IFSC Current Affairs - 2020

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Parliament passes International Financial Services Centre Authority bill, 2019

On December 13. 2019, the International Financial Services Centre Authority bill was passed by Rajya Sabha. It proposes to set up an authority to regulate financial services in the International Financial Services Centres in India.

Composition of the authority

According to the bill, the authority will comprise of nine members along with the chairperson. Among the nine members, two will be from Ministry of Finance and one each from SEBI, RBI, IRDAI and PRFDA. Two other officials are to be appointed on the recommendation of search committee. The members will have a term of three years.

Functions of the authority

The authority will regulate financial products like contracts of insurance, financial institutions and services, deposits and securities that were previously approved by regulators such as SEBI, RBI and IFSC. It has power to regulate services offered by financial bodies as notified by the Union Government. This makes it independent from the government and to work autonomously.

Performance Review Committee

Under the law, the authority will constitute Performance Review Committee that will review the functioning of the authority. It will consolidate the findings of the authority and submit a report to the authority at least once a year. The committee will comprise of at least two members of the authority.

International Financial Service Centre Authority Funds

The bill proposes setting up of International Financial Service Centre authority funds. The charges, fees collected will be received by the authority from different sources and will be credited to the fund. The fund will also be used to pay salaries and allowances of the employees and other expenses incurred by the authority.

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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.

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