Securities and Exchange Board of India (SEBI)
Indian Economy
- PYQs8
- Articles1
Background
SEBI is the apex regulator of India's capital markets, crucial for understanding financial sector governance, investor protection mechanisms, and economic stability. Its functions and powers are frequently tested in UPSC examinations.
SEBI is the statutory regulatory body for the securities market in India, established in 1988 and given statutory powers in 1992 through the SEBI Act, 1992. Its primary objectives include protecting the interests of investors in securities, promoting the development of the securities market, and regulating the securities market.
Facts & tables
- Establishment
- 1988 (statutory powers 1992 via SEBI Act)
- Nature
- Statutory body
- Core Mandate
- Investor protection, market development, regulation of securities market
- Jurisdiction
- Stock exchanges, mutual funds, merchant bankers, etc.
| Type | Reference |
|---|---|
| Conceptual area | Constitutional & Statutory Bodies |
| Body | Role |
|---|---|
| Securities and Exchange Board of India | Regulates |
Prelims angle
Prelims angle: Factual recall
Prelims angle: Multi-statement analysis
- Statutory body, established 1992 (SEBI Act).
- Regulates securities market (stocks, bonds, mutual funds).
- Protects investor interests.
- Promotes market development.
- Oversees Asset Management Companies (AMCs).
Check if created by Constitution or by Parliament.
| Year | Framing tags |
|---|---|
| 2025 | Multi-statement analysis, Institutional roles and functions |
| 2025 | Multi-statement analysis, Conceptual understanding |
| 2024 | Multi-statement analysis, Factual recall |
| 2024 | Definition-based questions, Conceptual understanding |
| 2024 | Factual recall, Multi-statement analysis |
| 2023 | Multi-statement analysis, Factual recall |
| 2022 | Statement-based questions, Conceptual understanding |
| 2021 | Multi-statement analysis, Institutional roles and functions |
Timeline
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Constitutional & Statutory Bodies
Conceptual area
-
Prelims 2021
Multi-statement analysis, Institutional roles and functions
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Prelims 2022
Statement-based questions, Conceptual understanding
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Prelims 2023
Multi-statement analysis, Factual recall
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Prelims 2024
Multi-statement analysis, Factual recall
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Prelims 2024
Definition-based questions, Conceptual understanding
-
Prelims 2024
Factual recall, Multi-statement analysis
-
Prelims 2025
Multi-statement analysis, Institutional roles and functions
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Prelims 2025
Multi-statement analysis, Conceptual understanding
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SEBI proposes to limit salary disclosure of AMC top employees
SEBI is India's statutory capital market regulator, established in 1992, focused on investor protection, market development, and regulating market intermediaries like Asset Management Companies (AMCs).
See also
No related topics linked yet.
Past papers
2021–2025 · 8 questions
In the news
SEBI proposes to limit salary disclosure of AMC top employees
SEBI is India's statutory capital market regulator, established in 1992, focused on investor protection, market development, and regulating market intermediaries like Asset Management Companies (AMCs).
Try these PYQs
In India, which of the following can trade in Corporate Bonds and Government Securities?
1. Insurance Companies
2. Pension Funds
3. Retail Investors
Select the correct answer using the code given below:
* Insurance Companies: Insurance companies have large funds that they need to invest securely for long-term returns. Corporate bonds and government securities fit this investment profile. Hence, this statement is correct. * Pension Funds: Similar to insurance companies, pension funds manage retirement savings and need safe, long-term investment avenues like corporate bonds and government securities. Hence, this statement is correct. * Retail Investors: Retail investors can also invest in corporate bonds and government securities, though the process might be slightly more complex than investing in stocks. Various platforms and brokers facilitate such investments. Hence, this statement is correct. Therefore, all three statements are correct.
Consider the following statements:
I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom.
II. India’s stock market has grown rapidly in the recent past even overtaking Hong Kong’s at some point of time.
III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.
Which of the statements given above are correct?
India has seen a massive rise in equity options trading and stock market capitalization, but investor protection is actively overseen by SEBI. ✅ Statement I: Correct India leads globally in equity options trading volume, reflecting a major boom in the derivatives market. ✅ Statement II: Correct In early 2024, India's stock market temporarily overtook Hong Kong’s, becoming the 4th largest by market cap. ❌ Statement III: Incorrect India has a regulatory body—SEBI—which issues warnings and acts against unregistered advisors.
With reference to investments, consider the following:
I. Bonds
II. Hedge Funds
III. Stocks
IV. Venture Capital
How many of the above are treated as Alternative Investment Funds?
Alternative Investment Funds (AIFs) are privately pooled investment vehicles that invest in assets beyond traditional options like stocks and bonds. In India, SEBI classifies AIFs into three categories, including hedge funds and venture capital funds. ❌ Statement I: Incorrect
* Bonds are traditional debt instruments and not classified as AIFs. ✅ Statement II: Correct
* Hedge Funds fall under Category III AIFs as per SEBI regulations. ❌ Statement III: Incorrect
* Stocks are conventional equity investments, not treated as AIFs. ✅ Statement IV: Correct
* Venture Capital is a form of Category I AIF in India.
With reference to India, consider the following statements:
1. Retail investors through demat account can invest in ‘Treasury Bills’ and ‘Government of India Debt Bonds’ in primary market.
2. The ‘Negotiated Dealing System-Order Matching’ is a government securities trading platform of the Reserve Bank of India.
3. The ‘Central Depository Services Ltd.’ is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.
Which of the statements given below is/are correct?
Statement 1 is correct: Retail investors through demat accounts can invest in Treasury Bills and Government of India Debt Bonds in the primary market. Statement 2 is correct: The Negotiated Dealing System-Order Matching is a government securities trading platform of the Reserve Bank of India. Statement 3 is incorrect: Central Depository Services Ltd (CDSL), is the first listed Indian central securities depository based in Mumbai. CDSL is promoted by BSE Ltd. jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, and Standard Chartered Bank.
Consider the following statements:
Statement-I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statement-II: InvITs are recognized as borrowers under the 'Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002'.
Which one of the following is correct in respect of the above statements?
* Statement I is Incorrect : Earlier, InvITs offered some tax benefits to investors. However, the budget in 2023 changed the taxation structure. Currently, all income distributed by InvITs, including interest income, dividend income, and rental income, is taxable in the hands of the unitholders according to their income tax slab. * Statement II is Correct : InvITs are indeed recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). This Act allows InvITs to access various financing options and enforce security interests in case of defaults.
Show 3 more PYQs
Consider the following statements:
1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India.
2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs).
3. In India, Stock Exchanges can offer separate trading platforms for debts.
Which of the statements given above is/are correct?
Statement 1 is correct: While NBFCs do not have routine, direct access to the Liquidity Adjustment Facility (LAF) like scheduled commercial banks, they can access RBI liquidity indirectly through eligible participants such as Primary Dealers and banks, and through special liquidity windows and RBI operations linked to LAF mechanisms. Statement 2 is correct: Foreign Institutional Investors (now FPIs) are permitted to invest in Government Securities (G-Secs) and Treasury Bills. The RBI has even introduced the Fully Accessible Route (FAR), which allows non-residents to invest in specified government bonds without any investment upper limit. Statement 3 is correct: To develop a robust corporate and government bond market, the RBI and SEBI have permitted Stock Exchanges to set up dedicated debt trading platforms. For example, the NSE's Wholesale Debt Market (WDM) and Retail Debt Market (RDM) provide transparent platforms for these transactions.
Consider the following:
1. Exchange-Traded Funds (ETF)
2. Motor vehicles
3. Currency swap
Which of the above is/are considered financial instruments?
* Exchange-Traded Funds (ETFs): ETFs are baskets of securities (like stocks) that are traded on stock exchanges, similar to individual stocks. They represent a financial instrument. * Motor vehicles: Motor vehicles are tangible assets, not financial instruments. Financial instruments represent claims to assets or cash flows. * Currency swap: A currency swap is a derivative contract where two parties exchange principal and interest payments in different currencies. It is a type of financial instrument. Therefore, only ETFs and currency swaps are considered financial instruments.
With reference to Convertible Bonds consider the following statements:
1. As there is an option to exchange the bond for equity, Convertible Bonds pay a lower rate of interest.
2. The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices.
Which of the statements given above is / are correct?
A convertible bond is a type of debt security that provides an investor with a right or an obligation to exchange the bond for a predetermined number of shares in the issuing company at certain times of a bond's lifetime. It is a hybrid security that possesses features of both debt and equity. * Statement 1 is correct: Convertible bonds tend to offer a lower coupon rate or rate of return in exchange for the value of the option to convert the bond into a common stock. Investors will generally accept a lower coupon rate on a convertible bond, compared with the coupon rate on an otherwise identical regular bond, because of its conversion feature. This enables the issuer to save on interest expenses, which can be substantial in the case of a large bond issue. * Statement 2 is correct: The option to convert to equity affords the bondholder a degree of indexation to rising consumer prices as equity prices can differ widely from the given interest and the difference in that can be used as a hedge for inflation.