Q.Explain the role of the RBI and SEBI in regulating India's financial markets.

India's two chief financial regulators divide responsibility cleanly along the same short-term/long-term line that separates the money market from the capital market.

Role of the RBI:

1. Controls overall money supply and credit through the Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), repo rate and reverse repo rate, the bank rate, and open market operations.
2. Regulates and supervises commercial banks, co-operative banks, and non-banking financial companies in the organised money market.
3. Manages the issuance of Treasury Bills and other government securities, overseeing the gilt-edged segment of the capital market on behalf of the government.
4. Acts as banker to the banks and banker to the government, and as the lender of last resort in periods of genuine liquidity stress.

Role of SEBI:

1. Established in 1988, given statutory powers under the SEBI Act, 1992, with the mandate to protect investors and to regulate and develop the capital market.
2. Registers and regulates market intermediaries — stock brokers, merchant bankers, portfolio managers, credit rating agencies, and mutual funds.
3. Lays down disclosure and investor-protection norms companies must follow when issuing securities in the primary market.
4. Oversees stock exchanges and works to prevent fraudulent and unfair trade practices, including insider trading.
5. Regulates mutual funds and other collective investment schemes. …

Describing SEBI's role only as 'protecting investors' in general terms, without naming its specific regulatory functions (registering intermediaries, disclosure norms, policing insider trading) — a complete answer is ex …