InvestorQ : How exactly is the G-Secs and call money market regulated and who is the final regulating authority?
Rashi Mehra made post

How exactly is the G-Secs and call money market regulated and who is the final regulating authority?

Angel dcosta answered.
3 years ago

Reserve Bank of India (RBI)

The Reserve Bank of India is the main regulator for the Money Market. Reserve Bank of India also controls and regulates the G-Secs Market. Apart from its role as a regulator, it has to simultaneously fulfil several other important objectives viz. managing the borrowing program of the Government of India, controlling inflation, ensuring adequate credit at reasonable costs to various sectors of the economy, managing the foreign exchange reserves of the country and ensuring a stable currency environment.

The RBI controls the issuance of new banking licenses to banks. It controls the manner in which various scheduled banks raise money from depositors. Further, it controls the deployment of money through its policies on CRR, SLR, priority sector lending, export refinancing, guidelines on investment assets etc.

Another major area under the control of the RBI is the interest rate policy. Earlier, it used to strictly control interest rates through a directed system of interest rates. Each type of lending activity was supposed to be carried out at a pre-specified interest rate. Over the years RBI has moved slowly towards a regime of market determined controls.

Securities & Exchange Board of India (SEBI)

The SEBI is the regulator for the Indian Corporate Debt Market is the Securities and Exchange Board of India (SEBI). SEBI controls bond market and corporate debt market in cases where entities raise money from public through public issues.

SEBI regulates the manner in which such moneys are raised and tries to ensure a fair play for the retail investor. It forces the issuer to make the retail investor aware, of the risks inherent in the investment, by way and its disclosure norms. SEBI is also a regulator for the Mutual Funds, SEBI regulates the entry of new mutual funds in the industry. It also regulates the instruments in which these mutual funds can invest. SEBI also regulates the investments of debt FIIs.

Apart from the two main regulators, the RBI and SEBI, there are several other regulators specific for different classes of investors, e.g. the Central Provision Fund Commissioner and the Ministry of Labour regulate the Provident Funds which are for specific class of investors only.

In the case of religious and charitable trusts, they are regulated by some of the State governments of the states, in which these trusts are located.