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Aniket Dnyaneshwar Hirde

Discuss the role... highlight the challenges... suggest reformsGS2UNKNOWN

Discuss the role of Securities and Exchange Board of India (SEBI) in the regulation of the share market and safeguarding the interests of investors. In the light of government highlight the challenges faced by the SEBI and suggest reforms in this regard. (Answer in 250 words) [15 Marks]

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AnswerKeywords

Introduction

Securities & Exchange Board of India (SEBI) is a statutory organisation which regulates EqQ share markets in India.

18 words

Main Body

Securities & Exchange Board of India (SEBI) is a statutory organisation which regulates EqQ share markets in India. Its functions are:

1Regulating companies, stock exchanges, clearing corporations, etc.
2Protecting investor interests via ensuring disclosures of information by companies.
3Investigating allegations/mal-practices. Eg:- SEBI panel for Adani short selling incident.

Challenges faced by SEBI:

1Volume: Ever growing share market, IPOs, etc. with start-up boom in India.
2Round-tripping: Money routed through shell companies making it difficult for SEBI to find ultimate beneficial owner. Eg:- Adani-ese.
3External Shocks:- SEBI cannot always protect own investor interest. Eg:- FPI outflow clue to Fed Rate rise in FY23 led to drop in stock markets.
4Cryptocurrencies: 1.5 million trade in crypto which is outside of SEBI purview.
5Corporate Governance Lapses:- Like Viking-fishers, PNB scam, etc. which threaten investor interest but cannot be controlled by SEBI alone.

Way Ahead:

1Reorganizing SEBI: Separate divisions for startups, blue-chip companies for efficiency.
2Inter-government group: Across RBI, SEBI, Ministry of Corporate Affairs, etc. to ensure borrowing, corporate governance as per regulations.
3International Coordination: Information sharing agreements between global exchange boards to avoid round-tripping.
4Enhanced investor outreach: via smartphones, monthly newsletter to educate them on new opportunities, market risks, etc.

SEBI has potential to mobilize savings of average Indian household & channelize it for India's growth story.

1Reorganizing SEBI: Separate divisions for startups, blue-chip companies for efficiency.
2Inter-government group: Across RBI, SEBI, Ministry of Corporate Affairs, etc. to ensure borrowing, corporate governance as per regulations.
3International Coordination: Information sharing agreements between global exchange boards to avoid round-tripping.
4Enhanced investor outreach: via smartphones, monthly newsletter to educate them on new opportunities, market risks, etc.

SEBI has potential to mobilize savings of average Indian household & channelize it for India's growth story.

— Aniket Dnyaneshwar Hirde

302 words19 paragraphs

Conclusion

SEBI has potential to mobilize savings of average Indian household & channelize it for India's growth story.

17 words

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Topper

Aniket Dnyaneshwar Hirde

Subject & Paper

GS2UNKNOWN

Topic

Governance and Regulation

Financial Market Regulation

SEBI role and functions

Writing Stats

337

Total words

19

Paragraphs

formal, informative

Tone

Linked PYQ

Vinod is an honest and sincere IAS officer. Recently, he has taken over as Managing Director of the State Road Transport Corporation, his sixth transfer in the past three years. His peers acknowledge his vast knowledge affability and uprightness. The Chairman of the State Road Transport Corporation is a powerful politician and is very close to the Chief Minister. Vinod comes to know about many alleged irregularities of the Corporation and the high-handedness of the Chairman in financial matters. A Board Member of the Corporation belonging to the Opposition Party meets Vinod and hands over a few documents along with a video recording in which the Chairman appears to be demanding bribe for placing a huge order for the supply of QMR tyres. Vinod recollects the Chairman expediting the clearing of pending bills of QMR tyres. Vinod confronts the Board Member as to why he is shying away from exposing the Chairman with the so-called solid proof he has with him. The members inform him that the Chairman refuses to yield to his threats. He adds that Vinod may earn recognition and public support if he himself exposes the Chairman. Further, he tells Vined that once his party comes to power, Vinod’s professional growth would be assured. Vinod is aware that he may be penalised if he exposes the Chairman and may further be transferred to a distant place. He knows that Opposition Party stands a better chance of coming to power in the forthcoming elections. However, he also realises that the Board Member is trying to use him for his own political gains. (a): As a conscientious civil servant, evaluate the options available to Vinod. (b): In the light of the above case, comment upon the ethical issues that may arise due to the politicization of bureaucracy.

20M2023Evaluate