Challenges before SEBI
Supply the answers to the following questions and your essay is ready:
(A) What is SEBI?
(B) When was it founded?
(C) Its historical background in brief
(D) What are its objectives?
(A) How does SEBI function?
(B) How it is beneficial for better economy?
(C) What are its challenges?
Challenges before SEBI
SEBI has given intellectual leadership for the transformation of equity market. There are various problems and challenges ahead of SEBI.
1. Enforcement process
The statutory powers of SEBI are at par with a civil court .SEBI has made various regulations but only making regulations and giving orders is not enough if it is not able to enforce the same. SEBI need to strengthen its surveillance and enforcement functions. It needs to ensure that violations do not go unnoticed whether small or large.
2. Talent pool and market intelligence
In 2012 SEBI had 643 employees whereas US security and exchange commission alone had 1000 people. As we all know human resource is the most important resource for an organisation. SEBI needs to increase its human resource in both quality and quantity. It needs to significantly im- prove its market intelligence, technology and talent pool in order to improve its performance.
3. Deepening capital market
The number of participant in the capital market has not risen much. Still a large section of society does not deal in security market. SEBI has done a lot to encourage people to participate in capital market such as abolishing entry load on mutual funds, simplifying KYC norms but it needs to take some stronger steps to deepen participation in capital market. It should work deeper participation in equity by pension, superannuation and gratuity funds, developing a vibrant retail debt segment and reducing the cost of transaction.
4. Corporate debt and securitization market
Despite numerous attempts the debt market volume has increased but it has failed to attract sufficient liquidity. The regulator needs to develop a vibrant corporate debt market and securitization market but these largely remain part of over the counter market.
5. Matching up to global standard
Capital markets are growing and the size of SEBI as com- pared to security market is not sufficient to properly regulate the capital market .like its peers (regulators of US and UK) it needs to established self-regulatory organisations. SRO can focus on routine decisions and SEBI can work on more important issues.
6. Negatively charged
SEBI’s appointment process has always been criticise. Allegation of corruption by SEBI staff is frequently heard. The accountability mechanism that envelope SEBI is quite poor. It is very important to make the recruitment process fair and transparent.
SEBI has taken a number of steps in the last few years to reform Indian capital market. It has past various regulations such as freedom in designing and pricing instruments, introduction of stock invest scheme, banning badla system and introduction of electronic trading. It also has faced various controversies such as Ulips , sahara and MCX- SX controversies. In such a small time SEBI has earned its respect and place in the capital market however there are various problems and challenges in front of it which it needs to overcome.