The Rajya Sabha had recently passed the International Financial Services Centres Authority Bill, 2019

The Rajya Sabha had recently passed the International Financial Services Centres Authority Bill, 2019

The Rajya Sabha recently had passed the International Financial Services Centres (IFSCs) Authority Bill, 2019 in order to set up a unified authority towards regulating all financial services in IFSCs in the country.

An IFSC caters towards consumers out of their own jurisdiction of the domestic economy which is referred towards as International Financial Centers (IFCs) or offshore Financial Centers (OFCs). Such centers shall deal with flows of finance, financial goods, and services across borders. London, New York, and Singapore could be considered global financial centers. The first IFSC in India has formed at GIFT (Gujarat International Finance Tec-City) City in Gujarat’s Gandhinagar. IFSCs could be established in an SEZ or as an SEZ after taking approval from the Centre.

The Lok Sabha also had passed the Bill and it shall become a law after the assent of the President.

IFSCs shall also give Indian corporations easier access to global financial markets and also allow the development of financial markets within India.

The passing of the Bill in both Houses pass International Financial Services Authority Bill, 2019 has been very crucial. It would form world-class unified regulator for international financial services joining powers as well as functions of the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), The Insurance Regulatory and Development Authority of India (IRDAI) and The Pension Fund Regulatory and Development Authority (PFRDA).

As per the Bill, the authority includes a chairperson and one member each which is chosen by the RBI, SEBI, IRDAI, and PFRDA. There would also be two members of the central government as well as full-time or part-time members.

Aside from regulating all the financial services and products, the authority could also suggest any additional financial products towards the central government.

Presently, the banking, capital markets as well as insurance sectors in IFSC are controlled through multiple regulators for instance RBI, SEBI and IRDAI.

The dynamic nature of business in the IFSCs requires a high degree of inter-regulatory management. It also needs regular clarifications as well as frequent amendments in the present regulations governing financial actions in IFSCs. The development of financial services and products in IFSCs shall also need focused and dedicated regulatory interventions. Henceforth, a necessity is felt for having a combined financial regulator for IFSCs in India in the direction of providing a world-class regulatory environment to financial market contributors.

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eStartIndia Team

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