Question

Describe the significance of regulator, RBI and SEBI, and importance of Financial Markets and instruments in the growth of the economy.

Answer 1

Significance of regulators like securities and exchange board of India and Reserve Bank of India and importance of financial market and instrument in growth of economy are as follows-

A. Reserve Bank of India is responsible for formulation of monetary policy at regular intervals which will be based upon quantitative easing and quantitative tightening in order to control the monetary flow in the economy it will be helpful in maintaining the economic stability to a greater extent.

B. Securities and exchange board of India will be helping in maintaining fair regulations all across the financial market and they will prepare all such policies will maintain a high degree of transparency and protect the interest of the investors in the economy so they will be helping in better investment in the market.

C. These regulator's are responsible for maintenance of such policies which will be attracting the foreign direct investment into the Indian economy and since India is an emerging market, it needs these foreign direct investment in order to grow.

D. Financial markets are reflecting the the growth of economy to a certain extent and when the financial markets are going up there are lot of flows into the Indian markets and it will be providing a source of capital to many of the companies because they can even lift their shares and generate equity funds.

E. These regulator's are also responsible for always maintenance of trust of foreign investors and domestic investors and they should always try to adopt such policy which will be protecting from frauds of the institutions and maintaining a high corporate standard which will be flourishing the the investments into the domestic markets.

G. Higher financial markets is an indicator of stable economy and it will be leading to employment generation of opportunities when there will be capital infusion.

Hence it can be said that these regulator are responsible for management of healthy financial Markets and financial markets participants are responsible for protecting the interest of investors and instill a belief in them for investment so that economy could prosper.