IFSC Current Affairs - 2019

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Government to set-up a Unified Authority for Regulating Entities in IFSC

The Union Cabinet headed by Prime Minister Narendra Modi has approved setting up of a unified authority for regulating all financial services in international financial services centres (IFSCs) in the country. The government has approved a bill to set up a unified regulator.

Fact Box

The first IFSC in India was set up at GIFT City in Gandhinagar, Gujarat.

Promoting the Ease of Doing Business

IFSCs are set-up to bring back the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches or subsidiaries of financial institutions (FIs) to India.

In order to ensure this, the business and regulatory environment must be comparable to other leading international financial centres in the world like London and Singapore. Currently, the banking, capital markets and insurance sectors in IFSCs are regulated by multiple regulators like the RBI, SEBI and IRDAI respectively.

For IFSCs to attain its objectives there is a need for inter-regulatory coordination. The establishment of a unified financial regulator for IFSCs will result in providing a world-class regulatory environment to market participants from the ease of doing business perspective.

For the setting up of a unified regulator, the Union cabinet has approved the International Financial Services Centres Authority Bill, 2019.

India’s first IFSC becomes operational at GIFT City in Gujarat

India’s first International Financial Services Centre (IFSC) became operational at Gujarat International Finance Tec (GIFT) City in Gandhinagar district of Gujarat.

It became operational after Union Finance Minister Arun Jaitley unveiled the rules and regulations for this global financial hub.

Key facts of IFSC rules and regulations

  • Aim at creating a vibrant IFSC on the lines of those in Dubai and Singapore.
  • They also seek to check the flight of trading in rupee and Indian securities to such offshore financial hubs.
  • These rules will allow companies incorporate outside India to raise money in foreign currencies by issuance and listing of their equity shares on stock exchanges within the IFSC.
  • They will also allow individual and institutional investors from India and abroad, including NRIs to trade.
  • Allows foreign and Indian stock exchanges to set up separate bourses within IFSC as subsidiaries.
  • Relaxes capital and other requirements for some time in order to facilitate exchanges, clearing corporations and depositories to set shop in the IFSC.
  • Allows alternative investment funds and mutual funds that have set up in the IFSC to invest in the securities listed there.