Explain the recent Capital Market reforms in India.

The major reforms in capital market of India since 1990 are listed below –

1. Establishment of SEBI: The Securities and Exchange Board of India was established in the year 1988 to –

âRegulate the activities of the merchant banks,

âRegulate the mutual funds’ operations

âWork as a promoter of stock exchange activities

âAct as a regulatory authority of new issue activities of the companies.

The main objective was to protect the interest of investors in securities market.

2. Establishment of Credit Rating Agencies: The Credit Rating Agencies like CRISIL, ICRA, and CARE were set up to assess the financial health of the Financial Institutions and agencies related to the stock market activities. It helps the investors in evaluating the risk of their investment.

3. Increased Merchant Banking activities: The merchant banking division is new division in commercial banks. These divisions provide financial services and are helping hands to the factors related to the capital market.

4. Mutual Funds: The growth of mutual funds in India has an important role in the capital market growth. It has given a wide choice to the common investors to enter the capital market.

5. Investors Protection: Government of India has set up Investor Education and Protection Fund in 2001 to educate and guide the investors in the capital market and to protect their interest from frauds and malpractices.