The Rajya Sabha on Thursday passed the International Financial Services Centres (IFSCs) Authority Bill, 2019 towards setting up a unified authority to regulate all financial services in IFSCs in the cpuntry.
An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders. London, New York and Singapore can be counted as global financial centres. The first IFSC in India has been set up at GIFT City in Gujarat’s Gandhinagar. IFSCs can be set up in an SEZ or as an SEZ after approval from the Centre.
The Lok Sabha passed Bill on Wednesday and will become a law after the President’s assent.
IFSCs would also provide Indian companies easier access to global financial markets and also enable the development of financial markets in India.
"In a path breaking reform, both Houses pass International Financial Services Authority Bill, 2019. It will set up world class unified regulator for international financial services combining powers and functions of RBI, SEBI, IRDAI And PFRDA," economic affairs secretary Atanu Chakraborty said in a tweet.
According to the Bill, the authority comprise a chairperson, and one member each 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). There will also be two members from the central government and full-time or part-time members.
Apart from regulating all financial services and products, the authority can also recommend any other financial products to the central government.
Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators such as RBI, SEBI and IRDAI.
"The dynamic nature of business in the IFSCs necessitates a high degree of inter-regulatory coordination. It also requires regular clarifications and frequent amendments in the existing regulations governing financial activities in IFSCs. The development of financial services and products in IFSCs would require focused and dedicated regulatory interventions. Hence, a need is felt for having a unified financial regulator for IFSCs in India to provide world class regulatory environment to financial market participants," the government had said earlier.