Purpose of SEBI

These days, it has become all the trendier to invest their money in any of the above options. But every investment carries a risk with it. It becomes all the more difficult for a naive person to invest his money into all such things.

That’s where the regulatory bodies come into the picture. SEBI is a regulatory body that is handled by the Government so that the government keeps a check on the share market, mutual funds etc. and helps the users to gain benefits from the. And also to secure their money from the fraudsters by regulating the laws and rules abiding by the policies.

What do we Understand By SEBI?

SEBI is the short form for the Securities and Exchange Board of India.

It was formed in the year 1988 on the 12th of April to serve as a body to regulate the financial markets Of India.

When the body was first formed, it was a non-statutory body. This means that earlier, it had no power or authority to regulate the finances of the country. But later, the Government decided to change its status.

In the year 1992, The Government of India declared it an autonomous body that had the power and authority to take up the financial matters in its hand and look after the finances in the primary market.

The body had the authority to look after the finances in the market and also to regulate the rules governing them.

The security to assist the finances in the market is very important as it can lead the fraudsters to misuse the money. That’s why a regulatory body like SEBI is essential for the primary market.

Why was the need for SEBI to be formed?

As we know that before the Independence of India, the Britishers used to import and export spices, dyes, clothes etc., to the international markets owing to the Rich Cultural Heritage of the country.

However, after India got independence from the Britishers and came to know about the rich heritage of the country and the jaw-dropping prices paid for all the indigenous products, it led to the misuse of the resources.

In the late ’90s, particularly in the 1970s and 1980s, the financial market saw a huge misuse of money. The establishment of the financial market was a new thing for the individuals ready to invest their money. 

Seeing the golden opportunity, many people started to violate the limit and practices like becoming self-claimed fake bankers, fake private companies set up, violating the rules of the policies like Company Acts, Hiking the prices of the shares unnecessarily, violating the rules governing the stock market, delaying the process of delivering of the shares, unnecessary hiking of the charges of the duties etc. became the problems faced by the people. This led to the beginning of disinterest among the people. People became hesitant to invest in the share market and seeing the discrepancies caused, and the Government felt the need to form a body that would look after all these malpractices.

Hence, The Government decided to form SEBI or Securities and Exchange Board of India.

Functions Of SEBI

The three prime functions of SEBI are:

• Protective

• Regulatory

• Developmental

Protective –

The protective function of the SEBI deals with the protection of the users who invest their money so that they are safeguarded by the fraudsters or the middle man.

This function aims at:

1. Preventing the hike in the share market suddenly.’
2. Preventing the trading inside the market anonymously
3. Promoting the use of fair practices in the trading
4. Creating an aware and informed environment among the users
5. Doing the best to curb all the bad practices prevalent in the market.

Regulatory

The regulatory Function of the Sebi aims at regulating the rules of the market so that the investors, as well as the dealers, abide by the rules and regulations.

The regulatory function is:

1. Laying a guideline for the companies to follow so that uniformity is maintained.
2. Regulating the companies registered in the market.
3. Fixing a proper fee for all the purposes.

1. Registering the names of the brokers so that there is no fake person registered

Developmental Function

The developmental Function aims at developing good practices and encouraging people to learn about the stock market and its functions.

Objectives Of SEBI

The objectives of SEBI are:

1. Trying to curb the malpractices prevalent in the market and encouraging a fair and clean state of practices.
2. To help in the protection of the users and the investors who invest their hard-earned money in the market.
3. To see to the development of fair and transparent services in the market which can help in the proper functioning of the body.

 Conclusion

All three objectives of the SEBI aim at providing maximum coverage and benefit to the investors so that they don’t have a fear of losing money and investing more in the stock market.

The main agenda behind the formation of the SEBI was to encourage more and more people to invest their money properly and earn good interest so that they have proper security for their future.