Powers and Functions of SEBI
SEBI stands for Securities and Exchange Board of India. It is a legal body set up by the Government of India in 1992 to protect the interests of people investing in securities. SEBI also oversees the working of the stock market and mutual funds to ensure they function smoothly. Functions of SEBI include:
Protective Functions
Regulatory Functions
Development Functions
Powers and Functions of SEBI
SEBI has several powers and duties to ensure the smooth working of the securities market. These include:
Regulatory Powers
Controlling stock exchanges and securities markets.
Making rules for how the market operates.
Protective Powers
Protecting investors from fraud and unfair practices.
Preventing any illegal activities in the market.
Development Functions
Educating investors and spreading awareness.
Supporting new ideas and fair practices in the market.
Judicial Powers
Investigating wrongdoings in the market.
Taking action and punishing those who break the rules.
Advisory Powers
Advising the government on market-related policies.
Suggesting ways to improve the financial system.
SEBI works to make the securities market safe and fair while encouraging its growth.
Purpose of SEBI
SEBI was set up to create a system that helps in collecting and using money properly. It provides rules, a working setup, and facilities to meet the needs of the growing market.
It focuses on helping these groups:
Issuers: SEBI gives a platform for businesses to raise money.
Investors: It protects investors by giving correct and timely information.
Intermediaries: SEBI supports intermediaries by ensuring fair competition and proper facilities.
Structure of SEBI
The SEBI Board has nine members, which include:
A Chairman is chosen by the Central Government.
One member from the Reserve Bank of India (RBI).
Two members from the Ministry of Finance.
Five members are selected by the Central Government.
Conclusion and Key Takeaways
The Securities and Exchange Board of India (SEBI) is crucial in ensuring a transparent, fair, and efficient securities market in India. Established in 1992, SEBI performs diverse functions, including regulating stock exchanges, protecting investors from fraud, and encouraging fair practices. Its powers span regulatory, protective, developmental, judicial, and advisory domains, allowing it to oversee market operations, take legal actions against malpractices, and promote investor education. SEBI’s structured governance, comprising representatives from the Central Government, RBI, and Ministry of Finance, ensures comprehensive oversight. By safeguarding investor interests, enabling businesses to raise capital, and fostering innovation, SEBI contributes to the stability and growth of India’s financial ecosystem.
FAQs on Functions of SEBI: Objectives, Purpose and Structure
1. What are the Regulatory Functions of SEBI?
SEBI’s regulatory work ensures the fair and smooth running of the securities market. It makes rules for stock exchanges and market participants, registers and monitors brokers and mutual funds, and keeps a check on trading to stop unfair practices. SEBI also makes sure companies share important information regularly, manages takeovers and mergers, and checks if rules are being followed. These efforts help keep the market honest and clear.
2. What are the Role and Functions of SEBI?
SEBI manages and develops the securities market while protecting investors. Its main functions are:
Protecting investors from fraud.
Monitoring brokers, mutual funds, and stock exchanges.
Promoting fairness and awareness.
Stopping unfair practices like insider trading.
Making sure market rules are followed.
These actions help keep the market honest and smooth.
3. What are the Development Functions of SEBI?
SEBI's development functions aim to improve the securities market. It spreads awareness among investors, ensures fair practices, and makes it easier for businesses to raise funds. It also supports new ideas and methods to make the market simple and efficient for everyone.
4. What are the Protective Functions of SEBI?
SEBI’s protective functions are meant to keep investors safe. It stops fraud, unfair trading, and price cheating. SEBI makes sure companies give correct and timely information to investors and takes action against those who break the rules. This helps keep the market fair and trustworthy.
5. What are the 5 Major Functions of SEBI?
The five main functions of SEBI are:
Protecting investors from fraud.
Regulating stock exchanges and trading.
Monitoring brokers, mutual funds, and other participants.
Stopping unfair practices like insider trading.
Promoting awareness and fair practices in the market.
6. Who is the CEO of SEBI?
Madhabi Puri Buch is the Chairperson of SEBI. She took office on March 1, 2022, with her three-year term ending on February 28, 2025. Buch is the first woman and the first person from the private sector to lead SEBI.
7. How does SEBI ensure fair market practices?
SEBI monitors trading activities, investigates violations, and imposes penalties on those involved in unfair practices.
8. What role does SEBI play in market transparency?
SEBI ensures companies disclose accurate and timely information to maintain transparency in the securities market.
9. Why is SEBI important for the stock market?
SEBI ensures the stock market operates efficiently, transparently, and fairly, building trust among investors.
10. How does SEBI promote market development?
SEBI supports new technologies, educates investors, and improves processes to make the market more efficient and accessible.
