Looking for the answer to the question below related to Financial Management ?
|A. Unified regulatory system
B. Sectorial regulatory system
C. Single regulatory system
D. None of these
The Correct Answer Is:
- B. Sectorial regulatory system
The correct answer is B. Sectorial regulatory system. India follows a sectorial regulatory system, which means that regulatory authorities are established for specific sectors or industries to oversee and regulate activities within those sectors. This approach is in contrast to a unified regulatory system, where a single regulatory body governs multiple sectors.
Let’s explore why the answer is correct and why the other options are not applicable in the context of India’s regulatory framework:
B. Sectorial Regulatory System:
In India, various regulatory authorities have been established to oversee and regulate specific sectors or industries. Each regulatory authority is responsible for setting and enforcing regulations, standards, and guidelines relevant to its respective sector. Some examples of sector-specific regulatory bodies in India include:
1. Securities and Exchange Board of India (SEBI):
SEBI regulates the securities market in India, including the stock exchanges, mutual funds, and other entities involved in the securities and capital market. Its primary goal is to protect the interests of investors and promote fair and transparent market practices.
2. Reserve Bank of India (RBI):
RBI is the central bank of India and regulates the banking and financial sector. It oversees commercial banks, cooperative banks, and non-banking financial companies (NBFCs), among other financial institutions. RBI is responsible for monetary policy, currency issuance, and financial stability.
3. Insurance Regulatory and Development Authority of India (IRDAI):
IRDAI is the regulatory body for the insurance sector in India. It supervises insurance companies, brokers, and intermediaries, ensuring compliance with insurance laws and protecting policyholders’ interests.
4. Telecom Regulatory Authority of India (TRAI):
TRAI is responsible for regulating the telecommunications industry in India. It sets policies and regulations related to telecommunication services, spectrum allocation, and consumer protection.
5. Central Electricity Regulatory Commission (CERC):
CERC oversees the power sector, including electricity generation, transmission, and distribution. It regulates tariffs, grid operations, and market mechanisms in the electricity sector.
These are just a few examples, and India has many other sector-specific regulatory bodies covering areas such as aviation, pharmaceuticals, and environmental protection. The sectorial regulatory system allows for focused oversight tailored to the unique characteristics and challenges of each industry.
Now, let’s examine why the other options are not correct:
A. Unified Regulatory System:
A unified regulatory system involves a single regulatory authority that oversees multiple sectors or industries. India does not follow a unified regulatory system. Instead, it has opted for a sectorial approach, where different regulatory bodies are responsible for specific sectors.
This approach recognizes that each sector has distinct characteristics, complexities, and regulatory needs, making it more effective to have specialized regulators.
C. Single Regulatory System:
Option C, “Single regulatory system,” is similar to option A in that it implies a unified regulatory structure. India’s regulatory framework does not adhere to a single regulatory system; instead, it operates through multiple regulatory authorities, each focusing on a specific sector or domain.
D. None of These:
Option D suggests that none of the provided options accurately describe India’s regulatory system. However, as explained earlier, India follows a sectorial regulatory system where regulatory bodies are established for various sectors to ensure effective oversight and compliance with sector-specific regulations.
In conclusion, India’s regulatory framework is characterized by a sectorial regulatory system, where distinct regulatory authorities are responsible for overseeing specific sectors or industries.
This approach acknowledges the diversity and complexity of India’s economy and allows for tailored regulation and supervision to address the unique challenges and requirements of each sector. Sectorial regulation plays a crucial role in promoting transparency, competition, and consumer protection within individual industries, contributing to the overall regulatory framework in India.