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Website Report
On
“Regulatory Framework”
Submitted By
Varma Pranjal
Roll No: 13011114
Specialization: Finance
Course: Financial Regulatory Framework
Semester III
Academic year: AY 2014-15
BRACT’s
Vishwakarma Institute of Management (An ISO 9001-2008 Certified Institute)
(Approved by AICTE-New Delhi, Recognized by Government of Maharashtra and Permanently Affiliated to University of Pune)
MBA – Programme – Rated as “MH-A” by CRISIL
Recipient of the 19th Dewang Mehta B School Award for the Best B School with Academic Inputs in Marketing
Rewarded as “Second Best Professional Institute in Urban Area Category” by the University of Pune
A. RBI:-
1. Name of the regulator with logo: Reserve Bank Of India
2. Year of establishment: April 1, 1935
3. Headquarters: Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937.
4. Board: The Reserve Bank's affairs are governed by a central board of directors. The board
is appointed by the Government of India in keeping with the Reserve Bank of India Act.
Appointed/nominated for a period of four years o Constitution:
o Official Directors Full-time : Governor and not more than four Deputy Governors
o Non-Official Directors Nominated by Government: ten Directors from various fields and two
government Officials
Others: four Directors - one each from four local boards
Local Boards:-
One each for the four regions of the country in Mumbai, Calcutta, Chennai and New Delhi
Membership: consist of five members each appointed by the Central Government
for a term of four years
1
Dr.Raghuram Rajan Governor
10 Prof. Dipankar Gupta
2 Shri H.R. Khan
Deputy Governor
11 Shri G.M. Rao
3 Dr. Urjit R. Patel Deputy Governor
12 Ms. Ela Bhatt
4 Shri R. Gandhi
Deputy Governor
13. Dr. Indira Rajaraman
5 Shri S. S. Mundra Deputy Governor
14. Shri Y.C. Deveshwar
6 Dr. Anil Kakodkar 15. Prof Damodar Acharya
7 Shri Kiran Karnik 16. Shri Arvind Mayaram
8 Dr Nachiket M. Mor 17. Shri Gurdial Singh
Sandhu
9 Shri Y.H. Malegam
5. Website :-www.rbi.org.in
6. All about RBI in brief:
The Reserve Bank of India, the nation’s central bank, began operations on April 01, 1935. It was established with the objective of ensuring monetary stability and operating the currency and
credit system of the country to its advantage. Its functions comprise monetary management, foreign exchange and reserves management, government debt management, financial regulation and supervision, apart from currency management and acting as banker to the banks and to the
Government. In addition, from the beginning, the Reserve Bank has played an active developmental role, particularly for the agriculture and rural sectors. Over the years, these
functions have evolved in tandem with national and global developments
The Reserve Bank’s regulatory and supervisory domain extends not only to the Indian
banking system but also to the development financial institutions (DFIs), non-banking financial companies (NBFCs), primary dealers, credit information companies and select segments of the
financial markets. In respect of banks, the Reserve Bank derives its powers from the provisions of the Banking Regulation Act, 1949, while the other entities and markets are regulated and supervised under the provisions of the Reserve Bank of India Act, 1934. The credit information
companies are regulated under the provisions of Credit Information Companies (Regulation) Act, 2005.
As the regulator and the supervisor of the banking system, the Reserve Bank has a critical role to play in ensuring the system’s safety and soundness on an ongoing basis. The objective of
this function is to protect the interest of depositors through an effective prudential regulatory framework for orderly development and conduct of banking operations, and to maintain overall
financial stability through various policy measures.
7. Functions of the regulator:
Monetary policy
Regulation and supervision of the banking and non-banking financial Institutions, including credit information companies Regulation of money, forex and government securities markets as also
Certain financial derivatives Debt and cash management for Central and State Governments
Management of foreign exchange reserves Foreign exchange management—current and capital account management Banker to banks
Banker to the Central and State Governments Oversight of the payment and settlement systems
Currency management Developmental role Research and statistics
8.Analysis on any one of the speeches published on the website:
In recent times, the emergence of compliance function as an area of greater focus is an
acknowledgement of the damaging impact of non-compliance, not only on an entity’s own
reputation but, more broadly, also on the confidence in the system. Regulators, supervisors and
international standard setters have become increasingly cognizant of the fact that merely enacting
rules and regulations is a futile exercise unless these are complied with, both in letter and spirit,
by the regulated entities. Not surprisingly, on account of a bigger push from the
regulators/supervisors, the compliance function has assumed massive significance within the
bank’s internal structure and organization. In my address today, I intend to talk about the
relevance of compliance function within the bank’s overall business strategy, operations and
conduct and re-emphasize some of the key elements of the compliance framework that we would
want to see in practice in our banks.
The compliance function is at the center of value creation in a bank, strengthening public
confidence, preserving and enhancing its reputation, and maintaining the integrity of its business and management. In effectively performing this function, in my view, compliance needs to be supported unconditionally through engagement from the top, which includes the Board and the
senior management. The ‘tone from the top’ would set the pace for a sound compliance culture that values honesty and integrity. This would also entail strengthening the edifice of the function,
which includes a well-rounded compliance structure with appropriate IT and quality HR resources in terms of number of qualified staff, training and skill development, independence, interaction with other areas and clear and direct reporting. Another crucial element for the
success of compliance function is inculcation of strong ethics within the organization, which can override profit motive and business target considerations.
Finally, from the regulator’s perspective, compliance is absolutely non-negotiable. Full compliance with all applicable laws, rules and regulations is a must. This belief has to find roots
at the top and steadily percolate to all levels in a bank. Going forward, the compliance function in banks will need to play a greater and more proactive role in business operations as well as risk
management. Let me remind that the cost of non-compliance has been steadily rising as seen from the instances I recounted earlier.
9. Monetary Policy in brief:
One of the most important functions of central banks is formulation and execution of monetary
policy. In the Indian context, the basic functions of the Reserve Bank of India as enunciated in the Preamble to the RBI Act, 1934 are: “to regulate the issue of Bank notes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency
and credit system of the country to its advantage.” Thus, the Reserve Bank’s mandate for monetary policy flows from its monetary stability objective. Essentially, monetary policy deals
with the use of various policy instruments for influencing the cost and availability of money in the economy. As macroeconomic conditions change, a central bank may change the choice of instruments in its monetary policy. The overall goal is to promote economic growth and ensure
price stability, ensuring adequate flow of credit to productive sectors of the economy for supporting economic growth, and achieving financial stability.
The Governor of the Reserve Bank announces the Monetary Policy in April every year for the financial year that ends in the following March. This is followed by three quarterly
reviews in July, October and January. However, depending on the evolving situation, The monetary policy framework in India, as it is today, has evolved over the years. The success
of monetary policy depends on many factors.
Operating Target Monetary Policy Instruments Institutional Mechanism for Monetary Policy-making
Financial Markets Committee (FMC) Monetary Policy Strategy Group
Technical Advisory Committee (TAC) on Monetary Policy Pre-Policy Consultation Meetings Resource Management Discussions
B. SEBI:-
1. Name of the regulator with logo:
Securities and Exchange Board of India
2. Year of establishment:
The Securities and Exchange Board of India was enacted on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
3. Headquarters: Mumbai
Board:
Shri U. K. Sinha Chairman, SEBI
Shri Rajeev Kumar Agarwal Whole-Time Member, SEBI, Shri Prashant Saran
Whole-Time Member, SEBI Shri S. Raman
Whole-Time Member, SEBI Shri Arvind Mayaram Secretary,
Department of Economic Affairs, Ministry of Finance,
Shri Naved Masood Secretary, Ministry of Corporate Affairs
Shri Prakash Chandra Chhotaray IRS (Retired Chairman of Inco Me Tax Settlement Commission, New Delhi) Shri R Gandhi
Deputy Governor Reserve Bank of India
4. Website: www.sebi.gov.in
5. All about SEBI in brief:
It was officially established by The Government of India in the year 1988 and given statutory powers in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI has
its Headquarters at the business district of Bandra Kurla Complex in Mumbai, and has Northern, Eastern, Southern and Western Regional Offices in New Delhi, Kolkata, Chennai and
Ahmedabad respectively.
Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital Issues (Control) Act, 1947.
Initially SEBI was a non statutory body without any statutory power. However in the year
of 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act, 1992. In April, 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government
of India.
The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors
in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto".
SEBI has to be responsive to the needs of three groups, which constitute the market:
The issuers of securities
The investors The market intermediaries.
SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and
enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeal process to create accountability.
There is a Securities Appellate Tribunal which is a three-member tribunal and is presently headed by Mr. Justice J P Devadhar, a former judge of the Bombay High Court. A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive role in streamlining
disclosure requirements to international standards.
6. Functions of the regulator:
Market intermediaries regulation and supervision department (MIRSD)
Market regulation department (MRD)
Corporation finance department (CFD)
Investment management department (IMD)
Integrated surveillance department (ISD)
Investigations department (IVD)
Enforcement of department (EFD)
Legal affairs department (LAD)
Enquiries and adjudication department (EAD)
Office of investor assistance and education (OIAE)
General services department (GSD)
Department of economic and policy analysis (DEPA)
7. Analysis on any one of the speeches published on the website:
During the financial year ended 31st March, 2014, though Venky''s registered a growth of
21.7% in terms of sales turnover, overall growth in profitability grown slightly at lower rate
of 15.2%. This was mainly due to continuous high cost of feed ingredients and lower
realisations from sale of day old chicks and grown up birds for most of the periods. The
performance of the animal health products segment was satisfactory. The performance of the
oilseed segment was impacted due to lower realisations. Expansion programmes commenced
in March, 2013 for augmenting capacities in poultry and poultry products segment, setting up
a new plant for processing of soya seeds and setting up of Venky''s XPRS outlets are under
way and It expect that the same will be completed by second quarter of this financial year.
Benefits of the expanded capacities will accrue to the Company partially in 2014-15 and fully
thereafter. For the financial year 2014-15, It expect that the overall performance of the
Company would be better as compared to the previous year, though the prices of key
ingredients used in poultry feed i.e. maize and soya are expected to be volatile due to the
expected subdued rainfall and uneven weather conditions in most parts of the country. they
foresee a bright future for the Indian poultry industry in general, and your Company in
particular. They thanks to the creation of a strong infrastructure, continued focus on superior
quality and the high standards of customer service and the farsighted vision of our Late
Chairman Padmashree Dr. B.V Rao, we are able to maintain the steady growth of the poultry
industry. With these inherent strengths we are able to maintain competitive edge in a steadily
growing market which has the potential for manifold growth for several years in the future.
8. Brief report on NSE, BSE and any 5 Indian Stock Exchanges in India:
The National Stock Exchange of India Ltd. (NSE) is a stock exchange located in the financial capital of India, Mumbai. National Stock Exchange (NSE) was established in the mid 1990s as a demutualised electronic exchange. NSE provides a modern, fully automated screen-based trading
system, with over two lakh trading terminals, through which investors in every nook and corner of India can trade.
NSE has a market capitalization of more than US$1.5 trillion and Number of securities (equities
segment) available for trading are 3,091 as on June 2014. NSE was mainly set up to bring in transparency in the markets. Instead of trading membership being confined to a group of brokers,
NSE ensured that anyone who was qualified, experienced and met minimum financial requirements was allowed to trade.
NSE was also instrumental in creating the National Securities Depository Limited (NSDL) which allowed investors to securely hold and transfer their shares and bonds electronically. It also
allowed investors to hold and trade in as few as one share or bond. This not only made holding financial instruments convenient, but more importantly eliminated the need for paper certificates
and greatly reduced the incidents of forged or fake certificates and fraudulent transactions that had plagued the Indian stock market. The NSDL's security, combined with the transparency, lower transaction prices and efficiency that NSE offered, greatly increased the attractiveness of
the Indian stock market to domestic and international investors.
BSE
Established in 1875, BSE Ltd. (formerly known as Bombay Stock Exchange Ltd. and established as "The Native Share and Stock Brokers' Association") is one of Asia’s fastest stock exchanges,
with a speed of 200 microseconds and one of India’s leading exchange groups. BSE is a corporatized and demutualised entity, with a broad shareholder-base that includes two leading
global exchanges, Deutsche Bourse and Singapore Exchange, as strategic partners. BSE provides an efficient and transparent market for trading in equity, debt instruments, derivatives, and mutual funds. It also has a platform for trading in equities of small-and-medium enterprises
(SME). Over the past 139 years, BSE has facilitated the growth of the Indian corporate sector by providing an efficient capital-raising platform.
More than 5000 companies are listed on BSE, making it the world's top exchange in terms of
listed members. The companies listed on BSE Ltd. command a total market capitalization of USD 1.51 Trillion as of May 2014. It is also one of the world’s leading exchanges (3rd largest in March 2014) for Index options trading. BSE also provides a host of other services to capital
market participants, including risk management, clearing, settlement, market data services, and education. It has a global reach with customers around the world and a nation-wide presence.
BSE systems and processes are designed to safeguard market integrity, drive the growth of the Indian capital market, and stimulate innovation and competition across all market segments. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000
certification and the Information Security Management System Standard BS 7799-2-2002 certification for its On-Line trading System (BOLT). It operates one of the most respected capital
market educational institutes in the country (the BSE Institute Ltd.). BSE also provides depository services through its Central Depository Services Ltd. (CDSL) arm. BSE’s popular equity index - the S&P BSE SENSEX (Formerly SENSEX) - is India's most widely tracked
stock market benchmark index.
OTCEI
OTCEI was incorporated in 1990 as a Section 25 company under the Companies Act 1956 and is recognized as a stock exchange under Section 4 of the Securities Contracts Regulation Act, 1956. The Exchange was set up to aid enterprising promoters in raising finance for new projects
in a cost effective manner and to provide investors with a transparent & efficient mode of trading.
Modelled along the lines of the NASDAQ market of USA, OTCEI introduced many novel concepts to the Indian capital markets such as screen-based nationwide trading, sponsorship of
companies, market making and scripless trading. As a measure of success of these efforts, the Exchange today has 115 listings and has assisted in providing capital for enterprises that have
gone on to build successful brands for themselves like VIP Advanta, Sonora Tiles & Brilliant mineral water, etc
Studies by NASSCOM, Software Technology Parks of India, the venture capital funds and the
government's IT Task Force, as well as the rising interest in information technology, pharmaceutical, biotechnology and media shares have repeatedly emphasised the need for a national stock market for innovative and high growth companies. Innovative companies are
critical to developing economies like India, which is undergoing a major technological revolution.
OTCEI helpful for
High-technology enterprises
Companies with high growth potential
Companies focused on new product development.
Entrepreneurs seeking finance for specific business projects
Ahmedabad Stock Exchange
Ahmedabad Stock Exchange or ASE is the second oldest exchange of India located in the city
of Ahmedabad in the western part of the country. It is recognized by Securities Contract (Regulations) Act, 1956 as permanent stock exchange. It has adopted a Swastika in its logo
which is one of the most auspicious symbols of Hinduism depicting wealth and prosperity. Ahmedabad Stock Exchange Limited is a premier national equities exchange that plays a key role in the Indian securities markets. Serving individual and institutional investors from around
the world, its primary business is the trading of approximately 2000 nationally listed equities. The Exchange also trades over 200 high growth companies that are solely listed on the ASE or
dually listed with another exchange.
Earlier, all the Stock Exchanges in India functioned under the framework of Bombay Securities
Contracts Act, 1925. The Securities Contract Regulations Act, 1956 was enacted thereafter and all the Stock Exchanges in India were required to get recognition from the Ministry Of Finance. At this juncture, the eventual process of merger took place and Gujarat Share & Stock Exchange,
Indian Share and General Exchange Association and Bombay Share and Stock Exchange, Share and Stock Brokers Association merged with the Ahmedabad Share and Stock Brokers
Association. The membership of the merged entity was 463. In 1982, The Stock Exchange- Ahmedabad got the permanent recognition from the Government of India.
Calcutta Stock Exchange
From a get together under a "Neem Tree" way back in the 1830s, the Calcutta Stock broking fraternity has come a long way. Though the once famous shelter for Calcutta Stock brokers no
longer exists, the roots laid in the last century have dug themselves deep into the city and the region. The North-Eastern region, today plays a crucial role in the country’s capital market,
while the Calcutta Stock Exchange has emerged as the second largest bourse in the country. The investors from the Eastern Zone are also at the forefront today.
The origin of stock broking in India goes back to a time, when shares, debentures and bonds representing titles to property were first issued on the condition of transfer from one person to
another. The earliest record of dealings in securities in India is the East India Company’s loan securities. By 1830 there was a perceptible increase in the volume of business in Calcutta and we
find in the ‘Englishman’ of 1836, the then widely circulated newspaper from Calcutta quotations of 4%, 5% and 6% loans of the East India company as well as shares of the Bank of Bengal being quoted at a considerable high premium over the par value of Rs. 100/-. Three years later, in
1839, quotations were also found in newspapers published from Calcutta, of shares of the Union Bank, the Agra Bank and certain other commercial undertakings like Bengal Bonded Warehouse
Docking Company and Steam Tug Company. The advent of the Companies Act 1850 and subsequent introduction of the principle of limited liability, made investments in stocks and shares popular.
Though Stock Broking was practiced in Calcutta as early as 1836, the members of the broking profession had neither any code of conduct for their guidance, nor any permanent place for congregation. The centre of their activity was near a neem tree, where at present, stands the
offices of the Chartered Bank (now known as Standard Chartered) on Netaji Subhas Road, Calcutta. In 1905, Chartered Bank began to construct their own building, which led brokers to shift the arena of their operation, to the neighborhood of the recent Allahabad Bank.
The year 1997 had been a momentous one in the history of this illustrious institution as on 26th February, 1997 the Calcutta Stock Exchange ushered in a new era by replacing the old manual trading system with completely computerized on-line trading & reporting system known as C-
STAR (CSE Screen Based Trading And Reporting). The on-line electronic screen based trading system was inaugurated by Shri Jyoti Basu, Hon’ble Chief Minister of West Bengal on
26th February, 1997
Delhi Stock Exchange Limited
Delhi Stock Exchange Limited (DSE) is located in Delhi, the Indian Capital surrounded by the most promising States of Northern India which predominantly contribute to the India’s Economic Growth and have significantly large number of Small and Medium Enterprises.
DSE, one of the oldest Stock Exchanges in the country, was established in the year 1947, the year of Indian Independence. Since then, it has played a key role in the development of the economy by facilitating investments in different sectors, thereby creating a reasonably
encouraging equity cult in the northern belt of India. DSE, from the inception, has been helping the companies around, in terms of creation of capital and net-worth. It has contributed in its
inimitable way, in spreading financial literacy amongst the larger populace.
During the year 2007-08, DSE successfully completed the demutualization process with the minimum public holding of 51%. DSE has set an ambitious path of reviving its trading
operations soon backed by the global technology and skills matching the best in the Industry. DSE would soon regain its position as the premier active Stock Exchange in India. DSE intends
to channelize its productive resources towards contributing significantly to the growth of the Capital Market in India.
Delhi Stock Exchange has paired up with the National Securities Depository Limited (NSDL), and commenced trading in dematerialised shares. This started September, 1988. However, the
option for delivering shares either in physical or demats form started in November 1998
Madhya Pradesh Stock Exchange
Madhya Pradesh Stock Exchange (MPSE) is located at Indore, Madhya Pradesh, India is the 3rd Oldest Stock Exchange in the Country & a leading Stock Exchange under outcry system.
MPSE is a SEBI recognized Permanent Stock Exchange. Madhya Pradesh Stock Exchange Limited (MPSE) is the only permanently SEBI Recognized Stock Exchange in Central India. Set
up as an Association of Persons in 1919, MPSE was Corporatized and Demutualised into a Limited Company in 2007. MPSE enjoys the association of 260 members and 296 Listed Companies. MPSE Governing Board is represented by the Strategic investors, trading members
and SEBI nominated Directors. Post Demutualization, the reconstituted Governing Board with joint efforts of the Strategic Investor and Trading members focused on "Revival of the stock
exchange. To further its initiative and vision to provide a Trading Platform to MPSE Members & Listed Companies, MPSE entered into an Strategic Partnership agreement with NSE and BSE under proviso to Section 13 of SCRA which is approved by SEBI.
MPSE was activated u/s 13 with National Stock Exchange Limited on 26th Oct, 2011 & Bombay
Stock Exchange Ltd on 23rd February 2012. MPSE is fully operational with more than 105 members as on 31.12.2012. MPSE has embarked upon a "New Membership Drive" in which 100
new members have been given Trading Membership
C.IRDA:-
1. Name of the regulator with logo:
Insurance Regulatory and Development Authority
2. Year of establishment:1999
3. Headquarters:
4. Members:
Mr. T S Vijayan
Mr. D. D. Singh
Mr. Radhankishan Nair
5. Website :WWW.irda.gov.in
6. All about IRDA in brief: We regulate the Indian insurance industry to protect the
interests of the policyholders and work for the orderly growth of the industry.
Background
1991: Government of India begins the economic reforms programme and financial sector reforms
1993: Committee on Reforms in the Insurance Sector, headed by Mr. R. N. Malhotra,
(Retired Governor, Reserve Bank of India) set up to recommend reforms. 1994: The Malhotra Committee recommends certain reforms having studied the sector
and hearing out the stakeholders
Some recommended reforms o Private sector companies should be allowed to promote insurance companies
o Foreign promoters should also be allowed o Government to vest its regulatory powers on an independent regulatory body
answerable to Parliament
Birth of IRDA
Insurance Regulatory and Development Authority (IRDA) set up as autonomous body under the IRDA Act, 1999
IRDA’s Mission: To protect the interests of policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
IRDA’s Activities
Frames regulations for insurance industry in terms of Section 114A of the Insurance Act 1938
From the year 2000 has registered new insurance companies in accordance
with regulations Monitors insurance sector activities for healthy development of the industry and
protection of policyholders’ interests
7.Functions of the regulator:
Without prejudice to the generality of the provisions contained in sub-
section (1), the powers and functions of the Authority shall include, - Issue to the applicant a certificate of registration, renew, modify,
withdraw, suspend or cancel such registration; protection of the interests of the policy holders in matters concerning
assigning of policy, nomination by policy holders, insurable interest,
settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents
Specifying the code of conduct for surveyors and loss assessors;
Promoting efficiency in the conduct of insurance business; Promoting and regulating professional organizations connected with the
insurance and re-insurance business; Levying fees and other charges for carrying out the purposes of this Act; calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the
insurance business; control and regulation of the rates, advantages, terms and conditions that
may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section
64U of the Insurance Act, 1938 (4 of 1938); Specifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;
Regulating investment of funds by insurance companies;
Regulating maintenance of margin of solvency; Adjudication of disputes between insurers and intermediaries or insurance
intermediaries; Supervising the functioning of the Tariff Advisory Committee; Specifying the percentage of premium income of the insurer to finance
schemes for promoting and regulating professional organizations referred to in clause (f);
Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and
Exercising such other powers as may be prescribed
8. Analysis on any one of the press releases published on the website:
PUNE: Chairman of Insurance Regulatory Development Authority (IRDA) T
Vijayan has called for an apt focus on making affordable insurance cover
available to people in the low income groups."For IRDA, financial inclusion
means making insurance available to lower income groups at an affordable cost,"
he said at a day-long seminar on financial inclusion through insurance, organised
by the National Insurance Academy (NIA) here on Saturday .Vijayan said, "In
order to build a strong system, we must focus on improving persistent
communication tools,
improving premium policy renewal options, fostering long term distribution
partner relations, optimum use of technology for providing services apart from the
using brick and mortar structures, ensuring all financial needs can be addressed at
one place."
He said, "The insurance penetration in India is 4.1 for life and 0.7 for non- life,
which is very small for a country like India. We still have a long way to go."
Arvind Kumar, joint secretary to the Ministry of Finance, suggested suggested re-
looking at the policies made. He cited some of the major announcement of
the Union Budget 2013 - 2014, including the provision for having insurance
offices in all towns of India having population of 10,000 or more; group saving
products, which are now being made available to homogenous non-employer-
employee groups and to provide a common platform for settlement of insurance
claims to bereaved families at the earliest.Kumar also mentioned about the
unequal penetration of insurance in India thus providing an opportunity to
improve the same tremendously.Over 200 delegates including senior executives
from public, private sector insurance companies, leading banks, NGOs and others
participated in the event. The broad theme for the seminar was 'Millions to Cover-
Reaching the Unreached through Insurance.'Officiating director of NIA Achintan
Bhattacharya said, "The academy decided to focus on inclusion through insurance
in view of the Union finance minister's budget speech that called for setting up
public sector insurance offices in all towns of India which have a population of
10,000 or more.
Chairman of NIA governing board Thomas Mathew said, "Today low income
groups can also contribute small amounts towards insurance. He went on to quote
C.K. Prahlad, who said, "The future belongs to companies who treat the poor as
their customers.
9. Insurance history:
In India, insurance has a deep-rooted history. It finds mention in the
writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This
was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and
carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular.
1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company
however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the
Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance
offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies.
In 1914, the Government of India started publishing returns of
Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect
statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. The history of
general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots
in the establishment of Triton Insurance Company Ltd. The IRDA opened up the market in August 2000 with the invitation for
application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the
Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests.
In December, 2000, the subsidiaries of the General Insurance
Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.
Today there are 28 general insurance companies including the ECGC and
Agriculture Insurance Corporation of India and 24 life insurance companies operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the
country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.
10 Brief report on Top 5 Insurance companies in India:
LIC
Life insurance in India made its debut well over 100 years ago. Life
Insurance Corporation of India (LIC) is an Indian state-owned insurance group
and investment company headquartered in Mumbai. It is the largest insurance company in India with an estimated asset value of 1560481.84 crore
(US$260 billion). As of 2013 it had total life fund of Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year. The company was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that
nationalized the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned Life
Insurance Corporation.
Every day we wake up to the fact that more than 250 million lives are part of our family called LIC. We are humbled by the magnitude of the responsibility we
carry and realise the lives that are associated with us are very valuable indeed. Though this journey started over five decades ago, we are still conscious of the fact that, while insurance may be a business for us, being part of millions of lives
every day for the past 52 years has been a process called TRUST.
In our country, which is one of the most populated in the world, the
prominence of insurance is not as widely understood, as it ought to be. What follows is an attempt to acquaint readers with some of the concepts of life
insurance, with special reference to LIC. It should, however, be clearly understood that the following content is by no means an exhaustive description of the terms and conditions of an LIC policy or its benefits or privileges. For more details,
please contact our branch or divisional office. Any LIC Agent will be glad to help you choose the life insurance plan to meet your needs and render policy servicing
SBI
SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Cardif. SBI owns 74% of the total capital and BNP Paribas Cardif the remaining 26%. SBI Life Insurance has an authorized capital of Rs. 2,000 crores and a paid
up capital of Rs 1,000 crores.
Birla Sun Life Insurance Company Limited
Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well-known and trusted name globally
amongst Indian conglomerates and Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers
a formidable protection for its customers' future.
With an experience of over 10 years, BSLI has contributed significantly to the growth and development of the life insurance industry in India and currently ranks
amongst the top 7 private life insurance companies in the country.
Known for its innovation and creating industry benchmarks, BSLI has several firsts to its credit. It was the first Indian Insurance Company to introduce "Free Look
Period" and the same was made mandatory by IRDA for all other life insurance companies. Additionally, BSLI pioneered the launch of Unit Linked Life Insurance plans amongst the private players in India. To establish credibility and further
transparency, BSLI also enjoys the prestige to be the originator of practice to disclose portfolio on monthly basis. These category development initiatives have
helped BSLI be closer to its policy holder’s expectations, which gets further accentuated by the complete bouquet of insurance products (viz. pure term plan, life stage products, health plan and retirement plan) that the company offers.
Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the
Aditya Birla Group, a well-known Indian conglomerate and Sun Life Financial
Inc., one of the leading international financial services organizations from Canada. With an experience of over a decade, BSLI has contributed to the growth and
development of the Indian life insurance industry and is currently one of the leading life insurance companies in the country. BSLI has a customer base of over
two million policy holders and has attained recognition as the 3rd Most Trusted Life Insurance Company in the 'Most Trusted Brands' survey 2013 conducted by Brand Equity (The Economic Times Group) with Neilsen. The Company offers a
complete range of offerings comprising protection solutions, children's future solutions, wealth with protection solutions, health and wellness solutions,
retirement solutions and savings with protection solutions. It has an extensive distribution reach in over 500 cities through its network of over 560 branches, around 85,000 empanelled advisors and over 140 partnerships with corporate
agents, brokers and banks. Birla Sun Life Insurance has total assets under management of Rs.26, 813 Crores and a robust capital base of over Rs.2, 170
Crores, as on 30th Jun, 2014
Reliance Life Insurance Company (RLIC)
Reliance Life Insurance Company (RLIC) is amongst the top five private sector life insurance companies in terms of individual WRP (weighted received premium)
and new business WRP. The company has over 9 million policy holders with a strong distribution network of over 900 branches with over 100,000 agents as of March 31, 2014. Reliance Life offers life insurance products targeted at individuals
and groups, catering to four distinct segments: protection, children, retirement and investment plans.
As of March 31, 2014, the Total Premium (net of re-insurance) was Rs. 4,283
crores, whereas new business premium stood at Rs. 1,934 crores. The company achieved a profit of Rs. 359 crores. The company sold 5.8 lakh policies during 2013-14 with total managed funds valuing to Rs. 18,328 crores, through a wide
network of distribution with 900 offices and over 100,000 advisors.
Rated amongst the Top 4 Most Trusted Service Brands by Brand Equity A C Neilsen Most Trusted Brand Survey 2013, the company aims to emerge as a
transnational life insurer of global scale and standards.
Reliance Life Insurance is a part of Reliance Capital of the Reliance Anil Dhirubhai Ambani Group. Reliance Capital is one of India's leading private sector financial services companies, and ranks among the top private sector financial
services and non-banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general
insurance, proprietary investments, private equity and other activities in financial services. Reliance Group also has presence in Communications, Energy, Natural Resources, Media, Entertainment, Healthcare and Infrastructure. Nippon Life
Insurance Company acquired 26% interest in equity share capital of the Company
effective October 7, 2011 subsequent to receipt of all regulatory approval.
Nippon Life Insurance (26% share), also called Nissay, is Japan's largest private
life insurer with revenues of Rs. 346,834 crore (US$ 80 Billion) and profits of over Rs. 12,199 crore (US$ 3 billion). The Company has over 14 million policies in Japan, offers a wide range of products, including individual and group life and
annuity policies through various distribution channels and mainly uses face-to-face sales channel for its traditional insurance products. The company primarily
operated in Japan, North America, Europe and Asia and is headquartered in Osaka, Japan. It is ranked 81st in Global Fortune 500 firms in 2011.
ICICI Prudential Life Insurance Company
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
India's largest private sector bank, and prudential plc. A leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in
December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA).
ICICI Prudential Life's capital stands at Rs 4,796 crores (as of March 31, 2014)
with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the financial year 2014, the company has garnered total premium of Rs 12,429 crores. The company has assets under management of over Rs 80,000 crores as on
March 31, 2014.
For the past decade, ICICI Prudential Life Insurance has maintained its dominant position (on new business retail weighted basis) amongst private life insurers in the
country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.
D.PFRDA:-
1. Name of the regulator with logo:
Pension Fund Regulatory and Development Authority
2. Year of establishment: 23rd August, 2003
3. Headquarters: New Delhi
4. Board:
Sh. R. V. Verma WTM-
Finance and
Officiating Chairman
Dr. Badri Singh
Bhandari
WTM-Economics
Ms. Madhavi Das Executive Director
Sh. Kamal Kumar
Chaudhry
Chief General Manager
Ms. Mamta Rohit Chief General Manager
Sh. Subroto Das Chief General Manager
Sh. Ananta Gopal Das Chief General
Manager
Sh. Venkateswarlu Peri General Manager
5. Website :pfrda.org.in
6. All about PFRDA in brief:
PFRDA was established by Government of India on 23rd August, 2003. The
Government has, through an executive order dated 10th october 2003, mandated PFRDA to act as a regulator for the pension sector. The mandate of PFRDA is
development and regulation of pension sector in India.
The National Pension System reflects Government’s effort to find sustainable solutions to the problem of providing adequate retirement income. As a first step
towards instituting pensionary reforms, Government of India moved from a defined benefit pension to a defined contribution based pension system by making it mandatory for its new recruits (except armed forces) with effect from 1st
January, 2004. Since 1st April, 2008, the pension contributions of Central Government employees covered by the National Pension System (NPS) are being invested by professional Pension Fund Managers in line with investment
guidelines of Government applicable to non-Government Provident Funds.
7. Functions of the regulator:
Services to subscribers of all sectors Recordkeeping, administration and customer service functions for
all NPS subscribers
Issue of unique Permanent Retirement Account Number (PRAN) and IPIN/TPIN
Maintaining database of all PRANs issued, scanned copies of KYC documents and recording transactions
8. Analysis on any two NPS:
National Pension System (NPS) was initially introduced for the Central
Government employees who joined on or after 01.01.2004. The NPS was made
available to all citizens of India on 1st May 2009. Later, in order to facilitate the
organized entities including public sector organizations, a customized version of
NPS, known as NPS-Corporate Sector Model, was introduced in December 2011.
NPS-Corporate Model provides a platform for the employers to extend the old age
social security benefits to their employees and co-contribute for their pension with
the flexibility in the amount of contribution from employee/employer. The NPS is
a cost effective scheme through specialized entities where the employers need not
be actively involved in record keeping, investment, annuity etc.as in the case of
self-administration of pension functions. The NPS-Corporate Model can be
introduced along with any other retirement benefit scheme like EPF and SAF. The
corporates/employers have flexibility to select the POP, PFM and investment
choice centrally for all employees or leave the choice for selection of PFM and
investment choice to individual employees. The employers get tax benefits on
their contribution to the employees NPS account as a business expense, while
employees can claim tax benefits on the employees’ as well as employer’s
contribution to NPS. The Portability feature of NPS account (PRAN) is best suited
for the employees of Corporate Sector, where the employment change is
frequent.
9. Analysis on any of the speeches published on the website:
PFRDA to launch pension scheme for poor Interim pension regulator PFRDA on Thursday introduced a new scheme, NSP Lite, for the economically deprived sections of the society."PFRDA has
introduced NPS-Lite which specifically targets the economically disadvantaged sections of society and promotes small savings during their productive life,"Pension Fund Regulatory and Development Authority (PFRDA) said in a
statement.The scheme aims at building up a corpus sufficient enough to buy an annuity for their old age.It further said that the government's 'Swavalamban
Scheme', which grants an incentive of Rs 1,000 to all eligible New Pension System (NPS) accounts shall be available to all NPS Lite account holders as well, if they meet the prescribed criteria.Finance Minister Pranab Mukherjee in his
Budget speech had said the government would contribute Rs 1,000 annually to each NPS account opened in 2010-11.The initiative, 'Swavalamban', will be
available for persons who join NPS, with a minimum contribution of Rs 1,000 and a maximum contribution of Rs 12,000 per annum during 2010-11, he had said.The scheme has been designed to ensure ultra-low administrative and transactional
costs, for making such small investments viable and NGOs and micro-finance institutions would be engaged to ensure that the benefits of scheme reach the
target group. "It also aims at harnessing the outreach and capacity of the Government operated schemes, NGOs, MFIs, NBFCs among others in targeting and servicing the old age savings needs of low income workers," it added. Andhra
Pradesh Building and Other Construction Workers Welfare Board has already been appointed as an aggregator under NPS-Lite for making NPS available to its
more than a million potential member base. Initially, the government launched the New Pension System for central government employees joining service from January 1, 2004, but it was extended to all citizens from May 1, 2009. However,
the citizen pension scheme received a lukewarm response and only around 8,000 subscribers joined the scheme in 14 months. In the all citizens pension scheme, a
subscriber has to make minimum contribution of Rs 6,000 annually.
1. NATIONAL PENSION SYSTEM:-
Government of India established Pension Fund Regulatory and Development
Authority (PFRDA)- External website that opens in a new window on 10th October, 2003 to develop and regulate pension sector in the country. The
National Pension System (NPS) was launched on 1st January, 2004 with the objective of providing retirement income to all the citizens. NPSaims to institute pension reforms and to inculcate the habit of saving for retirement amongst the
citizens.
Initially, NPS was introduced for the new government recruits (except armed
forces). With effect from 1stMay, 2009, NPS has been provided for all citizens of the country including the unorganised sector workers on voluntary basis.
Additionally, to encourage people from the unorganised sector to voluntarily save
for their retirement the Central Government launched a co-contributory pension scheme, 'Swavalamban Scheme- External website that opens in a new window' in
the Union Budget of 2010-11. Under Swavalamban Scheme- External website that opens in a new window, the government will contribute a sum of Rs.1,000 to each eligible NPS subscriber who contributes a minimum of Rs.1,000 and
maximum Rs.12,000 per annum. This scheme is presently applicable upto F.Y.2016-17.
A) NPS offers following important features to help subscriber save for retirement:
The subscriber will be allotted a unique Permanent Retirement Account Number
(PRAN). This unique account number will remain the same for the rest of subscriber's life. This unique PRAN can be used from any location in India.
B) PRAN will provide access to two personal accounts:
Tier I Account: This is a non-withdrawable account meant for savings for
retirement.
Tier II Account: This is simply a voluntary savings facility. The subscriber is free to withdraw savings from this account whenever subscriber wishes.
No tax benefit is available
The scheme which came to effect from May 1, 2009 allows investors to choose
their asset allocation as well as their fund managers.
On this account:-
Government of India has announced a New Pension System for post-retirement
life The New Pension System has two types of accounts.
1. Tier-I account: Individuals can contribute their savings for retirement into this
non-withdrawal account.
. 2. Tier II account: Under this saving facility, individuals are free to withdraw
their savings whenever they require.
The Pension Fund Regulatory and Development Authority (PFRDA) on May 1,
2009 introduced the New Pension Scheme System (NPS) for all citizens of the
country. Any citizen between the age of 18 and 55 can join the NPS. Tier - I of
NPS (non-withdrawable pension account) becomes operational from 1st May and
Tier - II (withdrawable account) of the NPS account will become operational in
about six months.
A minimum annual contribution of Rs 6,000 in each subscriber account has been
set by the PFRDA. This is now allowed to be remitted in a single installment,
however in case of multiple installments the minimum amount per installment will
be Rs 500/-. Under the investment guidelines finalised for the NPS, pension fund
managers will manage three separate schemes, each investing in a different asset
class. The three asset classes are equity, government securities and credit risk-
bearing fixed income instruments About 22 points of presence (PoP) and six
pension fund managers have been appointed to offer the NPS to citizens
.
.
.
E. NABARD:-
1. Name of the regulator with logo:
National Bank for Agriculture and Rural Development
2. Year of establishment: 12 July 1982
3. Headquarters: Mumbai 4. Board:
Dr. Harsh Kumar Bhanwala, Chairman
Shri Harun Rashid Khan
Prof. Dipankar Gupta
Shri Ashish Bahuguna
Shri L C Goyal
Mrs. Snehlata Shrivastava
Dr. Sudhir Kumar Goel
Shri Vineet Chawdhry
Shri Bharat Lal Meena
Shri Pochister Kharkongor
Prof. Manohar Lal Sharma
H.R.Dave
R.Amalorpavanathan
5. Website :www.nabard.org
All about NABARD in brief: At the instance of Government of India Reserve Bank of India (RBI), constituted a committee to review the arrangements for institutional credit for agriculture and rural development (CRAFICARD) on 30 March 1979, under the Chairmanship of Shri B.Sivaraman, former member of Planning
Commission, Government of India to review the arrangements for institutional credit for agriculture and rural development. The Committee, in its interim report, submitted on 28 November 1979, felt the need for a new
organizational device for providing undivided attention, forceful direction and pointed focus to the credit problems arising out of integrated rural development and recommended the formation of National Bank for Agriculture and Rural Development (NABARD). The Parliament, through Act,61 of 1981, approved the setting
up of NABARD. The bank came into existence on 12 July 1982 by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation (ARDC).
NABARD was dedicated to the service of the nation by the late Prime Minister Smt. Indira Gandhi on 05 November 1982.
NABARD was set up with an initial capital of 100 crore. Consequent to the revision in the composition of
share capital between Government of India and RBI, the paid up capital as on 31 March 2013, stood at 4000 crore with Government of India holding 3,980 crore (99.50%) and Reserve Bank of India 20.00 crore (0.50%).
6. Functions of the regulator:
In discharging its role as a facilitator for rural prosperity NABARD is entrusted with
Providing refinance to lending institutions in rural areas
Bringing about or promoting institutional development and
Evaluating, monitoring and inspecting the client banks
Besides this pivotal role, NABARD also:
Acts as a coordinator in the operations of rural credit institutions
Extends assistance to the government, the Reserve Bank of India and other organizations in matters
relating to rural development
Offers training and research facilities for banks, cooperatives and organizations working in the field of
rural development
Helps the state governments in reaching their targets of providing assistance to eligible institutions in
agriculture and rural development
Acts as regulator for cooperative banks and RRBs
7. Analysis on any of the speeches published on the website:
New fund to guarantee credit to unbanked
Banks will not risk losing money in advances provided to hitherto unbanked customers as a credit guarantee,
partly funded by a portion of interest on these loans, will make good any losses.The National Bank for
Agriculture and Rural Development (Nabard) will manage a Rs 1,000-crore plus fund, which will be bolstered
by risk premium collected by banks from borrowers.The new financial inclusion drive to be launched by the
government on August 15 will provide every new-to-banking customer an account with an overdraft facility of
Rs 5,000. Bankers said that the moral hazard in these loans would be lower because of two reasons. One, the
government has indicated that benefit transfer would be through these bank accounts and second, the borrowers
would be made aware that failure to repay will render him ineligible for loans in future as these accounts will
be linked to credit information bureaus. The government's objective is to ensure that every individual who
avails any form of government subsidy has a bank account by March 2016. The overdraft facility is something
like the spending limit on a credit card. The accountholder can draw the required funds and repay when he is in
a position to do so. Once the loan is cleared he is entitled for fresh credit.
Taking up financial inclusion in the government's agenda in his Budget speech, finance minister Arun Jaitley
had said, "To provide all households in the country with banking services, a time-bound programme would be
launched as Financial Inclusion Mission on 15 August this year. It would particularly focus to empower the
weaker sections of the society, including women, small and marginal farmers and labourers. Two bank
accounts in each household are proposed to be opened which will also be eligible for credit. "Bankers say that
the bigger challenge is opening the accounts for unbanked since a large number of the target group is outside
the reach of banks. The government is working together with RBI on its financial inclusion plan. Part of the
reason why RBI recently allowed non-banking finance companies to become 'business correspondents' of banks
was to ensure that banks have enough 'feet on the street' to identify unbanked families. Besides finance
companies, technology companies and companies that have been given licences to set up white-label ATMs
will also be roped in to open accounts.
9.Initiatives taken by NABARD in brief:-
ODI has been adopted by National Bank for Agriculture and Rural Development (NABARD) since 1994-95 as a tool to facilitate internal action for improvement of financial health of RRBs and Cooperative Banks. With an aim to improve the internal behavior within the organisation at inter-personal and group levels, NABARD, in
association with its in-house training institutions viz., National Bank Staff College (NBSC), Banker Institute of Rural Development (BIRD), Regional Training Centers (RTCs), etc., has been conducting ODIs for the benefit
of Cooperative Banks and Regional Rural Banks.
Keeping in view the changing environment for RRBs (consequent to their State Level Sponsor bank-wise
amalgamation) and Cooperative Banks (Revival of Rural Cooperative Credit Institutions) in the recent past,
NABARD has revised the methodology, design and focus for the conduct of ODIs.
F.SIDBI:-
1. Name of the regulator:
2. Year of establishment: April 2, 1990
3. Headquarters: Lucknow
4. Board:
Shri N.K. Maini Deputy Managing Director
Shri Amarendra Sinha Government Director
Shri Alok Tandon Government Director
Shri S.K.V. Srinivasan Nominee of IDBI Bank
Shri J. Chandrasekaran Nominee of State Bank of India
Shri B. Manivannan Nominee of Life Insurance Corporation of
India
Shri Anil Agrawal Nominated by Government of India
Dr. (Smt.) Madhu Khare Nominated by Government of India
Shri Satyananda Mishra Co-opted Director
Shri R. Ramachandran Co-opted Director
5. Website:www.sidbi.com 6. All about SIDBI in brief:
Small Industries Development Bank of India is a non-independent financial institution aimed
to aid the growth and development of micro, small and medium-scale enterprises (MSME) in India. Set up on
April 2, 1990 through an act of parliament, it was incorporated initially as a wholly owned subsidiary of
Industrial Development Bank of India. Current shareholding is widely spread among various state-owned
banks, insurance companies and financial institutions.
Beginning as a refinancing agency to banks and state level financial institutions for their credit to
small industries, it has expanded its activities, including direct credit to the SME through 100 branches in all major industrial clusters in India. Besides, it has been playing the development role in several ways such as
support to micro-finance institutions for capacity building and on lending. Recently it has opened seven branches christened as Micro Finance branches, aimed especially at dispensing loans up to 5 lakh.
It is the Principal Financial Institution for the Promotion, Financing and Development of the
Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities.
The business domain of SIDBI consists of Micro, Small and Medium Enterprises (MSMEs), which contribute significantly to the national economy in terms of production, employment and exports. MSME sector
is an important pillar of Indian economy as it contributes greatly to the growth of Indian economy with a vast network of around 3 crore units, creating employment of about 7 crore, manufacturing more than 6,000
products, contributing about 45% to manufacturing output and about 40% of exports, directly and indirectly. In addition, SIDBI's assistance also flows to the service sector including transport, health care, tourism sectors etc.
SIDBI Among Top 30 Development Banks of the World
SIDBI retained its position in the top 30 Development Banks of the World in the ranking of The Banker,
London. As per the May 2001 issue of The Banker, London, SIDBI ranked 25th both in terms of Capital and Assets.
7. Functions of the regulator:
World bank-GEF Project:
The objective of the India-MSME Energy Efficiency Project is to improve efficiency and reduce
GHG emissions through commercial investments in energy efficiency goods and services in target Small and
Medium Enterprise clusters.
Global Environment Facility (GEF) and the World Bank through SIDBI and BEE are implementing
a new initiative on financing Energy Efficiency (EE) in MSME Clusters in India to improve EE and reduce
Green House Gas (GHG) emissions from MSMEs utilizing increased commercial financing for EE. The Grant
agreement was signed on September 13, 2010 and effectuation of this grant took place on October 28, 2010.
Total GEF Funding under the project available to SIDBI is 9.05 Million USD to be utilized over a period of
four years. In addition to the grant to SIDBI, GEF has also provided a grant of USD 2.25 Million to the Bureau
of Energy Efficiency (BEE) for implementation of energy efficiency at MSMEs in India. A Project
Management Unit in SIDBI has been setup at New Delhi to channelize the grant to the targeted beneficiaries.
Under the project, SIDBI will focus largely on five energy intensive clusters viz. foundry cluster at
Kolhapur, Forging at Pune, Limekilns at Tirunelveli, Chemical at Ankleshwar and mixed at Faridabad) in India
through provision of assistance for completion of Energy Audits, preparation of DPRs and support in
mobilization of financing from the Indian local banks to ensure that the identified EE measures are
implemented. SIDBI will also provide broad support to BEE for energy efficiency implementation in additional
25 clusters where the initiatives are being undertaken by them. The project will focus on four main activities
viz. as 1) Activities to build capacity and awareness for EE in MSMEs, 2) Activities to increase investments in
EE in MSMEs, 3) Programme knowledge management, and 4) Project management.
SIDBI Foundation for Micro Credit
Mission
SFMC's mission is to create a national network of strong, viable and sustainable Micro Finance Institutions
(MFIs) from the informal and formal financial sector to provide micro finance services to the economically
disadvantaged people, especially women
APPROACH:-
SFMC is the apex wholesaler for micro finance in India providing a complete range of financial and non-
financial services such as loan funds, grant support, equity and institution building support to the retailing Micro Finance Institutions (MFIs) so as to facilitate their development into financially sustainable entities,
besides developing a network of service providers for the sector. SFMC is also playing significant role in advocating appropriate policies and regulations and to act as a platform for exchange of information across the sector. The launch of SFMC by SIDBI has been with a clear focus and strategy to make it as the main purveyor
of micro finance in the country. Operations of SFMC in the coming years, are expected to contribute significantly towards development of a more formal, extensive and effective micro finance sector serving the
poor in India with focus on innovation and action research.
Code of Conduct Assessments (COCA)
SIDBI is actively involved in development of a Code of Conduct Assessment Tool, which applies to
providing credit services, recovery of credit, collection of thrift etc, for MFIs to assess their degree of
adherence to the voluntary microfinance Code of Conduct formulated by the MFIs. 62 COCA of MFIs have
since been completed and reports of 56 of them have been hosted on SIDBI website.
Financial Assistance:-
Micro Finance:-MFIs are provided annual need based assistance. One of the unique features of the
scheme is the comprehensive financial support being provided to the MFIs/ NGOs to expand their
operations as well as to increase their efficiency. SIDBI’s support comprises of loans as well as equity/
quasi equity support as the case may be depending on the need of the client institutions.
Missing Middle Segment - SIDBI has also been extending financial assistance for the Missing Middle
Segment of the micro enterprises. . In India, ‘Missing Middle’ connotes the financing gap that lies above micro-
finance (loans up to INR 50,000) and below traditional institutional financing (generally loans starting at INR
10,00,000). The support under this scheme is channelized through Participating Financial Institutions (NBFCs,
RRBs, UCBs, MFIs, etc.).
Minimal Security Requirement
Rating of MFIs
Most micro finance programmes were initially operated by NGOs and were not subjected to regulation
and supervision as they were registered as Societies or Trusts. Non-regulation of these institutions
worked to their detriment and these institutions were not able to have smooth access to funds from the
financial sector which was vary of lending to such entities. This constraint, coupled with the fact that
SFMC was launched with a view to upscale the flow of micro credit with enabling policy modifications
relating to simplification of the procedures in availment of assistance and substantial relaxation in the
security/ collateral requirement posed a difficult challenge. Therefore, to meet the requirements of the
revised dispensation which called for selection of suitable micro finance intermediaries which could be
trusted with bulk assistance without collateral constraints, Capacity Assessment Rating [CAR] was
introduced by SFMC as a supplementary tool to assess the risk perception. On SFMC's initiative, rating
of MFIs was started by five agencies. With the passage of time, and ripening of the sector, most of the
informal NGOs have transformed into formal NBFCs. However, rating of MFIs has become a pre
requisite for getting assistance from the banks and financial institutions
Credit worthiness is based on the rating of the borrowing institutions rather than availability of security/ collateral requirements. Term Deposit Receipts (TDRs) issued by Scheduled Commercial Banks/ SIDBI for an
amount equivalent to 10% /5% /2.5% (depending upon geographical area of operation and duration of partnership with SIDBI)
Portfolio Risk Fund (PRF)
Portfolio Risk Fund (PRF) was created by SIDBI with funding support from Government of India and made
operational since March 2004. Normally, the Bank stipulates security requirement of FDRs equivalent of up to
10% of the loan sanctioned to MFIs under SFMC dispensation. Once the case is covered under PRF, 75% of
security requirement (i.e.7.5% of the loan amount) is booked under PRF and balance 25% (i.e.2.5% of the loan
amount) only is to be furnished by the individual MFI by way of FDRs.
Methodology Neutral
SIDBI's support is not for any specific methodology. MFIs may on lend to Self Help Groups/Joint Liability Groups/individuals. They may also adopt any other lending channel so as to effectively reach financial assistance to the poor clients.
Capacity Building Support for the sector
SFMC's capacity building efforts are directed not only towards MFIs but also towards smaller/ grassroot institutions engaged in micro finance operations, training, consultancy, rating and impact assessment etc., and
other service providers in the form of training, seminars, workshops, orientation and exposure visits
Responsible Finance Initiatives
SIDBI has been playing a pro-active role in propagating Responsible Finance in the MFI sector. The major
initiatives taken by SIDBI in the field of Responsible Finance Practices are –
-Creation of a Lenders’ Forum
Setting up of India Microfinance Platform
Setting up of the credit information bureaus
Creating awareness about Clients’ Protection Practices
Facilitating Development of a common code of conduct for the MFIs and ensuring adherence thereof
through COCA exercises y accredited third party agencies.
India Microfinance Platform
As part of its Responsible Lending initiatives under the World Bank Line of Credit, SIDBI has supported the
India Micro Finance Platform (IMFP) developed by MIX to provide and disseminate various financial and operational information on Indian MFIs. It is a global, web-based, microfinance information platform, a MIX
market tailored for India i.e., the India Microfinance Platform (IMFP) - to provide and disseminate valuable information on the Indian MFIs. The MFIs are required to submit financial and operational data, at regular intervals in a standardized format, thus enabling higher degree of transparency / disclosures with ease. The
project is to expand the depth and breadth of publicly available data on Indian microfinance institutions (MFIs). The IMFP project has already resulted in enhanced data coverage for India’s microfinance sector through
growth in the number of reporting MFIs as well as development of granular, district-level datasets.
India Microfinance Equity Fund (IMEF)
To ease the tight liquidity situation, in the FY 2012, GoI stepped in with creation of a Rs.100 crore fund viz.
IMEF, operated through SIDBI, to strengthen capitalisation of smaller, socially oriented MFIs, especially in underserved states/areas. The allocation under IMEF has been increased by Rs. 200 crore in FY 2013-14. The
assistance under the fund is expected to help the MFIs leverage more debt funds from the banks and financial institutions and help in increased flow of assistance to the poor in the unserved/underserved areas of the country.
Customized Support to MFIs
MFIs are provided annual need based assistance. One of the unique features of the scheme is the comprehensive Capacity Building Support being provided to the MFIs/ NGOs to expand their operations as
well as to increase their efficiency. Customized financial support comprising of loans, capacity building grant as well as equity/ quasi equity is being provided to the client institutions.
Minimal Security Requirement
Credit worthiness is based on the rating of the borrowing institutions rather than availability of security/ collateral requirements. Term Deposit Receipts (TDRs) issued by Scheduled Commercial Banks/ SIDBI for an amount equivalent to 10% /5% /2.5% (depending upon geographical area of operation and duration of
partnership with SIDBI).
Methodology Neutral
SIDBI's support is not for any specific methodology. MFIs may on lend directly to SHGs/ individuals or route
their assistance through their partner NGOs & MFIs. They may also adopt any other lending channel so as to effectively reach financial assistance to the poor clients.
Capacity Building Support for the sector
SFMC's capacity building efforts are directed not only towards MFIs but also towards smaller/ grassroot institutions engaged in micro finance operations, training, consultancy, rating and impact assessment etc., and
other service providers in the form of training, seminars, workshops, orientation and exposure visits.
Innovation & Action Research
SIDBI has taken a number of initiatives in launching / facilitating introduction / market-making of new
concepts in the sector. The launch of an electronic portal for information dissemination and knowledge sharing within the sector and development of MIS software for MFIs are some such initiatives. Other major initiatives include developing a common charter of accounts for the sector, creating gender and environment awareness,
promoting innovations and action research on emerging concepts etc. The environment appraisal of SFMC activities was carried out by the Society for Participatory Research in Asia (PRA), New Delhi and covered
areas like identification of environmental risks associated with some of the most relevant activities funded through the SFMC microfinance route, developing a format for identifying these risks in micro-project
identification and drawing up some simple guidelines on risk mitigation. The appraisal covered 15 partner MFIs of the Bank located in and around Chennai, Hyderabad, Bhubaneswar and Kolkata
Opening of specialised Microfinance branches
Seven dedicated microfinance branches have been opened by the Bank at Lucknow, Chennai, Hyderabad, Bangalore, Kolkata, Bhubaneswar and Guwahati to deliver micro finance services through intermediaries in a
timely and customer-friendly manner. While Hyderabad, Chennai, Bangalore are major hubs of microfinance activity in the country, the other centres viz. Lucknow, Kolkata, Bhubaneswar and Guwahati have been targeted
with the primary objective of giving an impetus to microfinance programmes in the underserved areas.
G.NHB:-
1. Name of the regulator:
National Housing Board
2. Year of establishment:1984
3. Headquarters: Delhi
4. Board:
Shri Mohammad Mustafa, IAS
Chairman & Managing Director Dr. Santosh Chandra Panda Dr. Neelima Risbud,
Shri H.R. Khan Shri G.M. Rao Director, Central Board of Directors, Reserve Bank of India
Shri Alok Tandon, IAS Joint Secretary to the Government of India, Ministry of Finance
Smt. Vijaya Srivastava, IAS, Joint Secretary to the Government of India,Ministry of Rural Development Shri Sanjeev Kumar, IAS
Joint Secretary (RAY) to Government of India & Mission Director (JNNURM), Ministry of Housing and Urban Poverty Alleviation
Shri Karoon Dey, Secretary to the Govt. of West Bengal, Housing Department Executive Committee of Directors
Shri Mohammad Mustafa, Chairman Shri H.R. Khan, Member
Shri G.M. Rao, Member Dr. Santosh Chandra Panda, Member Audit Committee of the Board
Shri H.R. Khan, Chairman Shri G.M. Rao, Member
Dr. Santosh Chandra Panda, Member Dr. Neelima Risbud, Member
5. Website :www.nhb.org.in
6. All about NHB in brief:
The Sub-Group on Housing Finance for the Seventh Five Year Plan (1985-90) identified the non-
availability of long-term finance to individual households on any significant scale as a major lacuna impeding progress of the housing sector and recommended the setting up of a national level institution.
The Committee of Secretaries considered' the recommendation and set up the High Level Group under the Chairmanship of Dr. C. Rangarajan, the then Deputy Governor, RBI to examine the proposal and recommended the setting up of National Housing Bank as an autonomous housing finance institution.
The recommendations of the High Level Group were accepted by the Government of India.The Humble Prime Minister of India, while presenting the Union Budget for 1987-88 on February 28, 1987
announced the decision to establish the National Housing Bank (NHB) as an apex level institution for housing finance. Following that, the National Housing Bank Bill (91 of 1987) providing the legislative framework for the establishment of NHB was passed by Parliament in the winter session of 1987 and
with the assent of the Hon’ble President of India on December 23, 1987, became an Act of Parliament. The National Housing Policy, 1988 envisaged the setting up of NHB as the Apex level institution
for housing.In pursuance of the above, NHB was set up on July 9, 1988 under the National Housing Bank Act, 1987. NHB is wholly owned by Reserve Bank of India, which contributed the entire paid-up capital. The general superintendence, direction and management of the affairs and business of NHB
vest, under the Act, in a Board of Directors.The Head Office of NHB is at New Delhi.
7. Functions of the regulator:
In terms of the National Housing Bank Act, 1987, National Housing Bank is expected, in the public interest, to
regulate the housing finance system of the country to its advantage or to prevent the affairs of any housing finance institution being conducted in a manner detrimental to the interest of the depositors or in a manner
prejudicial to the interest of the housing finance institutions. For this, National Housing Bank has been empowered to determine the policy and give directions to the housing finance institutions and their auditors.
Besides the regulatory provisions of the National Housing Bank Act, 1987, National Housing Bank has issued the Housing Finance Companies (NHB) Directions, 2001 as also Guidelines for Asset Liability Management
System in Housing Finance Companies. These are periodically updated through issue of circulars and notifications.
As part of the supervisory process, an entry level regulation is sought to be achieved through a system of registration of housing finance companies National Housing Bank supervises the sector through a system of on-site and off-site surveillance. Extending refinance to different primary lenders in respect of Eligible housing
loans extended by them to individual beneficiaries, For project loans extended by them to various implementing agencies. Lending directly in respect of projects undertaken by public housing agencies for housing
construction and development of housing related infrastructure Guaranteeing the repayment of principal and payment of interest on bonds issued by Housing Finance Companies Acting as Special Purpose Vehicle for securitizing the housing loan receivables. All about Reverse Mortgage Loans (Examples of the banks providing
RML): Reverse mortgage is a financial product that enables senior citizens (60 +) who own a house to mortgage their property with a lender and convert part of the home equity into tax-free income without having
to sell the house. Instead of you making monthly payments to a lender, as with a regular loan, the lender makes payments to you. Multiple options are available for repayment of the loan in lumpsum at the end of the loan term. Maximum period of loan is of twenty years. The loan is not required to be serviced as long as the
borrower is alive and in occupation of the property. On the borrower’s death, the loan is repaid through sale of property.
Qualifications for reverse mortgage eligibility:
o Should be a Senior Citizen of India above 60 Years of age. o Married Couples will be eligible as joint borrowers provided one of them being above 60 years
of age and other not below 55 years of age. o Benefits of a reverse mortgage:
o It aims at partially meeting the financial needs of senior citizens without selling the property and enables recurring funds inflows to the senior citizens during their life time.
o After the death of the senior citizen, the surviving spouse can continue to occupy the property till
his/her demise
Ex: Bank Of Baroda
8. Initiatives taken by NHB:
National Housing Bank, Consumer Association of India and Indian Banks Association jointly organised an one
day seminar on “Consumer Issues in Housing and Housing Finance” which was inaugurated by Shri. Arun Ramanathan I.AS., Finance Secretary, Government of India. In his inaugural address, Shri. Ramanathan
emphasised the need for transparency in lending practices of Banks and Housing Finance Companies which will provide the desired impetus in developing consumer confidence in availing housing loans in a hassle free manner. He highlighted the costs and services aspects of housing and housing finance and pointed out the need
to harmonise the regulations and guidelines of various authorities in a manner that will reduce the transaction cost and improve the quality of service offered to the consumers. Shri S. Sridhar, CMD, National Housing
Bank outlined the various initiatives taken by NHB for the benefit of consumers and for the development of housing in the country. These include developing a model code of conduct for housing finance companies and ensuring that they are adopted and followed; launch of home loan counselling programme which can be
provided by independent mortgage counsellors; launch of NHB Residex, India’s first official residential property price index etc. Current initiatives of NHB taken up jointly with IBA include developing valuation
standards in the country (being done for the first time) and setting up an electronic registry for mortgages (also being done for the first time). The technical sessions of seminar covered related topics on various consumer issues in housing and housing finance.
The discussions also included deliberations on Reverse Mortgage Loans, conceptualised by NHB as an innovative Scheme that enables house owning senior citizens to get periodic payments and live in dignity and
with self respect. In the Union Budget 2008-2009, the Income Tax Act was amended to exempt payments under Reverse Mortgage from tax. The Reverse Mortgage Counselling Centres are being established by NHB in different cities to provide independent advice free of cost to senior citizens. Six Counselling Centres are
functioning viz., at New Delhi, Chandigarh, Hyderabad, Kolkata and Bengaluru in association with NGOs working with Senior Citizens.
National Housing Bank is the principal financial institution for housing, established under an Act of the Parliament, as a wholly owned subsidiary of Reserve Bank of India. NHB is also the regulator of housing finance companies. NHB conceived and developed Reverse Mortgage product and piloted the offering of
Reverse Mortgage loans by Banks and HFCs.
Consumer Association of India (CAI) is a public charitable trust which is engaged in spreading awareness
about consumer responsibilities and rights and addressing consumers’ issues and problems in various fora. CAI is a member of Consumer International and its sister organisation viz., CONCERT which focuses on research
and training.
Indian Banks Association is the apex association representing all the banks in the country.
H. CCI:-
1. Name of the regulator:
Competition Commission Of India
2. Year of establishment:2003
3. Headquarters: New Delhi 4. Board:
M. L. Tayal, Member
S. L. Bunker, Member
Sudhir Mital, Member
Augustine Peter, Member
U. C. Nahta, Member
5. Website: www.cci.gov.in
6. All about CCI in brief:
Competition is the best means of ensuring that the ‘Common Man’ or ‘Aam Aadmi’ has access to the broadest
range of goods and services at the most competitive prices. With increased competition, producers will have
maximum incentive to innovate and specialize. This would result in reduced costs and wider choice to
consumers. A fair competition in market is essential to achieve this objective. Our goal is to create and sustain
fair competition in the economy that will provide a ‘level playing field’ to the producers and make the markets
work for the welfare of the consumers.
The Competition Act
The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows the philosophy
of modern competition laws. The Act prohibits anti-competitive agreements, abuse of dominant position by
enterprises and regulates combinations (acquisition, acquiring of control and M&A), which causes or likely to
cause an appreciable adverse effect on competition within India.
Competition Commission of India
The objectives of the Act are sought to be achieved through the Competition Commission of India (CCI), which
has been established by the Central Government with effect from 14th October 2003. CCI consists of a
Chairperson and 6 Members appointed by the Central Government.
It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and
sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.
The Commission is also required to give opinion on competition issues on a reference received from a statutory
authority established under any law and to undertake competition advocacy, create public awareness and impart
training on competition issues.
7. Functions of the regulator:
To Prevent practices having adverse effect on competition
To Promote and sustain competition in markets
To Protect the interests of consumers and,
To Ensure freedom of trade carried on by other
participants in markets, in India
8. Analysis on any one of the speeches/presentations published on the website:
Sun-Ranbaxy deal under CCI scanner:-
The Competition Commission, which has put the multi-billion dollar Sun-Ranbaxy deal for public
scrutiny, on Friday said the major issue is whether the combination would result in high market
concentration of certain molecules.
"This is the first case" of combination where the Competition Commission of India (CCI) has gone for
a public scrutiny, the fair trade watchdog's chairman Ashok Chawla said. In April this year, Sun
Pharma and Ranbaxy had announced a $4-billion deal that would create one of the top five largest
speciality generics company in the world. Chawla said the major issues related to the deal are with
regard to molecules market. "The major issues obviously are that in many of the molecules, the basic
building block in the pharmaceutical industry, whether in some of those molecules there is high
market concentration which will emerge as a result (of the consolidation). That is the matter," Chawla
said.
He was speaking on the sidelines of an event organised by industry body Assocham. The CCI has
asked Sun Pharma and Ranbaxy to make public details of their proposed transaction in a "prescribed
format" within 10 working days. Both companies informed the stock exchanges, on Thursday, about
the CCI direction, which comes under Section 29(2) of the Competition Act, 2002. Under this section,
if the CCI is "prima facie of the opinion that the combination has, or is likely to have, an appreciable
adverse effect on competition, it shall... direct the parties to the said combination to publish details of
the combination within ten working days of such direction...".
9. Initiatives taken by CCI:
1. CAPACITY BUILDING INITIATIVES:-
During 2010-11 the CCI has conducted 10 training programmes within the country and 10 training programmes outside the country.
2. INITIATIVES OF THE CCI; SECTION 49 (1)
The Commission has been in past engaged in undertaking advocacy with ministries, regulators, state governments and other authorities. For examples: The Commission has given its opinion on
the draft of Petroleum and Natural Gas Regulatory Bill, 2005. Warehousing (Development and Regulation) Bill, 2006 Indian Post Office (Amendment) Bill, 2007, and the Shipping Trade Practices Bill, 2007 The Commission has also given its views on regulatory policies and
practices in the fields of banking, telecommunications and intellectual property rights. Presentations on Competition law and policy to Ministries.
3. OTHER ADVOCACY INITIATIVES:-
Publication of Advocacy Literature on following topics:
An Overview of the Competition Act
Cartels
Bid Rigging
Abuse of Dominance
Combinations
Competition Compliance
How to File Information
Leniency
I. MoF:-
1. Name of the regulator:
Ministry of finance
2. Year of establishment:
3. Headquarters: New Delhi
4. Website: finmin.nic.in
5. Finance Ministry:
The Companies Act (henceforth referred to as the “Act”) was enacted in 1967. It applies to all companies
incorporated in Singapore, and contains provisions relating to the life-cycle of companies, from incorporation
to management to winding up. The Act also contains some provisions that apply only to listed companies and
branches of foreign companies (“foreign companies”) set up in Singapore. Besides the Act, companies listed on
the Singapore Exchange are required to abide by the Securities and Futures Act (SFA), Singapore Code of
Takeover and Merger, Listing Rules and Code of Corporate Governance as well.
The last review of the Act was conducted in 1999 by the Company Legislation and Regulatory Framework
Committee (“CLRFC”). Several key changes were made to the Act as a result of that review, such as allowing
one-director private companies, removing statutory audit for dormant companies [1] and exempt private
companies [2] with annual turnover less than S$5million, and abolishing the concept of par value shares and
authorized share capital. In October 2007, the Ministry of Finance (MOF) appointed a Steering Committee to
Review the Companies Act (“Steering Committee”) to undertake a comprehensive review of the Act. Refer to
Annex A for the list of Steering Committee members. The objectives of the review were to reduce regulatory
burden and ease compliance, while retaining an efficient and transparent corporate regulatory framework that
supports Singapore’s growth as a global hub for both businesses and investors.The Steering Committee
canvassed views from a wide range of local stakeholders, including business community, lawyers, accountants
and academia. The Steering Committee also considered the law and practices in jurisdictions such as Australia,
Hong Kong, New Zealand, United Kingdom and United States of America. The Steering Committee submitted
its final report to MOF in April 2011, which comprised 217 recommendations relating to directors, shareholder
rights, capital maintenance, accounts, company administration and charges. To reach out to a broader spectrum
of stakeholders beyond those consulted by the Steering Committee, MOF conducted a public consultation on
the Report of the Steering Committee from June to October 2011 [4]. At the close of the public consultation,
MOF received substantive comments from 70 respondents. Please refer to Annex B for the list of respondents.
MOF evaluated all relevant inputs for each of the 217 recommendations. In doing so, we have adopted a
principled, yet pragmatic approach, with a view to balancing the interests of various stakeholders while not
losing sight of the objectives of the review. We have decided to accept 192 recommendations and modify 17.
Eight of the 217 recommendations have not been accepted at this point. This report sets out a summary of
the feedback received during the public consultation and MOF’s response to the recommendations submitted by
the Steering Committee. Besides the detailed recommendations on changes to the Act, the Steering Committee
had recommended rewriting the Act to rationalise the various provisions for greater coherence. MOF agrees
with the Steering Committee that it is timely to rewrite the Act given the various amendments that have been
made over the years. To allow the business community and practitioners sufficient time to adapt to the changes
in the Act, MOF will implement the changes and rewrite of the Act in two phases . In the first phase, MOF
will amend the Act to implement the Steering Committee’s recommendations which have been accepted by the
Ministry. After the changes have been implemented, in the second phase, MOF will undertake a rewrite of the
Act to rationalise the provisions and improve the clarity. The Steering Committee had also recommended that
as part of the rewrite of the Act, provisions relating to foreign companies could be migrated to a separate
dedicated legislation. MOF shares the view of the Steering Committee that it would be helpful to have a
consolidated source of reference on the provisions relating to foreign companies. As the existing provisions on
foreign companies can already be found in a dedicated part of the Act; namely Part XI Division 2 of the Act,
MOF is of the view that there is no compelling need for a separate legislation for foreign companies. MOF will
thus retain the provisions relating to foreign companies in the Act. MOF would like to thank the Steering
Committee for its recommendations and the respondents that had provided valuable feedback on these
recommendations through the public consultation. MOF plans to table the amendment Bill in Parliament to
implement the changes by end of 2013. MOF will seek public feedback on the draft Bill in early 2013.
6. All about MoF in brief:
For ages, conflicts have broken out over who has the right to collect revenues from different sources and to spend them in matters related to public and national interest. In Egypt, Kings and princes had claimed that right
for being aware of the public interest.
In Mohammed Ali’s era, attention had been paid to the state finance according to an advice given to him by his foreign advisors to be able to obtain money necessary to create his own kingdom.
Therefore, he cared about dividing the government into different departments and successively he created
bureaus including Finance. In his time, the first primitive budget had been made for his belief that state’s power lies in its budget. His successors followed him, where Mohammed Said transformed some Bureaus or
Departments into ministries issuing a decree on February 26 ,1876 stipulating the new system he introduced in the general management including creating the first finance ministry chaired by prince Moustafa Fadhil.
In Khedive Ismail’s era, Ministry of Finance was headed by Ismail Siddiq , known as , Ismail El-Mufatish (the
Inspector) from 1868 to 1876. He is still to be remembered in Egypt as his palace has become the Finance Ministry’s headquarters at Lazoughli Square.
Before 1952 July Revolution , the state finance organization had been made according to bases set by the
British advisors to serve the interests of foreign occupation and its alliances. Then , the 1952 July Revolution occurred whose first tasks were to re-organize the state finance. Fore the first time, there is a new phenomenon to expand the appropriations allocated to the purposes of economic and social development. Thus, organizing
the state finance passed with successive historical phases, each of which reflects the prevailing social system.
When reviewing activities of The Finance Ministry since its inception, we find ,in addition to burdening the task of determining the state usages and providing their resources, Finance Ministry has been assuming
other duties later abandoned and turned to be other authorities or ministries such as Properties Department whose part of which has become affiliated to Ministry of Agriculture , while the other part to the Ministry of Housing. The General Department of the Government Employees was later turned to be the Employees
Bureau , then to the Central Agency for Regulation and Management.
On March 15,1958 a presidential decree was issued to change the name of the Finance Ministry to the Ministry of Treasury . In March 1973 the presidential decree no.49 of 1973 was issued to merge ministries
of Finance , Economy and Foreign Trade in one ministry . In April 1974 Ministry of Finance was separated from Economy and Foreign Trade to be named the Finance Ministry till now. Under Ministry of Finance, The General Department for Accounts has been transformed into the General Department for the Government
Accounts , Purchases Stores and Inspection. Then it was limited to the Government Accounts. In 1969, the General Authority for Government Services was created to take over the special tasks of warehouses and
purchases. Moreover, the General Directorates in governorates were created chaired by the Finance Ministry’s representatives to support the municipal authorities.
7. Fiscal Policy in brief:
Monetary policy pertains to the regulation, availability, and cost of credit, while fiscal policy deals with
government expenditures, taxes, and debt. Through management of these areas, the Ministry of
Finance regulated the allocation of resources in the economy, affected the distribution of income and wealth
among the citizenry, stabilized the level of economic activities, and promoted economic growth and welfare.
The Ministry of Finance played an important role in Japan's postwar economic growth. It advocated a "growth
first" approach, with a high proportion of government spending going to capital accumulation, and minimum
government spending overall, which kept both taxes and deficit spending down, making more money available
for private investment. Most Japanese put money into savings accounts, mostly postal savings.
1. National Budget:-
In the postwar period, the government's fiscal policy centers on the formulation of the national budget, which is
the responsibility of the Ministry of Finance. The Ministry's Budget Bureau prepares expenditure budgets for
each fiscal year based on the requests from government ministries and affiliated agencies. The Ministry's Tax
Bureau is responsible for adjusting the tax schedules and estimating revenues. The Ministry also issues
government bonds, controls government borrowing, and administers the Fiscal Investment and Loan Program
(FILP), which is sometimes referred to as the "second budget".
Three types of budgets are prepared for review by the National Diet each year. The general account budget
includes most of the basic expenditures for current government operations. Special account budgets, of which
there are about forty, are designed for special government programs or institutions where close accounting of
revenues and expenditures is essential: for public enterprises, state pension funds, and public works projects
financed from special taxes. Finally, there are the budgets for the major affiliated agencies, including public
service corporations, loan and finance institutions, and the special public banks. Although these budgets are
usually approved before the start of each fiscal year, they are usually revised with supplemental budgets in the
fall. Local jurisdiction budgets depend heavily on transfers from the central government.
Government fixed investments in infrastructure and loans to public and private enterprises are about 15%
of GNP. Loans from the Fiscal Investment and Loan Program, which are outside the general budget and funded
primarily from postal savings, represent more than 20% of the general account budget, but their total effect on
economic investment is not completely accounted for in the national income statistics. Government spending,
representing about 15% of GNP in 1991, was low compared with that in other developed economies. Taxes
provided 84.7% of revenues in 1993. Income taxes are graduated and progressive. The principal structural
feature of the tax system is the tremendous elasticity of the individual income tax.
Because inheritance and property taxes are low, there is a slowly increasing concentration of wealth in the
upper tax brackets. In 1989 the government introduced a major tax reform, including a 3% consumer tax. This
tax has been raised to 5% by now.
After the breakdown of the economic bubble in the early 1990s the country's monetary policy has become a
major reform issue. US economists have called for a reduction in Japan's public spending, especially on
infrastructure projects, to reduce the budget deficit. To force a reduction of the loan program, partially financed
through postal savings, then–Prime Minister Junichiro Koizumi aimed to push forward postal privatization. The
postal deposits, by far the largest deposits of any bank in the world, would help strengthening the private
banking sector instead.
2. Budget process:-
The Budget Bureau of the Ministry of Finance is at the heart of the political process because it draws up the
national budget each year. This responsibility makes it the ultimate focus of interest groups and of other
ministries that compete for limited funds. The budgetary process generally begins soon after the start of a
new fiscal year on April 1. Ministries and government agencies prepare budget requests in consultation with
the Policy Research Council.
In the fall of each year, Budget Bureau examiners reviews these requests in great detail, while top Ministry of
Finance officials work out the general contours of the new budget and the distribution of tax revenues. During
the winter, after the release of the ministry's draft budget, campaigning by individual Diet members for their
constituents and differentministries for revisions and supplementary allocations becomes intense. The coalition
leaders and Ministry of Finance officials consult on a final draft budget, which is generally passed by the Diet
in late winter.
In broad outline, the process reveals a basic characteristic of Japanese political dynamics: that despite the oft-
stated ideals of "harmony" and "consensus," interests, including bureaucratic interests, are in strong competition
for resources. Political leaders and Budget Bureau officials need great skill to reach mutually acceptable
compromises. The image of "Japan Incorporated," in which harmony and unanimity are virtually automatic,
belies the reality of intense rivalry. The late-twentieth-century system is successful insofar as political skills and
appreciation of common interests minimize antagonisms and maintain a balance of power among groups. It is
unclear, however, whether this system will continue as Japan faces such problems as growing social inequality
and an aging society.
3. National Debt:-
In 2011 Japan's public debt was about 230 percent of its annual gross domestic product, the largest percentage
of any nation in the world.
In order to address the Japanese budget gap and growing national debt, in June 2012 the Japanese diet passed a
bill to double the national consumption tax to 10%. The new bill increases the tax to 8% by April 2014 and
10% by October 2015
