International Financial Services Centre (IFSC) Authority: Role, Power, Function and Responsibilities
International Financial Services Centre (IFSC) will provide services to the purchasers outside the jurisdiction of the local or domestic economy, deals with flows of finance, financial products and services across borders.
International Financial Services Centres Authority was established by the central government to regulate all financial services in International Financial Services Centres (IFSC) with the headquarters in Gandhinagar (Gujarat).
What is the International Financial Services Centre (IFSC)?
An IFSC deliberately provides Indian corporates with easier access to global financial markets, and to complement and promote further development of financial markets in India. The financial services and transactions that are presently administered in offshore financial centres by Indian corporate entities and overseas branches or subsidiaries of Monetary Institutions like banks, insurance companies, etc. to India will be brought back by an IFSC. This is done by providing a business and regulatory environment compared to other leading international financial centres in the world like London and Singapore. It will conduct business in such foreign currency and with such entities, whether resident or non-resident.
Where the first IFSC in India has been set up?
The first IFSC in India has been set up at Gujarat International Finance Tec-City (GIFT City) in Gandhinagar. The Bill is applicable to all the IFSCs set up through the SEZ Act, 2005.
What are the functions of IFSC?
- The International Financial Services Centres authority will administer financial products that have been previously approved by any appropriate regulator like RBI or SEBI. The financial products include securities, deposits or contracts of insurance, financial services, and monetary institutions.
- Processes which are applicable to such financial products, financial services and financial institutions will also be followed by it under their respective laws. In a Schedule Bill, the appropriate regulators are listed and include the RBI, SEBI, IRDAI and PFRDA. This schedule can be amended by the central government through a notification.
- Other functions may include: to regulate other financial products, financial services, or financial institutions in an IFSC, which may be notified by the central government. It also recommends any other financial products, financial services or financial institutions to the central government, which may be permitted in an IFSC.
Now let us study about the members of the International Financial Services Centres Authority
Members of the authority will include:
2. A member each from the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Pension Fund Regulatory and Development Authority (PFRDA).
3. Two members from the Ministry of Finance.
4. Two members to be appointed on the recommendation of a Search Committee.
In total nine members, appointed by the central government including the chairperson.
What is the term of the members of an IFSC?
The term period of the members will be for three years and are subject to reappointment.
What are the possible benefits of an IFSC?
Integration or unification under one authority: Means; The banking capital markets and insurance sectors in IFSC that are regulated by various regulators including the RBI, SEBI, and IRDAI will be integrated or unified under the IFSC authority.
Further, the single-window regulatory institution would accelerate the development of India’s first IFSC at GIFT City, Gandhinagar, Gujarat.
Institutions like national and international that deals with international financial services would utilise the platform of IFSC for inbound and outbound investments with improved ease of doing business and makes GIFT IFSC as a global financial hub. Or we can say that IFSC will act as a single authority in regulating the services, products as well as the institutions within IFSC. So both the national level and international level institutions that are dealing with financial services will be able to utilise the IFSC platform.
Therefore, now you may have understood about IFSC, its members, functions, role and responsibilities.