To prevent the recurrence of scams in the Indian capital market, the Government of India has assigned regulatory powers to the Securities and Exchange Board of India (SEBI), as mentioned in option 1.

The Securities and Exchange Board of India (SEBI) is the regulatory body for the securities market in India. It was established in 1988 with the objective of protecting the interests of investors and ensuring the orderly and transparent functioning of the securities markets.

Here are some detailed reasons why SEBI has been assigned regulatory powers to prevent scams in the Indian capital market:

1. Expertise and Specialization: SEBI is a specialized institution dedicated solely to regulating the securities market. It has a deep understanding of the intricacies of the market and possesses the necessary expertise to formulate regulations and policies that help in preventing scams.

2. Regulatory Framework: SEBI has established a comprehensive regulatory framework that governs various aspects of the capital market, including listing and trading of securities, disclosure requirements, investor protection, and market surveillance. These regulations are designed to create a level playing field for all participants and prevent fraudulent activities.

3. Investor Protection: SEBI places a strong emphasis on investor protection. It has implemented various measures to safeguard the interests of investors, such as strict disclosure requirements, investor education initiatives, and a robust grievance redressal mechanism. By ensuring transparency and promoting fair practices, SEBI aims to prevent scams that may harm investors.

4. Market Surveillance and Enforcement: SEBI has developed a robust market surveillance system to detect and deter market manipulations, insider trading, and other fraudulent activities. It closely monitors trading patterns, investigates suspicious transactions, and takes strict enforcement actions against violators. By maintaining vigilance and conducting investigations, SEBI acts as a deterrent against scams in the capital market.

5. Continuous Monitoring and Adaptation: SEBI continuously monitors market developments and trends to identify new risks and challenges. It regularly reviews and updates its regulations to address emerging issues and prevent potential scams. This proactive approach helps in staying ahead of fraudsters and maintaining the integrity of the capital market.

While the Reserve Bank of India (RBI) and State Bank of India (SBI) are important financial institutions in India, they primarily focus on the regulation and supervision of banking and financial systems, including commercial banks, monetary policy, and currency management. Their roles are crucial for the stability of the overall financial system but are not directly responsible for regulating the securities market.

In summary, SEBI has been assigned regulatory powers by the Government of India to prevent scams in the Indian capital market due to its specialization, expertise, investor protection measures, market surveillance capabilities, and continuous monitoring and adaptation to evolving market conditions.