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The government and the stock exchange were rather helpless in addressing the investors' problems because of the lack of proper penal provisions in the existing legislation, so it was decided to set up a regulatory body known as:

Solution

✅ Correct Option: 2

Because existing legislation lacked proper penal provisions, the government set up the Securities and Exchange Board of India (SEBI) in 1988 (statutory status in 1992) to regulate the securities market and protect investors. Hence option 2.

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