RBI/NABARD/SEBI Regulatory Framework
Scope
This domain tests the roles and powers of RBI, NABARD and SEBI, plus the regulatory instruments they use. Expect monetary policy, priority sector lending, rural credit, bank licensing, securities market regulation, insider trading and listing obligations.
Core rules
- RBI regulates monetary policy and banks; its tools include repo, reverse repo, CRR, SLR, open market operations and bank rate.
- NABARD is the apex development bank for agriculture and rural development. It provides refinance, supports cooperative banks and regional rural banks, and administers rural infrastructure funds.
- SEBI regulates securities markets under the SEBI Act, 1992. It registers intermediaries, prohibits insider trading and regulates disclosures and listing.
- Priority sector lending targets for commercial banks are set by RBI; compliance is reviewed periodically.
Worked example
A company director buys shares in his own company before a price-sensitive merger announcement. This is insider trading because it is based on unpublished price-sensitive information. SEBI, not RBI or NABARD, has jurisdiction over listed securities and may impose penalties and disgorgement.
Traps
Assigning SEBI a banking-regulation role; treating NABARD as a commercial bank; and confusing the monetary policy tools of RBI with fiscal tools of the government.