Slide 1

INDIAN CAPITAL MARKET

Problems in Indian Capital Markets before 1992

Multiplicity of administration

Poor disclosure in prospectus

Investors faced problems of delays (Refund, Transfers etc.)

No concept of capital adequacy

No inspections of stock exchanges undertaken

Problems in Indian Capital Markets before 1992

Stock Exchanges management dominated by brokers

Poor disclosures by Mutual Funds (NAV not published, No valuation Norms)

No prohibition of insider trading, or fraudulent and unfair trade practices.

Primary markets not in the main stream of the financial systems

REFORMS IN INDIAN CAPITAL MARKET

Reforms in Indian Capital MarketCompanies free to raise funds from securities markets after filing prospectus with SEBI

SEBI introduces regulation for primary & other secondary market intermediaries

Listed Cos to furnish annual statement to the exchanges

Book Building introduced for institutional investors

SEBI introduces regulations governing substantial acquisition of shares and takeovers.

Reforms in Indian Capital Market NSE establishment as a stock exchange with national wide electronic trading

BSE introduces screen based trading

Capital adequacy requirement for brokers

System of mark to market margins introduced

Stock Lending schemes introduced

NSCCL setup by NSE

Reforms in Indian Capital MarketSEBI strengthen surveillance mechanisms and have a separate surveillance departments with all stock exchanges

Depositories act introduces for Electronic transfer of shares.

Permission to access in international capital markets by Indian companies through Euro issues

FDI allowed in stock broking ,AMCs, Merchant Bankers , NBFCs.

FIIs allowed to access Indian capital markets on registration with SEBI

Regulatory Framework of Indian Capital Markets

SEBI

Setup in 1992 , as a statutory bodyRegistering & regulating intermediariesInvestor protection through regulating Indian capital marketsBoost up the development of Indian Capital Markets Registering & regulating service providers, Mutual funds, collective investment schemes, venture capital funds, takeovers etc.Power to inspect book, records, suspend registered entities and cancel registration

RBI

Regulatory involvement in Indian Capital MarketsLimited to the Debt ManagementForeign Exchange ControlLiquidity support to market participantsRegulate primary dealers in the Government securities marketsSecurities transactions that involve foreign exchange transaction need prior permission of RBIImportant role in NSE debt Markets

DCA(Dept of Company Affairs)

Administered by Controller of capital issue(CCI)

Part of Ministry of Finance

In 1992 ,Liberalize capital issuance and pricing

Public & Private Companies were governed by companies act 1956, which continued to be administered by DCA.

Specify certain aspects concerning capital issuance and securities trading.

Stock Exchanges

Two major exchanges (NSE,BSE) in India.

Automated Trading System developed for fast & transparent execution of trades

Listing of securities in exchanges

Introduced risk management systems

Committees of stock exchange set up to handle matters of discipline , default and investor-broker disputes

Major crash in Indian Capital Markets

Major Rallies in Indian Capital Markets