A Critical Study On The Pivotal Role Of Securities Exchange Board Of India SEBI In Curbing The Transgressions In The Capital Market With A Reference To Its Global Counterparts

Abstract

The economic development of a nation is closely tied to the strength and efficiency of its capital market, which supports industrial growth by providing financial resources. In India, prior to the 1970s, capital market activity was minimal, with industries relying mostly on retained earnings and bank loans. However, post-1991 liberalization reforms transformed the Indian capital market into a more structured and globally integrated system. newlineThese reforms targeted the financial sector, trade, and investment policies, bringing order to a previously fragmented market. Today, India has a vibrant capital market with over 9000 listed companies, second only to the U.S., and around 40 million global investors engaged in it. Despite this, challenges remain. Only 2% of the country s 21% GDP-equivalent household deposits flow into the stock market, indicating low public participation and trust. newlineBetween 1991 and 1995, the primary market surged, with about 40 IPOs launched weekly. Many companies new and established raised significant funds, aided by aggressive marketing. However, lack of regulation and price manipulation led to investor losses, especially after the M.S. Shoes scandal, resulting in eroded investor confidence. Several firms that raised capital during this period later disappeared, causing widespread capital loss. Today, shares once issued at high premiums trade at values far below their original prices. newlineRecognizing the need for regulation, the Indian government established SEBI (Securities and Exchange Board of India) in 1988, formalized by the SEBI Act in 1992, to curb fraud and strengthen market oversight. newlineIndia s capital market remains a crucial mechanism for channeling savings into productive investments. The securities market provides an efficient link between savers and investors through various financial instruments like shares, bonds, government securities, and derivatives, as defined by the Securities Contracts (Regulation) Act, 1956. newline newline