Securities and Exchange Board of India (SEBI): Functions and Powers

The Indian capital market is one of the biggest capital markets in the world. The main stock exchange of India, the SENSEX has a major role in the global markets. To control and monitor this capital market the government formed the Securities and Exchange Board of India (SEBI). Let us learn more about them.

Securities and Exchange Board of India (SEBI)

The formation of the Securities and Exchange Board of India (SEBI) was done on 12th April 1988. This was followed by the establishment of the SEBI Act on 30th January 1992, which gave SEBI their powers and functions.

The main aim of the SEBI was to control and regulate the capital markets. This was done with the view of protecting the interests of the investors. The government wanted to ensure that the money which the public was investing was safe.

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Over the years this leads to a building of trust and reputation of the capital market and the stock exchange.

Functions of the SEBI

The SEBI Act lists out the powers of the Securities and Exchange Board of India. It has to be responsive to the needs of three particular parties in the capital market. Firstly there are the investors who invest their savings in the market in the hope for a return.

Then there is the issuers, i.e. the companies and institutions that issue securities in exchange for investment. And the SEBI must also govern the market intermediaries, such as brokers, banks, consultants etc.

Since SEBI is the only authority when it comes to the capital markets it has a variety of functions. These functions are of three types or categories as follows,

Quasi-Legislative Functions: These include drafting legislature with respect to the capital markets.
Quasi-Executive Functions: The implementation of the legislation also falls to SEBI. And when necessary they can conduct investigations as well about any wrongdoings.
Quasi-Legal Functions: The SEBI also has the authority to conduct hearings and pass rulings and judgments.

Powers of the SEBI

To be able to function efficiently and keep a definitive control over the market the Securities and Exchange Board of India has been granted some widespread powers. Let us take a brief look.

Has control of the bylaws of every stock exchange in the country. The approval of the SEBI is to be taken for such laws. And the SEBI can also ask the authorities to amend the laws if necessary.
The SEBI can also inspect the books of accounts of any stock exchange to check for irregularities. If the SEBI demands, such stock exchanges must provide any accounts/books/documents as requested.
SEBI can also inspect books of accounts for financial intermediaries.
And SEBI can ask any company to list their shares on more than one stock exchange if they feel it would be more beneficial to the market.

SEBI as a Business Facilitator

The main function of the Securities and Exchange Board of India is to regulate the capital market of India. By doing so it is also responsible for the development and advancement of the capital market. It builds trust among the investors that their investment is safe within its guidelines.

So ultimately the companies wanting to do business now have access to the capital they require. SEBI also facilitates the public offering of such companies.

Another aspect is that SEBI also oversees international investment in the domestic market. It is responsible for the trading of Indian companies in various stock markets across the world.

It coordinates with governing bodies and regulators abroad to make the process simpler and safer. So foreign companies can invest in India and Indian companies can invest in other global companies as well.

Solved Question on Securities and Exchange Board of India

Q: Who appoints the Chairman of the Securities and Exchange Board of India?

Central Government
RBI
The Board itself
None of the above

Ans: The correct option is A. The chairman of the SEBI is chosen by the Central Government. It is a person with knowledge and experience in the securities market, law, finance, administration etc.

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