2.4Why does India have two major stock exchanges?
1What is it?
India has two big exchanges for historical reasons and because competition helps investors.
2Why does it exist?
BSE existed for over 100 years. In the early 1990s, trading was slow and opaque. The government promoted NSE as a modern electronic rival. Competition pushed both to improve technology, cut costs and protect investors. Having two exchanges also gives backup if one has a technical problem.
3Real-life example
A town with two good hospitals: each tries to give better service, and if one has a power cut, the other still works.
4Quick revision
- BSE is historical; NSE was created in the 1990s reforms.
- Competition lowers costs and improves technology.
- Two exchanges add resilience.
5Knowledge check
Q1. What event led to market reforms and NSE’s creation?Show answer
The 1992 securities scam (Harshad Mehta) and the push for transparency.
Q2. Give one benefit of two exchanges.Show answer
Competition, lower costs, better technology, or backup during outages.
Q3. Do both follow the same regulator?Show answer
Yes, SEBI.