SEBI Current Affairs - 2019
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The Union Cabinet headed by Prime Minister Narendra Modi has approved setting up of a unified authority for regulating all financial services in international financial services centres (IFSCs) in the country. The government has approved a bill to set up a unified regulator.
The first IFSC in India was set up at GIFT City in Gandhinagar, Gujarat.
Promoting the Ease of Doing Business
IFSCs are set-up to bring back the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches or subsidiaries of financial institutions (FIs) to India.
In order to ensure this, the business and regulatory environment must be comparable to other leading international financial centres in the world like London and Singapore. Currently, the banking, capital markets and insurance sectors in IFSCs are regulated by multiple regulators like the RBI, SEBI and IRDAI respectively.
For IFSCs to attain its objectives there is a need for inter-regulatory coordination. The establishment of a unified financial regulator for IFSCs will result in providing a world-class regulatory environment to market participants from the ease of doing business perspective.
For the setting up of a unified regulator, the Union cabinet has approved the International Financial Services Centres Authority Bill, 2019.
The Finance Ministry has asked the public sector banks to gradually reduce the government’s equity to 52 per cent. Currently, some of the public sector banks have government’s holding beyond 75 per cent.
Why the disinvestment?
The decision to bring down the government’s equity to 52 per cent was taken due to the following reasons:
- Dilution of the government’s stake will help banks to meet 25 per cent public float norms set by the SEBI.
- To align with the best corporate practices.
- Encourage the banks to follow the prudential lending norms.
The Ministry of Finance has authorised the Public Sector Banks to take necessary steps in bringing down the government equity based on the marketing conditions.
Rules of SEBI
A notification under the Securities Contracts Regulations (Amendment) Rules makes it mandatory for all listed entities to have a minimum public float of 25%.
The Securities and Exchange Board of India (SEBI) was established under the provisions of the Securities and Exchange Board of India Act, 1992 on April 12, 1992. SEBI aims to protect the interests of investors in securities and to promote the development and regulate the securities market in the country.