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Unit study guide · NISM Series III-A

Regulatory Framework – General View

14 questions in this unit

What this unit covers

Key ideas

From the practice bank · 1

Which regulator primarily oversees India’s securities market and protects investors in securities?

The Securities and Exchange Board of India, or SEBI, regulates the securities market and protects investors in securities. Remember: SEBI’s core mandate concerns investors and the securities market.

Hint Common mistake: Assuming one financial regulator governs every financial product. Match the market being regulated with the regulator’s mandate.

III-A-009

From the practice bank · 2

Which institution performs India’s central banking functions, including monetary policy implementation?

The Reserve Bank of India, or RBI, is India’s central bank and performs monetary-policy functions. Remember: Central banking and securities regulation are different functions.

Hint Common mistake: Assigning monetary policy to the securities-market regulator. Distinguish monetary policy from securities-market supervision.

III-A-010

From the practice bank · 3

Which regulator primarily oversees insurance companies and the insurance business in India?

The Insurance Regulatory and Development Authority of India, or IRDAI, regulates the insurance sector. Selling insurance through a bank does not change its primary insurance regulator. Remember: A distributor’s identity does not change the product’s primary regulator.

Hint Common mistake: Assuming a product sold by a bank must be regulated only by RBI. Focus on the product’s legal category rather than where it is sold.

III-A-011

From the practice bank · 4

Which authority regulates the National Pension System within its statutory remit?

The Pension Fund Regulatory and Development Authority, or PFRDA, regulates the National Pension System under its statutory mandate. Remember: PFRDA is the key regulator for the National Pension System.

Hint Common mistake: Treating every retirement product as an insurance product. Identify the regulator assigned to the pension system.

III-A-012

From the practice bank · 5

Which authority maintains statutory company-registration records and receives prescribed corporate filings?

The Registrar of Companies administers company-registration records and prescribed corporate filings. Remember: Company registration and securities custody belong to different systems.

Hint Common mistake: Confusing the authority that registers companies with a share transfer agent. Think of the authority responsible for company incorporation records.

III-A-013

From the practice bank · 6

Which authority is the unified financial regulator for India’s International Financial Services Centres?

The International Financial Services Centres Authority, or IFSCA, is the unified financial regulator for India’s International Financial Services Centres. Remember: An IFSC has a dedicated unified financial regulator.

Hint Common mistake: Assuming the domestic sector regulator always directly performs the IFSC role. Recall the authority created specifically for the international financial centre framework.

III-A-014

From the practice bank · 7

A company proposes a statutory merger scheme requiring tribunal sanction. Which forum is normally relevant to that company-law approval?

The National Company Law Tribunal deals with the relevant company-law merger-sanction process. Remember: Match the legal proceeding to the forum’s statutory jurisdiction.

Hint Common mistake: Sending every securities-related corporate matter to SAT. Separate company-law restructuring from an appeal against a securities regulator’s order.

III-A-015

From the practice bank · 8

An intermediary must submit a suspicious transaction report. Which authority receives this financial intelligence report?

The Director of the Financial Intelligence Unit-India, or FIU-IND, receives the suspicious transaction report under the reporting framework. Remember: Suspicious transaction reporting has a designated statutory recipient.

Hint Common mistake: Assuming internal escalation alone completes external reporting. Distinguish financial intelligence reporting from routine corporate reporting.

III-A-016

From the practice bank · 9

A regulator publishes a consultation paper seeking views on a proposed limit. No final rule is issued. How should compliance classify it?

A consultation proposal is not itself the final operative rule. Remember: Separate proposed regulation from requirements already in force.

Hint Common mistake: Applying a headline proposal before checking final notification and commencement. Check whether the document actually brings a legal requirement into force.

III-A-017

From the practice bank · 10

An internal policy allows an activity that an applicable binding SEBI rule prohibits. Which requirement takes priority?

The binding SEBI rule takes priority because internal approval cannot override a legal prohibition. Remember: Internal policies may strengthen controls but cannot legalise prohibited conduct.

Hint Common mistake: Using management or client approval as a substitute for legal authority. Compare a firm’s private policy with an external legal obligation.

III-A-018

From the practice bank · 11

A firm meets a client’s contractual instruction but breaches an applicable regulation. How should the compliance team assess the transaction?

Meeting the contract does not cure the breach because contractual and regulatory duties both matter. Remember: A transaction must satisfy applicable law as well as its contract.

Hint Common mistake: Treating the client’s signature as a complete compliance defence. Consider whether a private contract can waive public-law requirements.

III-A-019

From the practice bank · 12

Which legislation is the main company-law framework for incorporation and corporate governance in India?

The Companies Act, 2013 is the main company-law framework for incorporation and corporate governance. Remember: Different laws can apply to the same company for different purposes.

Hint Common mistake: Assuming a listed company is governed only by the SEBI Act. Look for the law governing the company as a legal organisation.

III-A-020

From the practice bank · 13

A regulation is published in June but expressly starts in August. A firm assesses a July transaction with no other applicable change. Which version applies?

The July transaction is assessed against the version then in force, not a future commencement date. Remember: Check commencement and transitional provisions before applying an amendment.

Hint Common mistake: Treating the date of publication as the effective date in every case. Separate the publication date from the commencement date.

III-A-021

From the practice bank · 14

A listed company follows exchange rules but ignores a separate applicable company-law filing. No exemption applies. Which conclusion is correct?

Both applicable obligations remain because satisfying one legal regime does not automatically satisfy another. Remember: Build a compliance map across every applicable legal regime.

Hint Common mistake: Assuming the most visible regulator is the only source of obligations. Consider whether the two legal obligations operate together.

III-A-022