REGULATORS IN INDIAN FINANCIAL SYSTEM

The Indian financial system is regulated by various regulatory authorities, each

responsible for overseeing and governing specific segments of the financial industry.
These regulators are essential for maintaining the stability, integrity, and transparency of
India's financial markets and institutions. Here are the key regulators in the Indian
financial system:

1. Reserve Bank of India (RBI): The RBI is the central bank of India and plays a
pivotal role in regulating the entire financial system. Its responsibilities include monetary
policy formulation, issuing and regulating currency, supervision of banks and non-
banking financial companies (NBFCs), and overall financial stability.
2. Securities and Exchange Board of India (SEBI): SEBI is the regulatory authority
for the securities market in India. It regulates and oversees various segments of the
capital market, including stock exchanges, brokers, mutual funds, and other market
participants. SEBI's mission is to protect the interests of investors and ensure fair and
transparent markets.
3. Insurance Regulatory and Development Authority of India (IRDAI): IRDAI is
responsible for regulating the insurance industry in India. It supervises insurance
companies, promotes innovation, and ensures policyholder protection in the insurance
sector.
4. Pension Fund Regulatory and Development Authority (PFRDA): PFRDA
regulates the pension sector in India, including pension funds, pension fund managers,
and the National Pension System (NPS). It aims to promote retirement income security
for citizens.
5. National Housing Bank (NHB): NHB is the regulatory authority for housing
finance companies (HFCs) in India. It oversees and regulates HFCs to ensure the stability
of the housing finance sector.
6. Commodity Markets Regulator: India's commodity markets are regulated by
different authorities, such as the Forward Markets Commission (FMC) for commodity
futures and the Multi Commodity Exchange of India (MCX) for commodities trading.
However, some of these functions have been integrated with SEBI.
7. Ministry of Finance: While not a regulatory body in the traditional sense, the
Ministry of Finance plays a critical role in policymaking and oversight of the financial
sector. It sets fiscal policies, including the Union Budget, which has a significant impact on
the economy and financial markets.
8. Registrar of Companies (RoC): RoC is responsible for the registration and
regulation of companies under the Companies Act. It maintains company records and
ensures compliance with corporate governance and reporting requirements.
9. Financial Intelligence Unit (FIU-IND): FIU-IND is responsible for combating
money laundering and terrorist financing by analyzing and disseminating financial
intelligence to law enforcement agencies and other relevant authorities.
10. Stock Exchanges: India has multiple stock exchanges, with the National Stock
Exchange (NSE) and the Bombay Stock Exchange (BSE) being the most prominent. These
exchanges are self-regulatory organizations responsible for maintaining orderly and
transparent trading in the equity and derivative markets.

These regulatory authorities work in coordination to maintain the stability, integrity, and
efficiency of India's financial markets and institutions. They play a crucial role in
protecting the interests of investors, promoting economic growth, and ensuring the
overall health of the financial system.

Schedule Bank: It refers to a bank that is included in the Second Schedule of the
Reserve Bank of India (RBI) Act, 1934. Being listed in the Second Schedule signifies that a
bank is eligible to be regulated by the Reserve Bank of India and is entitled to certain
privileges and responsibilities.

Schedule Co-operative Bank: Cooperative banks are financial institutions that operate
on a cooperative basis, primarily serving the financial needs of their members, who are
also their customers. They are governed by cooperative principles and are often formed
by individuals with common interests or affiliations, such as farmers, urban residents, or
workers. The bank is subject to regulatory oversight by the Reserve Bank of India and is
entitled to certain privileges and responsibilities, similar to scheduled commercial banks.

Cooperative banks are owned and controlled by their members, who are also customers
of the bank. Members typically have voting rights and a say in the bank's governance.
Cooperative banks often have a community-centric approach and aim to serve the
specific financial needs of their members and the local community.

Cooperative banks in India can be categorized into two main types: urban cooperative
banks (UCBs) and rural cooperative banks (RCBs). UCBs primarily serve urban and semi-
urban areas, while RCBs cater to rural and agricultural regions.
Non Banking Financial Company: NBFC stands for Non-Banking Financial Company.
NBFCs are financial institutions that offer a wide range of banking and financial services
similar to traditional banks, but they do not hold a banking license and, therefore,
cannot accept demand deposits from the public. Unlike traditional banks, NBFCs do not
have a banking license. This means they cannot issue checks and cannot accept demand
deposits (like savings and current accounts) from the public.

NBFCs can engage in a wide range of activities, including consumer finance,

microfinance, leasing, factoring, housing finance, infrastructure finance, and more. Some
specialize in specific niches, while others offer a broader array of services.

NBFCs often serve as an important source of credit, especially for individuals and small
and medium-sized enterprises (SMEs) who may face challenges accessing loans from
traditional banks due to stricter lending criteria.

IFCI: The acronym "IFCI" stands for the "Industrial Finance Corporation of India." IFCI is a
financial institution in India with a long history and a significant role in the country's
industrial and financial development.

IFCI was established in 1948 as the first Development Financial Institution (DFI) in India.
Its primary mission was to provide long-term finance and credit to the industrial and
infrastructure sectors. IFCI also acted as a refinancing institution, providing funds to
other financial institutions, banks, and cooperative societies to promote industrial and
infrastructure development.

IDBI: Industrial Development Bank of India was established in 1964. Its primary mission
was to provide financial assistance to industrial projects and promote economic
development in India.

SIDBI: Small Industries Development Bank of India, established on April 2, 1990, is

dedicated to the promotion and financing of small and medium-sized enterprises
(SMEs).
SIDBI offers refinancing support to various financial institutions, including commercial
banks, cooperative banks, and regional rural banks, to help them extend credit to SMEs
at affordable terms. SIDBI is a major player in implementing the CGTMSE scheme, which
provides credit guarantees to financial institutions for loans extended to micro and small
enterprises, reducing the risk for lenders and increasing access to credit for SMEs.
NABARD: National Bank for Agriculture and Rural Development, is a prominent
financial institution in India that focuses on the development of the agricultural and
rural sectors. It was established in 1982 as an apex development bank.
NABARD's primary mission is to promote sustainable and equitable rural development
in India by providing financial and developmental support to various stakeholders,
including farmers, rural cooperatives, and rural financial institutions. NABARD provides
refinancing support to financial institutions such as regional rural banks (RRBs) and
cooperative banks, enabling them to extend credit to rural borrowers, including farmers
and rural entrepreneurs. NABARD promotes microfinance institutions (MFIs) and self-
help groups (SHGs) as important channels for financial inclusion in rural areas. It
finances rural infrastructure projects, including irrigation, rural roads, bridges, and
agricultural marketing infrastructure. NABARD plays a crucial role in the development of
rural areas by financing and facilitating a wide range of activities, including agriculture,
rural infrastructure, rural industries, and rural financial institutions.

EXIM: Export-Import Bank, provide financial and credit support to domestic companies
engaged in international trade. Their primary goal is to promote exports and facilitate
imports by offering various financing programs, export credit insurance, and guarantees.

NHB: National Housing Bank (NHB): NHB is the regulatory authority for housing finance
companies (HFCs) in India. It oversees and regulates HFCs to ensure the stability of the
housing finance sector.

ECGC: Export Credit Guarantee Corporation of India Limited, established in 1957, offers
export credit insurance policies to Indian exporters, primarily to protect them against
non-payment or delayed payment by overseas buyers. These policies provide exporters
with coverage for both commercial and political risks.

DICGC: DICGC stands for Deposit Insurance and Credit Guarantee Corporation. DICGC is
a subsidiary of the Reserve Bank of India (RBI) and plays a crucial role in safeguarding
the interests of depositors in Indian banks. DICGC provides deposit insurance coverage
of up to ₹5 lakhs (rupees five lakhs) per depositor per bank. This means that if a bank
fails, each depositor is eligible to receive up to ₹5 lakhs as compensation for their
insured deposits in that bank.