P1 Set 1.22-1.24

Why was SEBI created?

To address malpractices in the growing securities market, protect investors and promote orderly development and regulation of the securities market.

Why did India's capital market require stronger regulation during the 1980s?

The market expanded rapidly, more members of the public invested in shares, and malpractices increased.

What were the four major capital-market malpractices identified as reasons for establishing SEBI?

Self-styled merchant bankers and unofficial private placements; share-price rigging and unofficial issue premiums; violations of company law, exchange rules and listing requirements; and long delays in share delivery and transfer.

What were self-styled merchant bankers and unofficial private placements in the context of the problems that led to SEBI's creation?

Activities that bypassed the applicable rules for raising capital.

How did share-price rigging and unofficial premiums harm the securities market?

They encouraged unfair practices and eroded investor confidence.

What was the role of the Controller of Capital Issues before SEBI became the statutory securities regulator?

It operated under the Finance Ministry and mainly approved the pricing of new issues.

Why was the Controller of Capital Issues considered inadequate for the expanding securities market?

Its role focused on approving issue prices, while the Government and broker-run exchanges lacked adequate legal powers to punish wrongdoing.

On what date was SEBI established as a non-statutory administrative body?

12 April 1988.

How was SEBI initially established in 1988?

By a resolution of the Government of India as a non-statutory administrative body under the overall control of the Ministry of Finance.

What were SEBI's initial purposes when it was established in 1988?

To promote the orderly and healthy growth of the securities market and protect investors.

On what date was SEBI given statutory status through an ordinance?

30 January 1992.

What event exposed weaknesses in securities-market oversight around the time SEBI received statutory status?

The securities scam of 1992.

On what date was the ordinance granting SEBI statutory status replaced by the SEBI Act, 1992?

4 April 1992.

Which legislation was repealed in 1992 when companies were allowed to price issues under SEBI's disclosure-based rules?

The Capital Issues (Control) Act, 1947.

Which office was abolished following the repeal of the Capital Issues (Control) Act, 1947?

The Controller of Capital Issues.

What change did the repeal of the Capital Issues (Control) Act, 1947 enable?

Companies could price their issues freely under SEBI's disclosure-based rules.

What important changes does the PDF attribute to amendments to the SEBI Act in 1995?

SEBI's powers were strengthened and the Securities Appellate Tribunal (SAT) was created to hear appeals against SEBI orders.

Which body regulated commodity futures before its merger with SEBI?

The Forward Markets Commission (FMC).

On what date was the Forward Markets Commission merged with SEBI, according to the PDF?

28 September 2015.

What was the consequence of merging the Forward Markets Commission with SEBI?

SEBI became the regulator of commodity derivatives as well.

Under which section of the SEBI Act is the composition of the SEBI Board specified, according to the PDF?

Section 4.

How many members does the SEBI Board have, according to the PDF?

Nine members.

Who appoints the Chairman of SEBI, according to the PDF?

The Central Government.

How many SEBI Board members are drawn from Central Government ministries dealing with finance and administration of the Companies Act?

Two members.

How many SEBI Board members are drawn from among RBI officials, according to the PDF?

One member.

How many other members are included on the SEBI Board apart from the Chairman, two Central Government ministry members and one RBI member?

Five other members, of whom at least three must be whole-time members.

What is SEBI's basic purpose beyond enforcing rules?

To create an environment in which savings can be mobilised and allocated efficiently through the securities market, while stimulating competition and innovation.

What broad elements make up the securities-market environment SEBI seeks to develop?

Rules and regulations, institutions and their relationships, instruments, practices, infrastructure and policy.

What does SEBI aim to provide for issuers?

A marketplace in which companies can raise the finance they need easily, fairly and efficiently.

What does SEBI aim to provide for investors?

Protection of their rights and interests through adequate, accurate and authentic information disclosed continuously.

What does SEBI aim to provide for intermediaries?

A competitive, professional and expanding market with efficient infrastructure so they can serve investors and issuers effectively.

What are the three overarching objectives stated in the Preamble to the SEBI Act?

Protect the interests of investors in securities; promote the development of the securities market; and regulate the securities market.

What is one objective of SEBI concerning stock exchanges and the securities industry?

To regulate them to promote orderly functioning.

How does SEBI seek to protect individual investors?

By protecting their rights and interests and guiding and educating them.

What is SEBI's objective concerning trading malpractices and self-regulation?

To prevent trading malpractices and balance industry self-regulation with statutory regulation.

What is SEBI's objective concerning intermediaries?

To regulate intermediaries such as brokers and merchant bankers and develop codes of conduct and fair practices that support a competitive, professional market.

Which section of the SEBI Act gives SEBI its functions relating to regulation, development and protection of the securities market?

Section 11.

What are the three broad categories of SEBI's functions?

Regulatory, developmental and protective functions.

What are SEBI's regulatory functions concerning market intermediaries?

Registering and regulating stockbrokers, authorised persons, merchant bankers, underwriters, portfolio managers, registrars, depositories, depository participants, custodians, credit rating agencies and other intermediaries.

Which pooled-investment vehicles does SEBI register and regulate, according to the PDF?

Mutual funds, collective investment schemes, alternative investment funds and venture capital funds.

What is SEBI's regulatory role concerning stock exchanges?

It regulates the business of stock exchanges and other securities markets.

What is SEBI's role concerning substantial acquisitions and takeovers?

It regulates substantial acquisitions of shares and takeovers of companies.

What investigative and supervisory powers does SEBI exercise over exchanges and market participants?

It can call for information, conduct inspections, undertake enquiries and carry out audits of exchanges, intermediaries and other market participants.

Why can SEBI levy fees and other charges?

To carry out the purposes of the SEBI Act.

What role does SEBI play under the Securities Contracts (Regulation) Act, 1956?

It exercises powers under the SCRA that have been delegated to it by the Central Government.

What are SEBI's developmental functions?

Promoting investor education and intermediary training; conducting research and publishing useful information; and developing markets through new products, technology and simpler procedures.

How does SEBI promote investor education and market skills?

By supporting investor education and training intermediaries.

How does SEBI support securities-market research and information?

By conducting research and publishing information useful to market participants.

How does SEBI develop the securities market?

By promoting new products and technology, simplifying procedures and adopting a flexible approach.

What are SEBI's protective functions?

Prohibiting fraudulent and unfair trade practices; prohibiting insider trading and imposing penalties; protecting investors through grievance redress and online dispute resolution; and promoting fair practices and codes of conduct.

What kinds of conduct does SEBI seek to prohibit as fraudulent or unfair trading practices?

Misleading statements, price rigging and market manipulation.

What is SCORES in the context of SEBI's investor-protection role?

A grievance-redress system for investors.

What other dispute-resolution approach is mentioned alongside SCORES in the PDF?

Online dispute resolution.

Which section of the SEBI Act establishes SEBI as a body corporate?

Section 3.

Which section of the SEBI Act concerns the composition of the SEBI Board?

Section 4.

Which section of the SEBI Act covers SEBI's main functions to protect investors, develop the market and regulate it?

Section 11.

Which section of the SEBI Act empowers SEBI to require disclosures by companies issuing or listing securities?

Section 11A.

Which section of the SEBI Act empowers SEBI to issue directions in investors' interests, including disgorgement of wrongful gains?

Section 11B.

What does disgorgement mean in the context of SEBI's powers?

Requiring a person to repay wrongful gains.

Which section of the SEBI Act concerns investigation and the search and seizure of records?

Section 11C.

Which section of the SEBI Act deals with compulsory registration of stockbrokers and other intermediaries?

Section 12.

Which section of the SEBI Act prohibits manipulative and deceptive devices, insider trading and substantial acquisition of shares or control?

Section 12A.

What is covered by Sections 15A to 15HB of the SEBI Act, according to the PDF?

Monetary penalties for various violations, imposed by adjudicating officers.

Which section of the SEBI Act establishes the Securities Appellate Tribunal (SAT), according to the PDF?

Section 15K.

Which section of the SEBI Act concerns appeals against SEBI orders to SAT?

Section 15T.

Under which section may appeals against SAT orders be made to the Supreme Court, according to the PDF?

Section 15Z.

What time limit for appeals to the Supreme Court under Section 15Z is stated in the PDF?

Within 60 days.

Besides the SEBI Act, which major laws does SEBI administer or whose provisions does it administer, according to the PDF?

The Securities Contracts (Regulation) Act, 1956; the Depositories Act, 1996; and provisions of the Companies Act, 2013 relating to issue and transfer of securities by listed companies.

Which SEBI regulations are identified in the PDF as governing public issues?

The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations, 2018).

Which SEBI regulations are identified in the PDF as governing listed-company disclosures?

The Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015.

Which regulations are identified in the PDF as governing substantial acquisitions of shares and takeovers?

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Which regulations are identified in the PDF as prohibiting insider trading?

The SEBI (Prohibition of Insider Trading) Regulations, 2015.

What does the PDF say about the SEBI (Mutual Funds) Regulations, 2026?

It says they were notified in January 2026 to replace the Mutual Funds Regulations, 1996.

Whose orders, besides SEBI's, can be appealed to SAT, according to the PDF?

Orders of IRDAI and PFRDA as well.

What is the Securities Markets Code, 2025, according to the PDF?

A proposed law intended to consolidate the SEBI Act, 1992, the SCRA, 1956 and the Depositories Act, 1996 into a single law.

When was the Securities Markets Code, 2025 introduced in the Lok Sabha, according to the PDF?

December 2025.

What is one proposed change to SEBI's supervisory arrangements under the Securities Markets Code, 2025?

It would allow SEBI to delegate some registration and supervisory work to market infrastructure institutions and self-regulatory organisations.

What investigation time limit does the Securities Markets Code, 2025 propose, according to the PDF?

180 days.

When did the Standing Committee on Finance present its report on the Securities Markets Code, according to the PDF?

23 July 2026.

What investigation time limit did the Standing Committee on Finance recommend instead of 180 days?

One year.

What other changes did the Standing Committee on Finance recommend for the Securities Markets Code, according to the PDF?

Clearer limits on SEBI's rule-making powers and a mandatory investor grievance-redress system.

What does the PDF state about the legal status of the three securities laws pending the Securities Markets Code?

Until the proposed Code is passed and notified, the SEBI Act, 1992, the SCRA, 1956 and the Depositories Act, 1996 continue to apply.

When was the Financial Stability and Development Council (FSDC) established?

December 2010.

Why was the FSDC established?

To monitor financial stability across the system and coordinate regulators because risks can arise where financial sectors intersect.

Who chairs the FSDC?

The Union Finance Minister.

Which regulatory and institutional heads are listed as FSDC members in the PDF?

The heads of RBI, SEBI, IRDAI, PFRDA, IFSCA and IBBI, along with senior Finance Ministry officials.

What are the main responsibilities of the FSDC?

Monitoring overall financial stability; coordinating regulators; overseeing large financial conglomerates; promoting financial literacy and inclusion; and monitoring the macroeconomy for financial stability.

Who chairs the FSDC Sub-Committee?

The RBI Governor.

What is the role of the FSDC Sub-Committee?

It handles detailed inter-regulatory coordination and meets more frequently.

Is the FSDC a statutory or administrative body, according to the PDF?

An administrative body, not a statutory body.

Does the FSDC take over the legal powers of India's financial regulators?

No. It coordinates and monitors but does not take over the powers of individual regulators.

What are the three broad phases in the evolution of India's financial system described in the PDF?

1947–1990: state-led finance; 1991–2008: liberalisation; and 2008 onwards: stability, resolution and digital finance.

What characterised India's financial system during Phase 1, from 1947 to 1990?

State-led finance focused on planned development, nationalisation, directed credit and development financial institutions.

Why did the Government establish development financial institutions during the state-led phase?

To provide long-term industrial finance and support planned economic development.

Which major sectors or institutions were nationalised during the state-led phase, according to the PDF?

The RBI, life insurance, major commercial banks and general insurance.

Which sectors received directed bank credit during the state-led phase?

Priority sectors such as agriculture and small industry.

What was the cash reserve ratio (CRR) peak cited for the state-led finance period?

15%.

What was the statutory liquidity ratio (SLR) peak cited for the state-led finance period?

38.5%.

What does financial repression mean in the context of India's state-led financial system?

A system characterised by administered interest rates and high reserve and government-security requirements that restricted funds available for commercial lending.