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Which institutional change during IndiaтАЩs 1991 reforms best illustrates the transition from state-controlled mechanisms to market-based regulation in the capital markets?
Setting up of NABARD to oversee capital inflows into rural infrastructure
Empowerment of SEBI as a statutory body with regulatory authority over stock exchanges
The merger of UTI with SEBI to manage investor grievances in mutual funds
Delegation of stock market oversight to the Ministry of Finance for centralized control
Empowerment of SEBI as a statutory body with regulatory authority over stock exchanges
The SEBI Act of 1992 granted the Securities and Exchange Board of India (SEBI) statutory status, enabling it to regulate the securities market and protect investor interests. This marked a decisive shift from the previous Controller of Capital Issues (CCI) regime, which operated under the Capital Issues (Control) Act of 1947, toward a transparent, market-driven oversight framework.
The SEBI Act of 1992 granted the Securities and Exchange Board of India (SEBI) statutory status, enabling it to regulate the securities market and protect investor interests. This marked a decisive shift from the previous Controller of Capital Issues (CCI) regime, which operated under the Capital Issues (Control) Act of 1947, toward a transparent, market-driven oversight framework.
The SEBI Act, 1992 is the primary legislation governing the securities market in India, fulfilling the constitutional objective of regulating commerce and industry as per the Union List (Entry 48, List I of the Seventh Schedule).
SEBI was established as a non-statutory body in 1988 and gained statutory powers via the SEBI Act, 1992.
The 1991 reforms sought to replace the restrictive Capital Issues (Control) Act of 1947.
SEBI's mandate includes protecting investor interests, promoting development, and regulating the securities market.
The Controller of Capital Issues (CCI) was abolished in 1992, ending the government's direct control over the pricing and timing of share issues.
NABARD was established in 1982, not 1991, to support rural credit and development, unrelated to capital market regulation.
The Ministry of Finance shifted toward a policy-making role rather than direct operational oversight of stock exchanges post-1991.
The UTI Act was repealed in 2002-03, and UTI was bifurcated into UTI Mutual Fund and SUUTI, rather than being merged with SEBI.
B is correct тАФ The SEBI Act of 1992 provided the legal framework necessary to transition from government-controlled capital pricing to a regulated market-based system.
When studying 1991 reforms, connect the establishment of SEBI to the simultaneous abolition of the Controller of Capital Issues (CCI) to understand the full extent of the transition to a free-market economy.
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