Page 313 - DCOM304_INDIAN_FINANCIAL_SYSTEM

Indian Financial System

Notes SCR Act as well as by the SEBI Act to regulate the activities of primary and securities
markets and their various players. The SEBI has also been charged with the responsibility
of developing the securities market in India.

 The SEBI has taken several measures to improve the functioning of the stock exchanges,
modernize their infrastructure and create incredible investment climate. It has also taken
measures to increase integration of the country's market with global securities market.
However, the SEBI has not been found effective in monitoring the operations of the
exchanges and the brokers. This suggests a strong need to develop robust monitoring
system by the SEBI.
 RBI is also known as the bank of last resort. It is empowered with the responsibility of
regulator, advisor and monitor of the monetary system of the country. RBI is the Central
Bank of India and controls the entire money issue, circulation and control by its monetary
policies and lending policies by periodical updates or corrections to discipline the economy.
It acts as an advisor to the Government of India and states Governments, implements
Forex polices; it works in tandem with the Govt. of India in promoting trade and as the
account holder of foreign currency transactions and the Balance of Payment (BOP).

14.5 Keywords

Bank rate: Bank rate is the standard rate of discount charged by the Central Bank of the country
to eligible parties. It is the minimum official rate at which the Central Bank rediscounts first
class bills of exchange from the discount houses and commercial banks.
CRR: Cash Reserve Ratio.
Instruments of Credit Control: The operation of credit control is through various instruments of
policy. These instruments are classified in to quantitative or general controls and qualitative or
selective controls.
Open market operations: OMO are an important instrument of monetary policy and refer to the
purchases and sales by the Central Bank of government securities, treasury bills, gold, foreign
exchange etc. in India.
SLR: Statutory Liquidity Ratio.

14.6 Review Questions

1. Explain about the role of RBI as a regulator of the monetary system.
2. What are the functions of RBI?
3. Describe about how it monitors the economy for growth.
4. Why was the SEBI constituted? How far has the SEBI been successful in achieving its
objectives?
5. What are the functions and powers of the SEBI?

6. What steps have the SEBI taken to regulate the primary market in India?
7. Assess the efforts made by the SEBI in regulating and developing the stock market of the
country.

Answers to Self Assessment

1. Reserve Bank of India, Securities and Exchange Board of India
2. financial institutions 3. stock exchanges

308 LOVELY PROFESSIONAL UNIVERSITY