The Cabinet has approved the setting up of a unified authority that would regulate all the financial services in International Financial Services Centres (IFSC), such as the Gujarat International Finance Tec-City (GIFT) in Gandhinagar.
This is to be done through the International Financial Services Centres Authority Bill, 2019.
An IFSC is aimed at encouraging Indian companies that are conducting business in foreign financial centres such as London and Singapore, to bring that business to India by providing them with a global-standard regulatory and business environment. “It would provide Indian corporates easier access to global financial markets,” the government said in a release. “IFSC would also complement and promote further development of financial markets in India.” “Currently, the banking, capital markets and insurance sectors in IFSCs are regulated by multiple regulators, i.e. RBI, SEBI and IRDAI,” it added.
“The dynamic nature of business in the IFSCs necessitates a high degree of inter-regulatory coordination. It also requires regular clarifications and frequent amendments in the existing regulations governing financial activities in IFSCs.”
Since the development of financial services and products in IFSCs would require focussed and dedicated regulatory interventions, the government decided that a unified financial regulator for IFSCs in India would ease the process and help in easing doing business in India.
“The Authority shall regulate all such financial services, financial products and FIs in an IFSC which has already been permitted by the Financial Sector Regulators for IFSCs,” the government said. “The Authority shall also regulate such other financial products, financial services or FIs as may be notified by the Central Government from time to time. It may also recommend to the Central Government such other financial products, financial services and financial institutions which may be permitted in the IFSCs.”
The Bill also seeks to empower the proposed authority with “all powers exercisable by the respective financial sector regulatory” in the specific case of IFSCs and pertaining to the regulation of their financial products, financial services and FIs.
