NSE & Functions of RBI

Dr. Kavita Srivastava

Dr
Department of Management
ITS Ghaziabad
ITS,
Gh b d

National Stock Exchange

y Located in Mumbai
y Indias first Debt market
y Set
S t up iin 1993 tto encourage stock
t k exchange
h
reforms
f
y Opened for trading in mid 1994
y The instruments traded are government securities and bonds

issued by the public sector companies

Organization
y NSE was promoted by leading financial institutions and
y
y
y
y
y
y
y
y

government of India and was incorporated in November 1992 as a

tax paying company unlike other stock exchanges in the country
Promoters of NSE include
IDBI
ICICI
IFCI
SBI
Bank of Baroda
Canara Bank
PNB, etc.

NSE Group
y India Index Service and Products Ltd.
Ltd (IISL)
y National Securities Clearing Corporation Ltd. (NSCCL)
y National
N ti l SSecurities
iti Depository
D
it Ltd.
Ltd (NSDL)
y Dot Ex-International Ltd.

Reasons for establishment of NSE

y NSE of India became operational on 3rd November 1994,
1994 in

Mumbai
y The ggenesis of NSE lies in the recommendations of Pherwani
Committee (1991)
y The committee pointed out five major defects in the Indian
Stock Market
Lack of liquidity
Lack of ability to develop market for debt
Lack of infrastructural facilities and outdated trading system
Outdated
O d d settlement
l
system
Lack of existence of single market

Objectives of NSE
y To establish a nationwide trading facility for equities & debt

instruments
y To ensure equal access to investors all over the country
through appropriate communication network
y To provide a fair and efficient security market using
electronic communication network
y To meet current international standards of securities market

Advantages of NSE
y There is no problem of bad deliveries loss,
loss theft or forgery
y
y
y
y
y

because securities are safe in a depository

Effective regulation and monitoring of the system to ensure a
fair deal to the investors
there is high liquidity due to quick settlement and delivery
There is transparency as the date and time of transactions are
indicated.
indicated
Investors can check the exact price at which transactions
occurred
There is assurance of best price to the investors

Recent Trends in NSE

y Expansion : NSE has expanded its operation to other cities in

317 cities across the country

y Quality: transactions cost along with bad delivery has
declined
y More Liquidity: with online system and quick trading
facilities, NSE introduced some liquidity into the capital
market

Functions of RBI
y Bank of Issue
y Banker to the Government
y Bankers
B k bank
b k andd Lender
L d off the
th last
l t resortt
y Controller of credit
y Custodian of foreign exchange reserves
y Supervisory functions
y Promotional functions