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CISCEISC (Commerce) Class 12
Question Papers379
Textbook Solutions18217
Important Solutions6241
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Time Tables16
Syllabus

Overview of Business Regulators and Intermediaries

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Estimated time: 37 minutes
CISCE: Class 12

Key Points: Regulators and Intermediaries

  • Regulators are authorities set up by the Government to control and supervise specific individuals and organisations.
  • Their main objectives are to ensure ethical functioning of organisations and to protect the interests of the public.
  • For example, SEBI regulates stock exchanges, brokers, mutual funds and protects investors’ interests.
  • Intermediaries are individuals or organisations that act as middlemen between two groups in the economy.
  • Examples of intermediaries include stock brokers, merchant bankers, depositories and credit rating agencies.
CISCE: Class 12

Difference Between Regulators and Intermediaries

Basis of Distinction Regulators Intermediaries
Meaning Authorities which regulate intermediaries Middlemen between corporate sector/business firms and investors/consumers
Nature Official agencies Unofficial or private agencies
Appointment Appointed by the Government Not appointed by the Government
Motive Social motive Economic motive
Example SEBI Stockbrokers
CISCE: Class 12

Key Points: Reserve Bank of India (RBI)

  • The Reserve Bank of India (RBI) is the Central Bank of India, established in 1935 under the RBI Act, 1934.
  • It regulates commercial banks (Indian and foreign) and Non-Banking Finance Companies (NBFCs) in the country.
  • RBI controls money supply and credit and formulates and implements the monetary policy of India.
  • It acts as the Banker’s Bank by providing loans and maintaining cash reserves of commercial banks.
  • RBI functions as the Lender of the Last Resort by giving financial assistance to banks during emergencies.
  • It performs the Clearing House function by settling inter-bank payments through book entries.
  • RBI is the Custodian of Foreign Exchange and works to maintain stability in the exchange rate of the Indian currency.
 
CISCE: Class 12

Key Points: Securities and Exchange Board of India (SEBI)

  • SEBI (Securities and Exchange Board of India) was established in 1988 and became a statutory body in 1992 under the SEBI Act, 1992.
  • It regulates and supervises the securities market in India, including stock exchanges and companies issuing securities.
  • SEBI controls intermediaries such as brokers and merchant bankers to ensure fair practices.
  • Its main objective is to protect the interests and rights of investors.
  • SEBI ensures orderly functioning and development of the securities market and acts as the watchdog of the capital market.
 
CISCE: Class 12

Key Points: Functions of SEBI

  • SEBI performs protective functions by preventing fraud, insider trading, price rigging, and unfair trade practices to protect investors.
  • It carries out developmental functions such as promoting the training of intermediaries, conducting research, and educating investors.
  • SEBI performs regulatory functions by framing rules for stock exchanges and registering and controlling brokers, merchant bankers, and mutual funds.
  • It supervises important market intermediaries like stock exchanges, stock brokers, merchant bankers, depositories, and credit rating agencies.
  • Depositories (NSDL and CDSL) help investors hold securities in electronic form through demat accounts, reducing paperwork and risk.
  • Credit rating agencies like CRISIL and ICRA assess the creditworthiness of securities and help investors make informed decisions.
  • Overall, SEBI ensures transparency, fairness, and orderly functioning of the securities market in India.
CISCE: Class 12

Key Points: Mutual Funds

  • A mutual fund is a trust that collects money from the public by issuing units and invests it in securities according to prescribed rules.
  • It is managed by professional fund managers and works under the regulation of SEBI.
  • Mutual funds offer different schemes such as open-ended, close-ended, income funds, growth funds, and balanced funds.
  • They help investors by providing diversification of risk, liquidity, professional management, and tax benefits.
  • Unit Trust of India (UTI) was the first mutual fund in India, followed by many others like HDFC and ICICI Prudential Mutual Fund.
CISCE: Class 12

Key Points: Insurance Regulatory and Development Authority of India (IRDAI)

  • IRDAI is the apex statutory body that regulates and supervises the insurance industry in India.
  • It was established under the IRDAI Act, 2014, and is appointed by the Government of India.
  • Its main objective is to protect the interests and rights of policyholders.
  • IRDAI regulates insurance companies and agents by issuing licences and setting rules and standards.
  • It ensures transparency, fair practices, proper investment of funds, and maintenance of solvency by insurance companies.
CISCE: Class 12

Key Points: Food Safety and Standards Authority of India (FSSAI)

  • FSSAI was established under the Food Safety and Standards Act, 2006 to regulate food safety in India.
  • It lays down science-based standards for food and regulates manufacture, storage, distribution, sale, and import of food items.
  • FSSAI frames rules and guidelines to ensure safe and wholesome food for human consumption.
  • It provides scientific advice and technical support to Central and State Governments on food safety matters.
  • It accredits laboratories and certification bodies to maintain food safety standards.
  • FSSAI creates awareness, training programmes, and information networks related to food safety.
  • Food processors and food packers operate under FSSAI regulations to ensure safe processing and proper packaging of food items.
CISCE: Class 12

Key Points: Indian Standard Institute (ISI)

  • The Indian Standards Institution (ISI) was established in 1947 and later replaced by the Bureau of Indian Standards (BIS) in 1987 under the BIS Act, 1986.
  • BIS is a statutory body that sets national standards and promotes quality control in India.
  • Its main objective is to develop standardisation, marking, and quality certification to create quality awareness.
  • BIS prepares standards for products, certifies industrial and consumer goods, and protects consumers by ensuring product quality.
  • It promotes both national and international standards and helps reduce production costs by eliminating unnecessary varieties.
  • BIS provides quality marks such as ISI mark for consumer goods and BEE mark for electrical goods.
  • BIS plays an important role in improving the quality of industrial goods, electrical goods, and consumer goods in India.
 
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