There are many financial institutions in India and we have many regulators for regulating them in order to assure the proper functioning of the financial system in our nation. Now, the next questions is what is financial instituiton? Well! any organization which deals in money is a financial institutions. We will be discussing each and every one of them because it is one of the important topic from exam point of view as well as from interview point of view. Make sure you go through them all and make proper notes because it is going to be one intresting lesson for you all.

Reserve Bank of India (RBI)

It is one of the financial regulators in India and it regulates everything related to money. It is also known as the Central Bank Of India as well as the lender of last resort because of the impeccable function that it performs.  It was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. It regulates all the commercial banks in India like public sector banks, private sector banks, RRBs, Cooperative banks and all type of non-banking financial companies. It forms monetary policy and control the Inflation in the country with the help of monetary policy.

Securities and Exchange Board of India (SEBI):

SEBI is another financial regulator in India which was established in the year 1988. It basically regulates the security market in Indian territory. Any company which wants to be a part of the security market or wants to invest in the security market has to follow the guidelines laid by SEBI.

Insurance Regulatory and Development Authority of India (IRDAI):

The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India which is a financial regulator of all private sector and public sector insurance companies in India. It regulates the functioning of insurance companies to direct them to work in the public interest. It was established by an act of IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. The Head-Quarter is in Hyderabad.

Pension Fund Regulatory and Development Authority (PFRDA):

Pension Fund regulatory is a pension related authority and handles all the matters related to this sector. It   was established in the year 2003 by the Indian Government and authorized by the Finance Ministry. Its main function is to promote income security of old age by regulating and also developing pension funds. PFRDA is also responsible for the appointment of different other intermediate agencies like Pension Fund managers.

Forward Markets Commission:

Forward Markets Commission main objective is to advise the Central government on matters of the Forwards Contract Act, 1952. It is the chief regulator of the commodity (MCX, UCX, NMCE etc) of the Indian future market. It’s headquarter is located in Mumbai Working in collaboration with the Finance Ministry.

Factors Affecting Financial System

• Demand and supply is one of the factor.
• The lack of right and constructive approach to rule-making
• Financial and digital literacy among the people of the nation.
• Monopoly in the market.
• Launching innovative solutions for Supporting public good investments like the unified payments interface (UPI), etc

Ways to Improve Financial Sector

• Financial Inclusion among the people of the nation.
• Revising the existing policies for proper functioning of the system.
• Enabling the transparency in the process of price discovery by the market determination of interest rates that improves allocate efficiency of resources.
• Giving the autonomous status to institutions.
• Preparing the financial system of our nation  for increasing international competition.