Financial Regulators and their International Counterparts

Overview of Key Financial Regulators in India and their International Counterparts

• Securities and Exchange Board of India (SEBI) was established in 1992 with the goal of advancing the securities market and safeguarding investor interests.
• SEBI's key goals include safeguarding investor interests, encouraging securities market development, and regulating the securities market.
• The Securities Exchange Commission (SEC) in the USA carries out duties similar to SEBI but has greater authority to impose fines as a deterrent against stock market fraud.
• Reserve Bank of India (RBI) was established in 1935 and is fully owned by the Government of India, with the responsibility of regulating bank notes, maintaining monetary stability, and running the currency and credit system.
• RBI's policies are primarily driven by inflation, unlike the Federal Reserve (Fed) in the USA, which bases its policies on growth and employment figures.
• The RBI's goal is to keep interest rates high to control inflation, while the industry in the USA and EU is encouraged to borrow money at lower costs to promote economic expansion.
• The Covid-19 outbreak has forced the RBI to decrease interest rates slightly to boost the economy, but too much interest rate lowering could lead to uncontrollable inflation.
• Insurance Regulatory and Development Authority of India (IRDAI) was established in 1999 to safeguard policyholders' interests by regulating and promoting the insurance sector.
• In the USA, insurance is regulated by state governments, while the Office of the Superintendent of Financial Institutions (OSFI) in Canada establishes minimal regulatory standards and expectations to support policyholder and creditor protection.
• Pension Fund Regulatory and Development Authority (PFRDA) aims to promote and develop an organized pension system to meet people's needs for old age income.
• Pension systems are being reformed globally due to the growing demographic challenge, with ERISA controlling pension systems in the USA and Australian pension funds established in 1993.
• Financial regulators in different countries pursue comparable objectives but with different legislative and policy tools, as well as under different economic circumstances.