A Critical Overview of Indian Capital Market: Structure, Functions and Regulations

India’s capital markets serve as the cornerstone of the nation’s financial architecture, efficiently bridging the gap between savers and borrowers to propel economic growth. This paper offers a critical examination of the structure, core functions, and regulatory framework of India’s capital markets, evaluating their effectiveness in promoting stability, transparency, and market integrity. The capital market ecosystem comprises both primary and secondary markets, which not only mobilize capital but also facilitate essential processes such as price discovery, risk management, and wealth creation. The introduction of derivatives and hedging instruments has further empowered businesses to manage financial volatility, while technological advancements like T+1 settlements and dematerialized (demat) accounts have significantly enhanced operational efficiency and investor convenience. The Securities and Exchange Board of India (SEBI), established under the SEBI Act of 1992, functions as the apex regulatory authority, enforcing rigorous standards to curb insider trading, uphold corporate governance, and protect retail investors through mechanisms such as mandatory disclosures and Know Your Customer (KYC) protocols This analysis underscores that a dynamic and resilient capital market is indispensable for India’s sustained economic development. The ongoing challenge lies in striking the right balance between robust regulation and continuous innovation, ensuring that the capital market remains a reliable engine for financial stability, investor protection, and inclusive growth in a rapidly evolving economic landscape.