders, who hold more than 20% of the pre-issue shareholding,
can sell only up to half of their shareholding when going public. If they own below
20%, the limit to sell is set up to 10% shareholding in IPO via OFS (Offer for Sale).

Monitoring of Funds raised through IPO

As part of its primary changes, SEBI has permitted Credit Rating Agencies to monitor
the utilisation of funds raised through IPO. They need to submit the quarterly report to
the audit committee on the fund utilisation. At present, Scheduled Commercial Banks
have this responsibility. The credit rating agencies will also monitor funds raised for
general corporate purposes until the last rupee is used.

Lock-in period for Anchor investors

Starting April 1, 2022, the lock-in period for anchor investors has been extended. The
current 30-day lock-in period will be applicable for 50% of the shares they own. The
remaining 50% will have to be held for a minimum of 90 days.

Changes to preferential issues

The lookback period to set the floor price for preferential shareshas been shortened to
60 days from the current 26 weeks, on the other hand, the lock-in period for
promoters has been cut down to 18 months from three years. The lock-in period has
been set to 6 months from one year for other investors.

Changes to IPO allocation norms

SEBI revised the allocation norms for non-institutional investors (NII). Now, two-
thirds of the NII quota will be reserved for those investors applying for more than Rs.
10 lakh in the IPO. Rest will be available for those whose bidding value will be
between Rs. 2 lakh to Rs. 10 lakh.

Other Primary Market and Secondary Market changes

Apart from these, SEBI has also introduced a minimum price band of at least 105% of
the floor price for all book building issues. In addition, SEBI has introduced some
significant changes in mutual funds. When a mutual fund scheme wants to wind up
prematurely, most of the trustees and unit holders will have to grant their approval for
the same. The vote results have to be published within 45 days after the winding-up
announcement has been published. If the votes are against winding up, the scheme
will continue.

Measures undertaken by SEBI: -

 Entry Norms
 Promoter’s Contribution
 Disclosure
 Book Building
 Allocation of Shares
 Market Intermediaries

Entry Norms :-

Track record of dividend payment for minimum 3 years preceding the issue. Already
listed companies - when post-issue net worth becomes more than 5 times the pre-issue
net worth. For Manufacturing company not having such track record – appraise
project by a public financial institution or a scheduled commercial bank. For
corporate body – 5 public shareholders for every Rs.1 lakh of the net capital offer
made to the public Banks – 2 years of profitability for issues above par.

Promoters’ contribution :-

o Should not be less than 20% of the issued capital.

o Receiving of promoter contribution.
o Lock in period as per SEBI.
o Cases of non-underwritten public issues.

Disclosure: -

o Draft prospectus
o Un audited financial results

Book building: -

o SEBI recommends two-tier under writing system.

o One of the modes of public issue thru prospectus.
o Role of syndicate members and book runners.
o Minimum 30 centers.

Allocation of shares:-

o Minimum application of shares.

o Reservation for small investors.
o Allotment of securities.

Market intermediaries:-

o Licensing of merchant bankers

o Licensing of underwriters, registrars, transfer agents etc.
o Merchant bankers net worth Rs.5 crores.
o Segregate fund based from fee based activities.
Role of SEBI with respect to Public Issues

The Securities and Exchange Board of India (SEBI) govern the rules, regulations and
procedures relating to public issues in India. Any company going public in India
should get approval from SEBI before opening its IPO. Issuer company's lead
managers submit the public issue prospectus to SEBI, provide clarification, make
changes to the prospectus suggested by SEBI and get it approve. In simple words
SEBI validate the IPO prospectus and make sure all the declaration made in this
document are correct and also make sure that document has enough information to
help investors to take decision before applying shares in an IPO.

Secondary Market

The ‘secondary market’, also called the aftermarket, is the financial market in
which previously issued financial instruments such as stock, bonds, options,
and futures are bought and sold. Another frequent usage of ‘secondary market’ is to
refer to loans which are sold by a mortgage bank to investors such as Fannie
Mae and Freddie Mac.

The term ‘secondary market’ is also used to refer to the market for any used
goods or assets, or an alternative use for an existing product or asset where the
customer base is the second market (for example, corn has been traditionally used
primarily for food production and feedstock, but a ‘second’ or ‘third’ market has
developed for use in ethanol production).

With primary issuances of securities or financial instruments, or the primary

market, investors purchase these securities directly from issuers such
as corporations issuing shares in an IPO or private placement, or directly from the
federal government in the case of treasuries. After the initial issuance, investors can
purchase from other investors in the secondary market.

The secondary market for a variety of assets can vary from loans to stocks, from
fragmented to centralized, and from illiquid to very liquid. The major stock exchanges
are the most visible example of liquid secondary markets - in this case, for stocks of
publicly traded companies. Exchanges such London Stock
Exchange and NASDAQ provide a centralized, liquid secondary market for the
investors who own stocks that trade on those exchanges. Most bonds and structured
products trade “over the counter” or by phoning the bond desk of one’s broker-dealer.
Loans sometimes trade online using a Loan Exchange.

SEBI & SECONDARY MARKET:-

Reforms in the secondary market: -

 Governing board
 Infrastructure
 Settlement & clearing
 Debt market
 Price stabilization
 Delisting
 Brokers
 Insider Trading

Governing board:-

o Brokers and non-brokers representation made 50:50.

o 60% of brokers in arbitration, disciplinary & default committees.
o For trading members 40% representation.

Infrastructure:-

o On-line screen based trading terminals.

Settlement & clearing:-

o Weekly settlements.
o Auctions for non-delivered shares within 80 days of settlement.
o Advice to set up clearing houses, clearing corporation or settlement guarantee
fund.
 o Warehousing facilities permitted by SEBI.

Debt market segment:-

o Regulates through SEBI (depository & participants) regulation Act 1996.

o Listing of debt instruments.
o Investment Range for FIIs.
o Dual rating for above Rs.500 million.

Price stabilization:-

o Division to monitor the unusual movements in prices.

o Monitor prices of newly listed scrip from the first day of trading.
o Circuit breaker system and other monitoring restrictions could be applied.
o Imposing of special margins of 25% on purchase in addition to regular margin.
o Price filters.
o Price bands.

Delisting:-

o On voluntary de-listing from regional stock exchanges buy offer to all

shareholders.
o Promoters to buy or arrange buyers for the securities.
o 3 years listing fees from companies and be kept in Escrow A/c with the stock
exchange.
Major Achievements

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 ₹ 2 lakh, from ₹ 1 lakh at present.
The roles and achievements of SEBI.

1. Primary Market Reforms:

SEBI has successfully taken up primary market reforms in order to remove the
inadequacies and deficiencies in the issue procedures of new shares and debentures.
There is now transparency in fixing price and premium of a share. Issuing companies
are required to disclose all material facts and risk factors in the prospectus.

2. Secondary Market Reforms:

To bring efficiency in the working of the secondary market, SEBI has laid down
specific rules and regulations for intermediaries in the secondary market. Such
intermediaries are merchant bankers, portfolio managers, underwriters, registrars,
brokers and sub-brokers, and share transfer agents. They are required to adhere to
specific capital adequacy norms, meet certain eligibility criteria and follow a code of
conduct towards investors. They are penalized by SEBI in case of default.

3. Help in Institutional and Market Development:

SEBI has helped in the process of institutional and market development in the
secondary market. It approves ‘market makers’ on the recommendations of stock
exchanges. By dealing in scrips, market makers impart liquidity in them and reduce
volatile movements in share prices.
SEBI has encouraged the participation of foreign institutional investors (FIIs) in the
Indian capital market. It has simplified the procedure for their registration and
operation in the stock exchanges. FIIs have been permitted to repatriate capital,
capital gains, dividends and interest on shares and debentures.
SEBI issues guidelines to various stock exchanges including the National Stock
Exchange of India (NSEI) for their efficient operation in order to improve their
working and make them safe and friendly for investors.

4. Regulating Working of Institutions:

SEBI regulates the working of such institutions as mutual funds, money market
mutual funds, merchant bankers, portfolio managers, etc. By regulating their
 working, SEBI has tried to improve the working of primary and secondary capital
markets in India.

5. Modernisation of Stock Exchanges:

SEBI has modernized the entire operations of stock exchanges in India. All stock
exchanges are computerised. The stock market trading is 100% computerised and is
on-line. In many developed countries of the world, including America and Japan, the
trading is not fully computerised and a large part of their trade is still on-the-floor.
This is a big achievement of SEBI. The introduction of electronic trading in all the 23
stock exchanges has reduced transaction costs.
6. Dematerialisation of Shares:
The Government introduced the depository system in 1996 by establishing the
National Securities Depository Ltd. (NSDL) and a number of depository participants.
The aim was to start “paperless” transactions in stock exchanges. But its progress had
been slow. So SEBI introduced an element of compulsion by making
dematerialisation of shares compulsory for trading. This has been done in phases for
shares being traded daily on a large scale. At present more than 50% of the trade in
stock exchanges is in the demat form. Dematerialisation of shares has encouraged
trading especially by FIIs because it removes the fear of fake or forged shares and bad
deliveries. It has also eliminated transfer problems.

7. Internet Trading:
SEBI has allowed internet trading under Order Routing System (ORS) through
registered stock brokers on behalf of clients. It has thus facilitated investors to buy
and sell shares through the internet on their computers. It is a major advancement in
trading shares at stock exchanges in India.

8. Derivatives Trading:
With the introduction of derivatives trading in securities, the secondary market has
been modernised. There is the cash market, the forward market and the badla system.
9. Solving Investors’ Complaints:
SEBI has set up a separate cell where complaints received from the investors are
attended to. According to SEBI, more than 2 lakh investors complain against
companies every year regarding transfers, non-receipt of share certificates, dividend,
interest on debentures, etc. It is able to solve about 90% of them. SEBI hopes to
remove such complaints with more shares coming under the demat form.

10.Safety Measures:
SEBI has adopted a number of measures to safeguard the interests of investors.
Companies have been directed to call for the bank account number of a
share/debenture holder and mention it on the dividend/ interest certificate or deposit it
direct in his bank account.
It has guided stock exchanges in setting up Investor Protection Fund and Trade
Guarantee Fund to safeguard the interests of investors. Further, it has set up the
Clearing Corporation for Trade Settlements. Further, it has made it obligatory for the
broker to make the payment within 21 days even if there is a bad delivery. Thus an
investor cannot lose his money.

11.Circuit-Breaker System:
SEBI has introduced a circuit-breaker system based on the market volatility of
individual stocks. According to this system, if market volatility in a stock crosses a
certain limit, the trading in this stock is stopped for a few days so that speculators may
not take undue advantage. This is a better system than the American circuit- breaker
system which is related to the index of stocks. The New York Stock Exchange is
closed even for half- an-hour or more whenever the market volatility crosses the index
limit. Thus SEBI has developed a better circuit-breaker system whereby there is no
need to close the stock exchange.
 CHAPTER 2
Research Methodology:

Research methodology is considered as the nerve of the field work or any project.
Without proper well organized research plan, it is impossible to complete the project
and reach to any conclusion.

The project was based on the survey plan. The main objective of survey was to
collect appropriate data, which work as a box for drawing conclusion and getting
result. Therefore, research methodology is the way to systematically solve the search
problem.

Research methodology not only talks of the methods but also logic behind the
methods used in the context of a research study and it explains why a particular
method has been used in the preference of the other methods.

Exploratory research includes the reviewing and analysis of the articles, research
papers, interviews and other published information in order to gain a
deeper understanding of the prevailing scenario.

Research methodology is a way to systematically study the research problem. It

explains the statement of the research problem, objectives, chapter scheme, need,
scope, hypothesis, source, period and sample of study.

Also, the statistical tools and techniques which are used to analyze the data have
been discussed. Indian banking sector tremendously moving towards Digitalization.
Payments Banks (PBs) are making remarkable contribution towards the achievements
of objective of financial inclusion.

These banks focus on reaching towards small merchants and low-income group of
people. Even though RBI has taken many initiatives to reach all the sectors of people,
to make India, a cashless economy, the complete knowledge about banking services is
very much essential for the people. The research methodology under the present study
is summarized below:

2.1 Introduction Of The Project

This study was mainly planned to evaluate the performance of SEBI, relating to
supervision of securities market of various intermediaries registered with SEBI., and
to know what kind of Investor Protection measures taken by SEBI for the benefit to
safeguard the interest of investors in India since 1992.

2.2 Objective of The Project

 To know the investor protection measures taken by SEBI since its inception.

 To know the perception of people of different age group towards

 To know whether the SEBI has been acting as independent organization.

 To regulate the securities markets properly.

 To know the powers and functions implementing properly or not by SEBI.

2.3 Scope of the Study

The literature reviews taken for the study are primarily from India. The studies varied
from usage studies to behavioural studies. These were analyzed for the main results.
This is mainly restricted to studies of SEBI.

 This Study is about people’s perception towards SEBI.

 This study will cover all the main points which is needed for understanding
the topic.
 The scope of study is to get the first-hand information on the topic Role Of
SEBI Development In Indian Stock Market.
  The geographical scope of study is limited to areas of Mumbai Division,
which includes Suburban area.

2.4 LIMITATIONS OF THE STUDY

The following are limitations of the Study:

 The study attempts to generalize the work done by SEBI as seen from its
perspective to the whole of the Capital Market in India.

 The primary data for market intermediaries and investors is collected from one
investment zone.

2.5 NEED FOR THE STUDY

The security Exchange and Board of India was established by the government of
India on 12 April 1988 an interim administrative body to promote orderly and healthy
growth of the securities market and to protect investor’s rights. It is functioning under
administrative control of Ministry of Finance. The SEBI was given statutory status on
30th January 1992 through and ordinance, later it was replaced by an act of
parliament, Securities and Exchange Board of India Act, 1992.

As per the SEBI act, 1992, the power and functions of the Board encompass the
regulation of Stock Exchanges and other securities markets, registration and
regulation of the working stock brokers, sub-brokers, bankers to an issue (a public
offer of capital), trustees of trust deeds, registrars to an issues, merchant bankers,
under writers, portfolio managers, investment advisors and such other intermediaries
who may be associated with the stock market in any way; registration and regulations
of mutual funds, promotion and regulation of self-regulatory organizations,
prohibiting Fraudulent and unfair trade practices and insider trading in securities
markets, regulating substantial acquisition of shares and takeover of companies,
calling for information from, undertaking inspection, conducting inquiries and audits
of stock exchanges, intermediaries and self-regulatory organizations of the securities
market, performing such functions and exercising such powers as contained in the
provisions of the Capital Issues (Control) Act,1947.
 SEBI has its head office in Mumbai and it has now set up regional offices in the
metropolitan cities of Kolkata, Delhi, and Chennai. The Board of SEBI comprises a
Chairman, two members from the central government representing the ministries of
finance and law, one member from the Reserve Bank of India and two other members
appointed by the central government.

2.6 RESEARCH DESIGN

The present study is exploratory and descriptive in nature. The present study focused
on people’s awareness and satisfactions towards stock market and services provided
by the SEBI.

It is related to primary and secondary data which is collected with the help of well
drafted and pre-tested questionnaire. Appropriate statistical method and techniques
are adopted.

The nature of the study is statistical pertaining actual environmental conditions.

The reason for choosing this type of data is, qualitative research provides insights and
understanding of problems setting while quantitative research seeks to quantify the
data and typically applies some form of statistical analysis.

2.7 SOURCES OF DATA

Primary Data :

To collect primary data, the study employed survey method because data are collected
from large number of respondents. The primary data is collected with the help of
structured questionnaire.

Questionnaire consisted of open as well as close ended questions.

Secondary Data :

The present study is based on secondary data. Annual reports of various payments
banks; national and international Journals, Bulletins, Periodicals and newspapers
devoted to the subject of banking in India are also retrieved.
In addition to this, statistical data was also collected from website of the Reserve
Bank of India.

2.8 SAMPLING DESIGN

Sampling is a technique of selecting individual members or a subset of the population

to make statistical inferences from them and estimate characteristics of the whole
population. Different sampling methods are widely used by researchers in market
research so that they do not need to research the entire population to collect actionable
insights.

It is also a time-convenient and a cost-effective method and hence forms the basis of
any research design. Sampling techniques can be used in a research survey software
for optimum derivation.

SAMPLING

Sampling unit

The target population must be defined that has to be sampled. The sampling unit of
research included students and professionals residing in Mumbai city.

Sample size

This refers to number of respondents to be selected from the universe to constitute a

sample. The sample size of 110 customers was taken.

Questionnaire

This is the most popular tool for the data collection. Researcher designed
questionnaire according to the topic and objective of the research project, researcher
used two type questionnaire methods into data collection, i.e.

 Multiple choice questions

 Dichotomous
 i. Multiple Questions
Multiple questions researcher used because many options in this kind of
questions and easy for getting response from respondent. Researcher used 16
multiple questions. Questions of this type offer the respondents an alternative to
choose the right answer among others. It is faster, time saving and less biased.
It’s also simplifies the tabulating process.

ii. Dichotomous
Dichotomous question very simple and any one can able to answer that particular
question teenage, young and old. Two dichotomous questions used in this
project. These are the question which are Boolean in nature. These answers are
straightforward and respondent have to answer them in a straight way. That
means the answer can only be either ‘Yes’ or ‘No’.

2.9 Tools of Presentation & Analysis:

To analyze the data obtained with the help of questionnaire, following tools were
used.

1. Likert scale:
These consist of a number of statements which express either a favorable or
unfavorable attitude towards the given object to which the respondents are asked
to react. The respondent responds to in terms of several degrees of satisfaction or
dissatisfaction.

2. Percentage, Bar Graphs and Pie Charts:

These tools were used for analysis of data
 CHAPTER 3

LITERATURE REVIEW

In this chapter, an effort has been made to review the literature available on the
subject to present an overview of the various aspects and issues of the present
research study. The existing information and knowledge on the subject not only helps
to form the necessary background for this research project, but also enables to identify
the gap in the research area. Though a number of studies on various aspects of
securities market are available, yet, limited literature on investor protection and
grievance redressal mechanism is available and that too from a different prospective.

The review of various research studies conducted both in India and abroad has been
covered under the following sub-headings:

 Investor Protection
 Grievance Redressal Mechanism for Retail Investors
 Investor Education
 Corporate Governance and Disclosures norms
 Investor psychology and sentiments
 Market Manipulation
 Regulatory framework & Role of Regulator in Securities
Market.

Jain (1999) In his study on restructuring capital market observed that the agenda
for further reforms of capital market in India broadly comprise the developments in
the debt market, revival of equity markets and improved disclosures and corporate
governance standards, reforms in insurance and pension funds to enable flow of funds
to infrastructure and the emergence of financial derivatives and risk management
products.

Neelamegam R. and Srinivasan R (1996) studied the competency of different

protective measures in purview of existing Securities Contracts Act 1956, Securities
and Exchange Board of India Act 1992. They also examined the trading activities of
primary and secondary market in India. They figured out that though preventive
measures were taken by regulators through legislative systems, investors lost their
confidence even after the setup of SEBI.

Gupta and Biswas (2006) examines the development and efficiency of Indian
capital market during the post liberalization period and conducted that the process of
reforms has led to a pace of growth of Indian stock market a most unparalleled in the
history of any country. Ironically, this market suffers from the menace of over
speculation and excessive price fluctuations, which are in fact fiercer than many of its
counterparts. These vices are sufficient to defeat at basic purpose of financial
liberalization where the society in effect authorizes the financial systems to mobilize
and allocate resources.

Juhi Ahuja (2012) presents a review of Indian Capital Market & its structure. In
last decade or so, it has been observed that there has been a paradigm shift in Indian
capital market. The application of many reforms & developments in Indian
capital market has made the Indian capital market comparable with the international
capital markets. However, the market has witnessed its worst time with the recent
global financial crisis that originated from the US sub-prime mortgage market spread
over to the entire world as a contagion. The capital market of India delivered as
sluggish performance.

Dr. KVSN JawaharBabu and S. Damodar Naidu (2012) in their research

paper ‘Investor protection measures by SEBI’ found that investor education
programmes conducted by SEBI got positive results to some extent. But still lot more
efforts needs to be put in practice. Indian investors have steadily vanished from the
market which calls for prompt action of the apex body to frame and efficiently
implement the measures to protect small investors’ interest and restore their
confidence in the stock market.

Michal Parness, Founder & CEO, Investors don’t make money in the market.
The reason the institutions make money is that investors are trading, every time they
buy or sell.

According to SEBI, professional rating of market intermediaries is a matter of

debate and discussions. The need is felt not only from the viewpoint of greater
disclosure requirements for investor’s interest, considering the important role such
intermediaries play, being an interface between the investor and exchanges but also
from the viewpoint of measuring the adequacy of systems and controls to meet
internal and external compliance requirements.

Thus, the need for Intermediaries Rating Services in view of the development is
taking place in the capital markets and requires constantly upgradation and
improvement in the systems and procedures in operation. Besides compliance with
regulatory requirements, it has assumed significance to mitigate risk and ensure
protection of investor’s interest.

Rating objectives benefits the entity to brand its image and capitalize the same to
generate more business by accruing benefits to all of its stakeholders comprising
investors, stock brokers, regulators and others who will be benefited from the
transparency and consequential focus on efficiency.

According to SEBI and Intermediaries Regulation and Supervision Department,

different factors are to be considered for rating process:

 Organization structure

 Policy on investor’s interest

 Risk management policy

 Financials
 History/ background of firm

Sabarinathan Ganapathisubramani

Since the empowerment of the Securities and Exchange Board of India (SEBI)
through an Act of Parliament in 1992, SEBI has come up with a number of initiatives
aimed at regulating and developing the Indian securities market and improving its
safety and efficiency. These initiatives have made an impact on nearly every aspect of
the market. Some of those initiatives have transformed the market fundamentally.
Particularly net worthy is the growth in the following: • Market capitalization •
Number of listed firms • Trading volumes and turnover both in the spot and futures
markets. There is a growing network of financial intermediaries that operate in a
highly competitive environment while being governed by a tight set of norms. India
has one of the most sophisticated new equity issuance markets. Disclosure
requirements and the accounting policies followed by listed companies for producing
financial information are comparable to the best regimes in the world.

The Indian securities market is among the safest and the most efficient trading
destinations internationally. The Indian corporate governance code is compared to the
Sarbanes Oxley Act of the USA. India has one of the fastest growing and well-
developed asset management businesses in the world, with state- owned as well as
private sector players. That said, the Indian market is often hostage to some scam or
the other from time to time. Effective enforcement of compliance is cited as one of the
reasons for these unsavoury episodes. The role that SEBI’s initiatives have played in
bringing about this transformation of the market has not been researched
comprehensively so far.

Literature that has analysed the efficiency and the design of the Indian securities
market has examined the role of certain specific regulatory provisions on the
functioning of the securities market. So also the various annual reports of SEBI
discuss the regulatory and other institutional developments that took place during the
year under review. However, no attempt seems to have been made to take stock of all
the various initiatives of SEBI so far and assess its impact on the activity in the
securities market. This paper identifies some of the major interventions of SEBI
relating to each of these aspects of the market and critically examines the economic
consequences of the same. Such a stock-taking will enable a well-rounded and
objective review of SEBI’s performance. It is also likely to suggest interesting areas
for further research.

In Journal “Price Discovery and Volatility on NSE Futures Market” by.

Raju M. T and Karande Kiran in year 2003.
 It intensifies the curiosity of academics in exploring international market linkages.
Earlier studies by Blennerhassett, and Bowman,R.G., 1999, generally find low
correlations between national stock markets, supporting the benefits of international
diversification. In International Journal “ Commerce and Business Management “ by
Dr Holani H.K. . The links between national stock markets have been of heightened
interest in the wake of the October 1987 international market crash globally. The
crash has made people realize that various national equity markets are so closely
connected as the developed markets like the US stock market exert a strong influence
on other markets. Applying the vector auto regression models, Eun and Shim (1999)
find evidence of co-movements between the US stock market and other world equity
markets. Cheung and Ng (2000) investigate the dynamic properties of stock returns in
Tokyo and New York and find that the US market is an important global factor from
January 1985 to December 1999. Madhusoodanan, TP and Thiripalraju (1999)
examine the effect of the October crash and conclude that national stock markets
became more interrelated after the crash and find that the co-movements among
national stock markets were stronger when the US stock market is more volatile

. Emerging Markets Finance and Trade publishes (2009) Journal

On financial and economic aspects of emerging economies. Applying the VAR

approach and the impulse response function analysis, Jeon and Von-Furstenberg
(2003) show that the degree of international co-movement in stock price indices has
increased significantly since the crash. On the other hand, Koop (1999) uses Bayesian
methods to conclude that there are no common trends in stock prices across countries.
Also, Corhay, et al (2001) study the stock markets of Australia, Japan, Hong Kong,
New Zealand and Singapore and find no evidence of a single stochastic trend for these
countries.

The development of the securities market received a tremendous boost with the
increasing number of stock exchanges opened in the country.' Before there were
only 9 stock exchanges in the country. U.P. Stock Exchange was the 10th stock
exchange. In fact, the first Indian stock exchange established in Mumbai is the oldest
exchange in Asia. At present there are 22 stock exchanges located in various parts of
India. Stock exchanges of Mumbai, Kolkata, Chennai, Ahmedabad, Delhi,
Hyderabad, Indore and Bangalore have been granted permanent recognition. The
stock exchanges have organized themselves either in the form of a public limited
company or a company limited by guarantee or as a voluntary non-profit making
association.
 CHAPTER 4

ANALYSIS /CASE STUDY

CASE STUDY :- Sahara Group

Sahara India Pariwar (pariwar being Hindi for "family") is an Indian

conglomerate headquartered in Lucknow, Uttar Pradesh, India. The group operates
business sectors such as finance, infrastructure & housing, real estate, sports, power,
manufacturing, media & entertainment, health care, life insurance, educational
institute, offline online education (edunguru), retail, E-commerce (online/offline
shopping), electrical vehicle (sahara evols), hospital, artificial intelligence, hospitality,
and co-operative society. The group has been a major promoter of sports in India and
was the title sponsor of the Indian national cricket team, Indian national hockey team
and Bangladesh national cricket team, Force India Formula One team among many
other sports.

Businesses

Sahara India Pariwar was founded by Subrata Roy Sahara in 1978. In 2004,
Sahara group was termed by the Time magazine as ‘the second largest employer in
India' after the Indian Railways. The group operates more than 5,000 establishments
across India with the employee strength around 12 lakh (both field and office) under
the Sahara India umbrella.

Real Estate

Sahara India Real Estate Company and the Sahara Housing Investment
Corporation are subsidiaries of the conglomerate. They buy and develop land for
residential housing projects across India. The company has its projects spread in
almost all over India. Sahara has a collaboration with Turner Construction, an
American building company, in some of its projects.

Electric Vehicles

Sahara India Pariwar announced the launch of Electric Vehicles under the brand
name Sahara Evols in June 2019. The product line of Sahara Evols initially consists of
motorbikes, scooters, e-rickshaws and 3-wheeler cargo vehicles, charging stations and
EV batteries.

Sports

Sahara owns several professional sports teams in India in a variety of sports. In

badminton, it owns the Awadhe Warriors of Lucknow, one of the eight teams in the
Indian Badminton League.It owned the Pune Warriors India, a franchise cricket team
that played in the Indian Premier League (IPL). The company launched the Sahara
Warriors Polo Team in 2012. From 2005 to 2014 Calcutta Football League was
sponsored by Sahara. In July 2012, Sahara India Pariwar picked up the Lucknow
franchise of the Hockey India League, the Uttar Pradesh Wizards.It was also the
sponsor of the Bangladesh Cricket Team from 2012 to 2015.

Media And Entertainment

The group owns the national Hindi news channel Samay and 36 city-specific
regional news channels Sahara Samay. It also owns Sahara One, a general
entertainment channel; Filmy, a Hindi movie channel; and Firangi, an entertainment
channel. Sahara Samay received the "Broadcast Engineering Excellence Award" in
2008 for its network newsroom technology. The group owns publishes and sells one
magazine in English, seven editions of the Hindi daily newspaper Rashtriya Sahara,
nine editions of Urdu Daily Newspaper Roznama Rashtriya Sahara and one
International Urdu Weekly, Alami Sahara. Sahara had A Film Studio Named Sahara
One Motion Pictures. They produced, marketed, and distributed Hindi and other
regional language films. Well known films produced by the company include
Bewafaa, Page 3, Sarkar, No Entry, and Wanted. In September 2010, the company
was in talks to acquire MGM Studios, but the deal collapsed.

Since 2009, when the Sahara Group‘s activities first came under the radar of SEBI
leading up to the arrest of Sahara India Pariwar founder Subrata Roy in 2014, both
parties have been engaged in an aggressive regulatory conflict. SEBI alleged that
Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp
Ltd (SHICL), which issued Optional Fully Convertible Debentures (OFCD), illegally
collected investor money. Meanwhile, Sahara denied SEBI had any jurisdiction in the
matter.
 SEBI went on to order Sahara to issue a full refund to its investors, which was
challenged by Sahara be-fore the Securities Appellate Tribunal (SAT). When the SAT
upheld SEBI‘s order, Sahara moved to the Supreme Court in August 2012, which
ordered Sahara to refund investor money by depositing it with SEBI. Sahara then
declared that most of the US $3.9 billion had already been repaid to investors, save
for a pal-try US $840 million, which it handed over to SEBI. This was disputed by
SEBI, which claimed that the details of the investors who were refunded had not been
provided. When Sahara failed to deposit the remaining money with SEBI and Subrata
Roy skipped his hearing, the Supreme Court of India issued an arrest warrant for the
Sahara chief in February 2014.

Amid rumors of black money laundering and the misuse of political connections,
Sahara vehemently denied all charges and continued to defy SEBI. The regulator
persevered through what the Supreme Court referred to as the ―ridiculous game of
cat and mouse‖ and finally managed to pin down Sahara chief Subrato Roy in 2014. In
this rare victory, SEBI not only brought Sahara to justice, but also made an excellent
case for why the regulator, and others like it, require greater autonomy and penalizing
power.

 ANALYSIS OF SAHARA CASE

In the present economic and social environment, issues related to corporate
social responsibility and ethics are gaining more and more importance,
especially in the business sector. The failure to account for long-term social
and environmental impacts makes those business organizations unsustainable.

Investors are one of the important stakeholders of any company, who fund part
of the money by buying shares or apart ownership in the company. Companies
may pay their investors, dividends a share of the profits. Modern investors are
not short-sighted, they strongly interested in a company‘s overall reputation
and public perception, as well as its relationships with specific stakeholders
such as customers, employees and public authorities.

 Factual Case Summary:

 Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing
Investment Corporation Limited (SHIC), are the two unlisted companies
floated in 2008, controlled by the Sahara group worth of Rs.2.75 lakh crore .
The two companies have raised about over Rs 24,000 crore from more than
three crore investors by issuance of Optionally Fully Convertible Debentures
(OFCDS) and mobilise lucrative investments promising, in some cases, to
return three times their face value after 10 years, by passing Special resolution
U/S 81(1A). An Optionally Fully Convertible Debenture is just a kind of Bond
that can be converted into Equity Shares by the investors if they want to. So,
this is a kind of hybrid market instrument that would come under the
jurisdiction of the Securities and Exchanges Board of India (SEBI). Thus,
Sahara‘s case is all about OFCD and its investors. Here is the analysis of the
issues pertaining to how events unfolded from 2008 to the issuance of
non-bail able warrant to Sahara chief Subrato Roy.

 Why did SEBI ask Sahara to refund the money?

SEBI asked Sahara to refund investors because it felt Sahara was raising
money in violation of capital raising norms and certain sections of the
Companies Act. SEBI found that under the garb of an OFCD the company was
running an extensive para banking activity without conforming to regulatory
disclosures and investor protection norms pertaining to public issues.

 What is Sahara’s justification?

Sahara challenged SEBI‘s order saying the capital markets regulator did not
have any jurisdiction over the group companies since they were not listed. The
court dismissed Sahara‘s petition, also hauling it up for not complying with its
orders.

 What orders did Sahara not comply with?

 The court directed Sahara to furnish details of the OFCDs it had issued
including subscriptions and refunds within 10 days and submit these to SEBI.
It also gave Sahara 90 days to deposit roughly Rs 24,000 Cr. SEBI which was
given powers to freeze Sahara‘s accounts, attach proper-ties etc. Sahara has
repeatedly missed deadlines to comply with the Supreme Court‘s orders. It
claims the total money due is only Rs. 5,200 Cr, as the balance amount has
already been re-paid. SEBI meanwhile, told the court that while it had begun
the refund process; it couldn‘t trace many of Sahara‘s investors as details
submitted by Sahara were not in the prescribed format, with addresses and
other details missing in some cases

 What has the Supreme Court done today?

Since Sahara hasn‘t been able to deposit the Rs. 24,000 Cr amount with
SEBI, the Supreme Court has asked Sahara India to submit a bank guarantee
for Rs. 20,000 Crore before 2014,October 28th which is the date for the next
hearing of the case. SEBI had earlier rejected Sahara‘s offer to secure the
difference (between Rs 5,200 and 24,000) through immovable property
entrusted with a bank trustee.

In March 2015, the court had directed two Sahara group companies —
Sahara Real Estate and Sahara Housing — to return around Rs 24,000 crore
with interest to nearly 3 crore investors through market regulator SEBI in Aug
2012. The firms were later allowed to pay up by February 2013. So, the total
dues have now gone up to Rs 40,000 crore with the accrual of interest.

 What lessons are learnt from Sahara case?

Firstly, is India‘s regulatory framework equipped to consistently detect,

halt and penalise such organised efforts? The court‘s order lays out how two
Sahara group companies made a pre-planned attempt‖ to ―bypass the
regulatory and administrative authority‖ of the Securities and Exchange Board
 of India (SEBI). The regulator should take steps to institutionalise the
elements that led to this rare victory in court.

Secondly, the case highlights the issue of intelligence gathering and co-
ordination among different financial sector regulators. The controversial
money-raising operation followed a ban on Sahara‘s para banking activities by
the Reserve Bank of India in 2008. SEBI was, however, only alert to the
operation two years after Sahara started, that too when one of the group
companies came to the regulator for a legal‖ public issue. The level of
interaction between the different financial sector regulators is clearly
Insufficient. The only regular forum for interaction, the Financial Stability and
Development Council (FSDC), concentrates on macro-prudential matters.
More active co-ordination is needed at the grass-roots level.

CONCLUSION on CASE STUDY :-

Sahara‘s misdeeds are considered as an eye-opener in several respects about the

uncertain dealings inside the corporate- houses and it brings in to being the need for
protecting the interest of several millions of investors, who invested their hard earned
money in such socially irresponsible corporations.

SEBI proved to be effective machinery in tackling the case to an extent but still it
has a limiton of regulating unlisted companies in India. The reasons for such scandals
are several including lack of transparency, weak provisions, political nexus and above
all, ignorance of investors. In the light of Sahara case, it is the responsibility of the
government and its various agencies to protect the interests of investors and nation as
well through putting in place necessary provisions in accordance with the changing
requirement of market.
 CHAPTER 5

ANALYSIS SURVEY

A descriptive research design has been used to convey a survey of 114 samples.
Simple Random Sampling technique has been used for the same. Samples were
collected from various categories of people. Data of questions asked in the research
instrument to the respondents and its interpretations are as follows:

Question1.

1) Gender
A. Male
B. Female
C. Prefer not to say
D. Other

FIGURE 5.1

OBSERVATION:

While collecting data the main motive was to find out how many people of particular
gender are aware about SEBI and Indian Stock Market. This survey was answered by
112 people. The total percentage from it is: Male were 62.5% and Female were 35.7%
and the remaining percentage answered they preferred not to say.

Question: 2

Age

1. UNDER 18
2. 18-30
3. 31-45
4. 45 and above

FIGURE 5.2

OBSERVATIONS:

I tried to bring in diversity in my sampling by sending across the questionnaire to a

diverse age group. However, as you can see most of the audience comes under the age
of 18 group with 9.8% followed by 18-30 age group with 72.3% precisely followed
by 12.5% of population falling under 31-45 age group and 5.4% of people above 45
and above. I have interaction with mostly people falling in that range. The research
cannot be completely accurate due to restricted geographical barriers. The study took
place in Mumbai itself which makes it convenience sampling. Although it does not
give us 100% accurate results, it does give an idea of the overall objectives by taking
in the opinion of all the different age groups.

Question 3

Occupation

1. Student
2. Entreprenuer
3. Employed
4. Retired
5. Other

FIGURE 5.3

OBSERVATIONS:

Occupation is an important factor in investment decision making process. The highest

percentage that is 67 % were students in this survey. And the next highest percentage
is of people who are working i.e 22.3% and other 6.3%.
Question 4

Do you invest in securities market?

1. YES
2. NO

FIGURE 5.4

OBSERVATIONS:

As per above survey, we found that 56.3% of the people invested in Securities
Market 43.8 % of people not yet invested in market. We conclude that SEBI need to
take initiative for Investors Education programmes to increase customers interest for
trading in stock market.
QUESTION 5

IN WHICH MARKET WOULD YOU LIKE TO INVEST IN FUTURE?

1. GOVERNMENT SECURITIES
2. STOCK MARKET
3. DERIVATIVES MARKET
4. OTHER MARKET

FIGURE 5.5

OBSERVATIONS:

As per above Chart, we found that 62.5 % of people traded in Stock market and
25% of people invested in Government Securities. Investors traded in stock market to
get high return in short periods with market risk. As well as Government securities
also provide high return with low risk but longer period. People also traded in
Derivative market & 10.7 % in other market as it is new market. we need more
awareness about investors education on derivative market. Therefore we conclude that
most of the investors taking market risk to get high return in short period as compare
to other traded sources.
QUESTION 6

DO YOU HAVE INVESTMENT IN?

1. BOND/DEBENTURES
2. EQUITY SHARES
3. MUTUAL FUNDS
4. NONE OF THE ABOVE

FIGURE 5.6

OBSERVATIONS:

As per above chart, we found that more people traded in Bond/Debentures,

Equity Shares and Mutual Fund i.e. 50%, 20.5% and 23.2%.Therofore,
Bond/Debentures Equity Shares and Mutual fund are more preferable to trade in
market to get high return with market risk in Short period.
QUESTION 7

HOW FREQUENTLY DO YOU TRADE IN PRIMARY MARKET?

1. ALWAYS
2. FREQUENTLY
3. OCCASIONALY
4. RARELY
5. NEITHER

FIGURE 5.7

OBSERVATIONS:

The primary market is the part of the capital market that deals with issuing of
new securities. Companies, governments or public sector institutions can obtain funds
through the sale of a new stock or bond issues through primary market. This is
typically done through an investment bank or finance syndicate of securities dealers.
As per above chart, We conclude that, Most of people are rarely and not taking
initiative to trade in Primary market due to people are not aware that these market
gives more profit with full safety.
QUESTION 8

HOW FREQUENTLY DO YOU TRADE IN SECONDARY MARKET?

1. ALWAYS
2. FREQUENTLY
3. OCCASSIONALY
4. RARELY
5. NEITHER

FIGURE 5.8

OBSERVATIONS:

The secondary market is the part of the capital market that deals with debt
market, price stabilization of new securities. Companies, governments or public sector
institutions can obtain funds through the sale of a new stock or bond issues through
secondary market. This is typically done through an investment bank or finance
syndicate of securities dealers. As per above chart, We conclude that, Most of people
are rarely and not taking initiative to trade in Secondary market due to people are not
aware that these market gives more profit with full safety.
QUESTION 9

SEBI HAVE PROPER CONTROL OVER ON BROKER ACTIVITIES

1. YES
2. NO.

FIGURE 5.9

OBSERVATIONS:

Therefore, as per above chart we conclude that, 79.5% of people knows that
SEBI has proper control over Broking activities. It is important to keep an eye on the
activities of the brokers and other middlemen in order to control the capital market.
To have a control over them, it was necessary to establish the SEBI.
QUESTION 10

HAVE YOU EVER COMPLAINED TO SEBI/STOCK EXCHANGE/ANY

MARKET INTERMEDIARY LIKE SUB BROKERS/SHARE TRANSFER
BROKERS?

1. YES
2. NO

FIGURE 5.10

OBSERVATIONS:

SEBI has taking more initiative to solve the investors query & complaints as per
investors Requirement. Therefore, people also aware about current scenario as per
survey 84.8% of the people aware to complain SEBI some fraud happen in trading
stock market.

QUESTION 11

SEBI GIVING PROPER SECURITY TO THEIR INVESTORS?

1. YES
2. NO
FIGURE 5.11

OBSERVATIONS:

As per above chart, we found that 85.7% of peoples are knows that SEBI has
proper safety to its investors for traded in market. The capital market is meaningless
in the absence of the investors. The protection of the interests of the investors means
protecting them from the wrong information given by the companies in their
prospectus, reducing the risk of delivery and payment, etc. Hence, the foremost
objective of the SEBI is to provide security to the investors.
 CHAPTER 5

CONCLUSION

The security Exchange and Board of India was established by the government of
India on 12 April 1988 an interim administrative body to promote orderly and healthy
growth of the securities market and to protect investor’s rights. It is functioning under
administrative control of Ministry of Finance. The SEBI was given statutory status on
30th January 1992 through and ordinance, later it was replaced by an act of
parliament, Securities and Exchange Board of India Act, 1992.

SEBI is one of the important body which regulates both Primary as well as
Secondary Market. Above written Article is based on Primary market which deals
with issuance of new securities and deals with certain issues related to Primary
market. SEBI encourages both growth and development of the security market and act
as a watchdog.

The survey includes data from Mumbai itself. Total responses received through
this survey is 112. From the data collected through this survey we can conclude that a
lot of people are aware SEBI and it’s development in Indian stock market.

People do invest in securtities and are aware about various types of investments
i.e Government securities Stock market Derivatives market and various other types of
market.

From the survey that was performed we also came to know that other than
securities market people do invest in other forms. They are follows Bonds Debentures
Equity Shares Mutual Funds etc.

People also trade in different markets i.e Primary market and Secondary market.
In the Primary market, new stocks and bonds are sold for the first time. In a Primary
market, investors are able to purchase securities directly from the issuers. Types of
Primary market issues include an initial public offering (IPO) a private placement, a
rights issue, and a preferred allotment.
 Secondary markets consists of both equity as well as debt markets. Securities
issued by a company for the first time are offered to the public in the primary market.
Once the IPO is done and the stock is listed, they are traded in the secondary market.

Through the survey we also got know that people do have an eye on SEBI’s
control over on broker activities. SEBI is also given semi-jurisdictional powers, which
means it can conduct hearings and issue judgments in case any unethical and
fraudulent activity has taken place. Granting rights and obligations of stock brokers
authorized persons, and clients also come under the responsibilities of SEBI. SEBI
applies various rules to it’s stockbrokers. Some of them include: Stockbrokers
authorized persons, and clients are all bound by the rules and by laws set by SEBI,
governing the market. The stockbroker should also update itself on the financial
abilities of the client before undertaking and executing financial transactions on their
behalf. Stockbrokers must make clients aware of the nature of the business, policies,
limitations, liabilities and capacity under which the stockbrokers acts. Last but not the
least stockbrokers must maintain all client-related information but shall not disclose
such unless demanded by the law.

Through survey we even came to know that people are well aware about SEBI’S
working whether positively or negatively. People are concerned about letting them
know whether they are happy about it’s decisions and policies.

People do complain about SEBI or Stock Exchange or any other intermediary

market or sub-brokers or share transfer brokers freely.

By going through the responses collected from the survey we can conclude by
giving following suggestions.

SUGGESTIONS:

 SEBI need to take more initiative for Investors Education progammes to

increase customers awareness and interest for trading in stock market.
 Equity shares & Mutual fund are more preferable to trade in market to get
high return with market risk in Short period.
 SEBI protect the interests of investors in securities.
 SEBI promote the development of the securities market
 SEBI regulate the securities market
 SEBI has many powers for stopping fraud in capital market. It can ban on the
trading of those brokers who are involved in fraudulent and unfair trade
practices relating to stock market
 CHAPTER 7

BIBLIOGRAPHY

1. Wikipedia

2. Securities and Exchange Board of India

3. www.finmin.nic.in

4. www.moneycontrol.com

5. www.nseindia.com

6. www.bseindia.com

7. www.sebi.gov.in

8. Annual Report of SEBI

9. Business India, various issues.

10. Business Today, various issues.

 CHAPTER 8

ANNEXURE

Q1) Gender

1. Male
2. Female
3. Prefer not to say
4. Other

Q2) Age

1. Under 18
2. 18-30
3. 30-45
4. 45 AND ABOVE

Q3) Occupation

1. Student
2. Enterpreneur
3. Employee
4. Retired
5. Other

Q4) Do you invest in securities market?

1. Yes
2. No

Q5) In which market would you like to invest in Future?

 1. Government Securities
2. Stock Market
3. Derivatives Market
4. Other Market

Q6) Do you have Investment in?

1. Bond / Debentures
2. Equity Shares
3. Mutual Fund
4. None of the above

Q7) How frequently do you trade in primary market?

1. Always
2. Frequently
3. Occasionally
4. Rarely
5. Neither

Q8) How frequently do you trade in secondary market?

1. Always
2. Frequently
3. Occasionally
4. Rarely
5. Neither

Q9) SEBI have proper control over on Broker activities?

1. Yes
2. No
Q10) Have you ever complained to SEBI / Stock Exchange / any market intermediary
likes Sub brokers/ share transfer brokers?

1. Yes
2. No

Q11) SEBI giving proper security to their investors?

1. Yes
2. No