Q.Explain the recent Capital Market reforms in India.

Over the years the Indian capital market has been reformed to make it more transparent, efficient and investor-friendly.

The major reforms include the establishment of SEBI as the statutory regulator, the shift to screen-based electronic trading, the setting up of the NSE, dematerialisation and the depository system, rolling (T+2) settlement, and several investor-protection measures — each explained below.

The Indian capital market has undergone several reforms that made it more transparent, efficient and safe for investors:

1. Establishment of SEBI. SEBI was set up (statutory status 1992) as the regulator to protect investors and to develop and regulate the securities market, curbing the malpractices of the 1980s.
2. Screen-based electronic trading. The old open-outcry floor trading was replaced by an on-line, screen-based system that is transparent, efficient and accessible from anywhere in the country.
3. Setting up of the NSE. The National Stock Exchange introduced a modern, fully automated, nationwide trading system with equal access and international standards.
4. Dematerialisation and depositories. Securities are now held in electronic form through depositories (NSDL and CDSL) and depository participants, removing the theft, forgery and delay associated with physical certificates.
5. Rolling settlement (T+2). Trades are settled on a rolling basis on the T+2 day, shortening the settlement cycle and reducing risk.
6. Investor protection. SEBI's protective functions — prohibiting fraudulent and unfair trade practices, controlling insider trading, and educating investors — have strengthened investor confidence.

Together these reforms have widened participation and made the capital market a more reliable channel for mobilising long-term funds.