INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY BILL, 2019
Why in News?
- The Union Cabinet has approved establishment of a unified authority for regulating all financial services in International Financial Services Centres (IFSCs) in India through International Financial Services Centres Authority Bill, 2019.
- The first IFSC in India has been set up at GIFT City, Gandhinagar, Gujarat.
- An IFSC enables bringing back the financial services and transactions that are currently carried out in offshore financial centers by Indian corporate entities.
- They offer business and regulatory environment that is comparable to other leading international financial centers in the world like London and Singapore.
- Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators, i.e. RBI, SEBI and IRDAI.
- It requires regular clarifications and frequent amendments in the existing regulations
governing financial activities in IFSCs.
- The development of financial services and products in IFSCs would require focussed and dedicated regulatory interventions.
- It provides world class regulatory environment to financial market participants.
- The establishment of a unified financial regulator for IFSCs will result in providing world- class regulatory environment to market participants from an ease of doing business perspective.
- This will provide a stimulus for further development of IFSCs in India and enable bringing back of financial services and transactions that are currently carried out in offshore financial centres to India.
- This would also generate significant employment in the IFSCs in particular as well as financial sector in India as a whole.
Features of IFSC Authority Bill, 2019:
- The Authority shall consist of a Chairperson, one Member each to be nominated by the RBI, the Securities Exchange Board of India SEBI, the IRDAI and the PFRDA.
- Two members are to be dominated by the Central Government and two other whole-time or full-time or part-time members.
- 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 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
- All powers exercisable by the respective financial sector regulatory (viz. RBI, SEBI, IRDAI,and PFRDA etc.) under the respective Acts shall be solely exercised by the Authority in the IFSCs.
- This is so far as the regulation of financial products, financial services and FIs that are permitted in the IFSC are concerned.
- The Central Govt. may, after due appropriation made by Parliament by law in this behalf, make to the Authority grants of such sums of money as the Central Government may think fit for being utilized for the purposes of the Authority.
- The transactions of financial services in the IFSCs shall be done in the foreign.
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