SEBI or Securities and Exchange Board of India was founded on 12 April 1992 as the Indian securities market’s regulatory authority.

• SEBI is a statutory body of the Government of India, entrusted with creating a safe investment environment for Indian investors.

• SEBI has certain powers and functions as per the SEBI Act of 1992.

• If you are investing in mutual funds, it is important for you to be aware of the rules and regulations laid down by SEBI.

Before the Securities and Exchange Board of India was founded, there were multiple government institutions that regulated the Indian securities market, thereby resulting in inefficiency and inconsistency.
 

The Government of India awarded new regulatory powers to SEBI in 2014, which allowed SEBI in undertaking search and seizure operations, and applying harsher punishments for insider trading and rigging markets.
 

SEBI is considered to be one of the top regulatory authorities in the world, and plays a crucial role in the regulation and growth of the Indian securities market.

Also read: SEBI's new rules for Multi-Cap Funds in India

SEBI has been entrusted with regulating the functionality of the Indian capital market. Here are the objectives of SEBI:

• Monitoring and regulating the Indian securities market, thereby safeguarding investors’ interests.

• Implementing various rules and regulations, formulating guidelines, thereby inculcating a safe investment environment.

• Avoid malpractices in the stock market of India.

The Securities and Exchange Board of India follows a corporate structure wherein there is a Board of Directors, department heads, senior management, and various important departments.
 

SEBI has more than 20 departments, to be precise, and each department has its respective head, who are again administered by a hierarchy.
 

SEBI’s hierarchical structure has 9 designation officers

• The chairman, who is nominated by the Union Government of India

• Two members from the Union Finance Ministry of India

• One member from the RBI (Reserve Bank of India)

• Five members nominated by the Union Government of India
   

The following are some of the most crucial departments of SEBI

• Investment Management Department

• The Foreign Portfolio Investors and Custodians

• Commodity and Derivative Market Regulation Department

• National Institute of Securities Market

• The Information Technology Department

• Office of International Affairs

• Human Resource Department
   

There are several other crucial departments in SEBI, apart from the above-mentioned, that are responsible for taking care of the legal, financial and enforcement-related affairs.
 

Also read: Mutual Fund Cut Off Time

The SEBI Act of 1992 lays down certain powers vested in the regulatory body. Let us look closely at what the powers and functions of SEBI are.
 

Powers of SEBI

• SEBI has quasi-judicial powers which allow it to pass judgements in cases of unethical or fraud practices in the securities market.

• SEBI’s quasi-executive powers allow it to examine the Book of Accounts and other important documents to gather evidence against violations. Legal action can be taken by SEBI in such cases.

• SEBI’s quasi-legislative powers allow it to protect the investors’ interests by formulating rules and regulations which encompass insider trading regulations, essential disclosure requirements, listing obligations, and more.
   

Functions of SEBI

• Protecting the Indian investors’ interests in the securities market.

• Promoting the development and functionality without any hassles of the securities market.

• Regulating the securities market business operations.

• Serving as a platform for bankers, registrars, stockbrokers, portfolio managers, share transfer agents, and others.

• Regulating the tasks that have been entrusted to credit rating agencies, foreign portfolio investors, depositors, and others.

• Educating investors regarding the securities market and its intermediaries.

• Prohibiting fraudulent and unfair practices with the securities market.

• Monitoring company takeovers as well as acquisition of shares.

• Maintaining efficiency of the securities and keeping it up-to-date, with proper developmental tactics and research.
   

Also read: Registered Investment Advisor (RIA)

As an investor in India, you need to be aware of how SEBI functions and the rules and regulations it introduces, so that you can keep investing in mutual funds schemes without any troubles.
 

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