REFORMS IN INDIAN FINANCIAL SYSTEM

 

INTRODUCTION                                     

Well developed securities market are the backbone of any financial system . It serves as a barometer of the financial health of the economy.

IFS is the medium that aids in channelizing & Mobilization of funds for investment related purposes . they also help in determine the prices of securities . With passage of time , The Indian security market has undergone remarkable changes & grown exponentially , particularly in terms of

·       RESOURCE ALLOCATION

·       INTERMEDIARIES

·       THE NUMBER OF LISTED STOCK

·       MARKET CAPITALISATION

·       TURNOVER & INVESTOR POPULATION

·       INVESTOR PROTECTION

RECENT TRENDS & DEVELOPMENTS IN INDIAN SECURITIES MARKET

SEBI ACT ,1992 : SEBI has replaced the Capital Issues (Control)Act , 1947 . It is autonomous body of CG having perpetual succession & common seal .

OBJECTIVES / FUNCTIONS OF SEBI :

 

SCREEN BASED TRADING

 A nationwide online fully automated screen based trading system (SBTS) was originated where a member can punch quantities of securities & the prices into computer at which he likes to transact & the transaction is excuted as soon as it finds a matching a sale & buy order from other party.

 

REDUCTION OF TRADE CYCLE / ROLLING SETTLEMENT

Earlier , the trading cycle for stocks which varied from 14days to 30 days & the settlement involved another fortnight.

IN DEC 2001 All scrips & dealing of securities were moved to rolling settlement & settlement period was reduced progressively from T+5 days to T+3 days.

From April, 2003 onwards , T+2 days settlement cycle is being allowed .

                                                             

DEPOSITORIES ACT , 1996

Depositories ( NSDL , CDSL ) is an agency with whom securities are deposited in electronic form .

It was introduced for the fast , inexpensive & hassle free transactions of securities .

DEMATERIALISATION                                 

The Process by which physical certificates of an investor are converted into equal number of securities in electronic form & credited into investor 's account with depository participant .

                                                                   

PROCESS OF DEMATERIALISATION

GLOBALIZATION

Indian companies were permitted to tap foreign markets by issusing ADR, GDR & FCCB . RBI has permitted two way fungibility for ADR / GDR which means the investor who hold ADR/ GDR 'S can cancel them with depository & sell the underlying shares in the market.

RESEARCH IN SECURITIES MARKET

 

In collaboration with NCAER ( National council of applied economic research ) , SEBI brought out a survey of india investors which estimates investor protection in India .

DIRECT MARKET ACCESS            

It is a facility which allows brokers to offer clients direct approach to the exchange trading system through the broker 's infrastructure without manual intervention by the broker.

                                                   

CONCLUSION

SEBI has come a long way since its Inception as an institutions regulating the Indian Securities Market. It has boosted a lot of reforms to increase the safety of investors in the stock market .

 

YOU TUBE LINK:                  

http://youtu.be/SGWknfh7zdg

                                

Author Name:

Himanshi Chugh

(Assistant Professor, Management Department)