Govt notified IFSCA
The finance ministry has established the International Financial Services Centres Authority (IFSCA) through a notification. The body will be headquartered in Gandhinagar in Gujarat, as per the notification. With this, the government has established a unified authority to regulate all financial services in International Financial Services Centres (IFSCs) in the country.
- Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators such as Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDAI).
- The notification brings into effect certain provisions of the IFSCA Act, 2019, related to its functioning, however, the Centre refrained from fully enabling the authority with all its powers as envisaged in the Act.
- While allowing for the appointment of its members and other employees, setting up of funds and exemption from taxes, the government has not affected provisions pertaining to the regulation of financial products, financial services and financial institutions in IFSCs and its abilities to transact in foreign currencies and make rules.
- The main function of the authority will be to regulate financial products such as securities, deposits or contracts of insurance, financial services, and financial institutions which have been previously approved by any appropriate regulator in an IFSC.
- As per the Act, the regulators include SEBI, RBI, IRDAI and the The Pension Fund Regulatory and Development Authority.
- The IFSCA will comprise a chairperson, and one member each nominated by the regulators mentioned earlier. There will also be two members from the central government and full-time or part-time members.
- The International Financial Services Centres Authority Act 2019 will apply to all International Financial Services Centres (IFSCs) set up under the Special Economic Zones Act, 2005.
- It set up the International Financial Services Centres Authority. It will consist of nine members, appointed by the central government.
- The Authority will regulate financial products (such as securities, deposits or contracts of insurance), financial services, and financial institutions which have been previously approved by any appropriate regulator (such as RBI or SEBI), in an IFSC.
- The Act sets up the International Financial Services Centres Authority Fund. The following items will be credited to the Fund: (i) all grants, fees and charges received by the Authority, and (ii) all sums received by the Authority from various sources, as decided by the central government.