Banking

Parliament passes International Financial Services Centre Authority Bill, 2019 to regulate IFSCs

11.12.2019

International Financial Services Centre Authority Bill, 2019 passed in winter session of Parliament to set up an authority for regulating the financial services market in the International Financial Services Centres (IFSCs) in India. The Union Cabinet chaired by Prime Minister approved for withdrawing of the International Financial Services Centres Authority Bill, 2019 which was introduced in the Rajya Sabha on 12th February, 2019 and pending in the Rajya Sabha and introduced same in the Lok Sabha in the winter session of the Parliament. Currently the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators i.e. RBI, SEBI and IRDAI. The dynamic nature of business in the IFSCs necessitates a high degree of inter-regulatory co-ordination.

The development of financial services and products in IFSCs would require focused and dedicated regulatory interventions. The unified authority would provide the much needed impetus to further development of IFSC in India in-sync with the global best practices. Further, this would also be essential from an ease of doing business perspective. The first IFSC in India has been set up at GIFT City, Gandhinagar, Gujarat. The Authority shall consist of a Chairperson, one Member each to be nominated by the Reserve Bank of India (RBI), the Securities Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Pension Fund Regulatory and Development Authority (PFRDA), two members to be dominated by the Central Government and two other whole-time or full-time or part-time members.

The Union Cabinet in its meeting held on February 6, 2019 had approved the proposal for establishment of a unified authority for regulating all financial services through the introduction of the International Financial Services Centres Authority Bill 2019 in the Parliament. 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.

Tags : IFSCs Bill Regulation

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