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Lok Sabha passes Bill to set up unified authority for financial services

Nirmala Sitharaman. File photo: PTI

Nirmala Sitharaman. File photo: PTI  

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It will be a single window for regulation, says Sitharaman

The Lok Sabha on Wednesday passed the International Financial Services Centres (IFSC) Authority Bill, 2019 which provides for the establishment of an authority to develop and regulate the financial services market.

The first IFSC in India was set up at Gujarat International Finance Tec-City (GIFT) in Gandhinagar, Gujarat.

Finance Minister Nirmala Sitharaman told the Lower House that the unified authority would act as a single window of regulation. She added that all the laws of land, including the Prevention of Money Laundering Act, would apply and would be audited by the CVC and the CAG.

Refuting claims that the IFSC could become a tax haven, the Minister said, “Tax holiday is given only for 10 years in the IFSC.”

When questioned on the economy, the Finance Minister said, “I am not undermining the challenges. A blip should not prevent us from setting up the centre.” On the question of the crisis-ridden IL&FS in GIFT City, Ms. Sitharaman said the Gujarat government wanted to take over the stake in the IFSC.

The Gujarat government has already appointed a new CEO replacing the IL&FS nominee.

The International Financial Services Centres Authority Bill, 2019, was introduced in the Lok Sabha after withdrawal from the Rajya Sabha.

Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators — the RBI, the Securities and Exchange Board of India (SEBI), the Pension Fund Regulatory and Development Authority (PFRDA) and the Insurance Regulatory and Development Authority of India (IRDAI).

The Bill seeks to amend 14 Acts, including the SEBI Act, the IRDA Act and the PFRDA Act.

On the criticism on why the centre was being set up in Gandhinagar, the Finance Minister said, “States are welcome to apply. The Gujarat government had applied for setting up financial sector Special Economic Zone and the approval was given by the then Congress-led UPA in 2011.”

“There is no limit on how many IFSCs can be set up but others can come up after the first centre becomes fully operational,” she added.

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Printable version | Jan 27, 2020 2:03:53 AM | https://www.thehindu.com/news/national/lok-sabha-passes-bill-to-set-up-unified-authority-for-financial-services/article30279791.ece

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