Reforms within Primary Market in India

Reforms within Primary Market in India

Tags:      Gig Economy     Economy     WTO     WTO Public Stockholding     MSP     Economic Growth     Masala Bond     Environmental Performance Index     Forecast of Economic Growth     Functions of the Finance Commission

1. Elimination of the Capital Issues Controller - In India, capital issues were governed by the Capital Issues (Control) Act of 1947. The Controller of Capital Issues (CCI) was in charge of controlling Capital Issues.

          

a. The Narasimham Committee's (1991) recommendation to abolish CCI called for SEBI to safeguard investors and take over CCI's regulatory responsibilities.

          

b. As a result, the Capital Issues (Control) Act was repealed and the CCI position was eliminated by the government.

          

c. Companies are permitted to move toward the Capital market without earlier government consent subject to getting their proposition archives cleared by SEBI.

2. Securities and Exchange Board of India (SEBI) - SEBI became a statutory body in January 1992 after being established as a non-statutory body in 1988. In the primary market, SEBI has established a number of guidelines for capital issues. The following explains them:

          

a. Businesses are obligated to disclose all relevant information and particular risk factors pertaining to their projects.

          

b. SEBI has likewise presented a code of promotion for public Issues for guaranteeing fair and honest exposures.

          

c. SEBI has given the businesses permission to determine the par value of the shares they issue.

          

d. SEBI has authorized the "book building" process 3 for IPO issues. Foreign Institutional Investors (FIIs) Are Allowed to Participate in the Indian Market Foreign institutional investors, such as pension funds and mutual funds, are permitted to invest in both the equity market and the debt market, which includes dated government securities and treasury bills.

3. Getting into the Global Funds Market - Indian organizations are permitted to get to worldwide money market and advantage from the lower cost of Assets. Through the issuance of American Depository Receipts (ADRs), Global Depository Receipts (GDRs), Foreign Currency Convertible Bonds (FCCBs), and External Commercial Borrowings (ECBs), they have been permitted to raise funds. Additionally, through ADR/GDR Issues, Indian businesses can list their securities on international stock exchanges.

4. Merchant bankers, as well as other intermediaries like portfolio managers, registrars to an issue, share transfer agents, underwriters, debenture Trustees, bankers to an issue, custodian of securities, and venture capital funds, have been brought under the purview of SEBI. Other intermediaries include UTI, mutual funds, and venture capital funds.

5. 6. Credit Rating Agencies - In order to meet the growing requirements of the capital market, a number of credit rating agencies, including Cost Analysis and Research Ltd. (CARE – 1993), Investment Information and Credit Rating Agency of India Ltd. (ICRA – 1991), and Credit Rating Information Services of India Ltd. (CRISIL – 1988), were established.