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SEBI: full form, powers and functions
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SEBI is the Securities and Exchange Board of India, the regulator of the securities (stock, bond and mutual fund) market. It was created on 12 April 1988 as a non-statutory body and given statutory powers by the SEBI Act, 1992. Its head office is in Mumbai (Bandra Kurla Complex), and it has regional offices, including a Southern Regional Office in Chennai.
What SEBI does
The SEBI Act directs it to protect the interests of investors, promote the development of the securities market and regulate it. It oversees:
- Stock exchanges and clearing corporations
- Brokers, merchant bankers and portfolio managers
- Mutual funds and alternative investment funds
- Foreign portfolio investors, credit rating agencies and depositories
- Public issues of shares and bonds (IPOs)
- Real estate and infrastructure investment trusts
Its three kinds of power
| Power | Meaning | Example |
|---|---|---|
| Quasi-legislative | Frames regulations | Insider trading and takeover rules |
| Quasi-judicial | Holds hearings and passes orders | Penalties for market manipulation |
| Quasi-executive | Inspects, investigates and enforces | Raids and orders to freeze accounts |
Appeals against its orders go to the Securities Appellate Tribunal (SAT), and from there to the Supreme Court.
Board
The board has a chairman, two members from the Union Finance and Law ministries, one member from the RBI and five other members, of whom at least three are whole-time. The chairman is appointed by the Central Government. Names of office-holders change, so take them from a recent news source.
SEBI vs the other financial regulators
How bank exams ask about it
Look for the year of formation (1988) and statutory status (1992), the head office, the regulator for mutual funds and stock exchanges, and the matching of regulators with sectors. Government securities are regulated mainly by the RBI, not SEBI, which is a favourite trap. Put these in the regulator table in banking awareness.
Where to check
sebi.gov.in carries the Act, regulations and press releases.
Frequently asked questions
Is SEBI under the RBI?
No. They are separate regulators, though they coordinate through the Financial Stability and Development Council.
Does SEBI regulate banks?
No. The RBI regulates banks. SEBI regulates how banks behave only when they act as intermediaries in the securities market, such as a custodian or depository participant.
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