The Indian central government has recently established an International Financial Services Centres Authority (IFSCA) for controlling all financial services in the nation’s International Financial Services Centres (IFSCs). This administrative body is based in Gandhinagar, Gujarat.
Functionality of the Authority
The primary function of the IFSCA is to manage financial commodities such as securities, insurance contracts, deposits, financial services, and financial establishments, which have been previously authorized by an appropriate regulator like the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), among others. The authority will also oversee other financial goods, services, or institutions in an IFSC, which may be designated by the central government.
In addition to this, the IFSCA may suggest other financial products, services, or institutions to the central administration that could be permitted in an IFSC.
Composition of the IFSCA
The IFSCA comprises nine members appointed by the central government. These include the chairperson of the authority, a member each from the RBI, SEBI, the Insurance Regulatory and Development Authority of India (IRDAI), and the Pension Fund Regulatory and Development Authority (PFRDA). There will also be two members representing the Ministry of Finance. Two additional members will be chosen based on the recommendation of a selection committee.
All members of this newly formed agency will serve a term of three years, with the possibility of reappointment.
Anticipated Benefits of the IFSCA
One significant advantage of the IFSCA is that it brings banking, capital markets, and insurance sectors in IFSC, currently regulated by multiple bodies like the RBI, SEBI, and IRDAI under one umbrella. This consolidation is expected to fast-track the development of India’s first IFSC at the Gujarat International Finance Tec (GIFT) City in Gandhinagar.
Having a single regulating body will also aid both domestic and international institutions dealing with international financial services. It is expected to improve ease of doing business, making GIFT IFSC a globally competitive financial hub.
International Financial Services Centre: An Overview
An IFSC enables the repatriation of financial services and transactions currently conducted in offshore financial centres by Indian corporate entities and foreign branches/subsidiaries of financial institutions.
These centres offer a business environment that is on par with other leading international financial hubs like London and Singapore. The main aim of IFSCs is to provide easier access for Indian companies to global financial markets and to further cultivate the financial market in India.
India’s first IFSC has been set up at GIFT City in Gandhinagar.
