Expansion of Activities at International Financial Services Centre (IFSC)
- January 23, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Expansion of Activities at International Financial Services Centre (IFSC)
Subject: Economy
Section: Monetary Policy
- Government’s Decision:
- The government has expanded the scope of activities permissible at the International Financial Services Centre (IFSC).
- Inclusion of Services:
- A gazette notification issued by the Ministry of Finance has included additional services as part of financial services within the IFSC.
- Enlisted Services:
- The expanded list now encompasses services such as bookkeeping, accounting, taxation, and financial crime compliance.
- Regulatory Oversight:
- The provision specifies that these financial services should be offered by units within an IFSC that are regulated by the International Financial Services Centres Authority (IFSCA).
- Target Audience:
- The financial services are intended for non-residents whose business is not established through the splitting up of existing business in India or the reconstruction/reorganization of existing business in India.
- IFSCA Regulation:
- The regulatory oversight by IFSCA ensures compliance and adherence to international financial standards within the IFSC.
- Date of Notification:
- The notification was issued on January 18, formalizing the inclusion of the specified services within the scope of financial activities at IFSC.
International Financial Services Centres Authority (IFSCA) and Its Scope:
- Establishment:
- IFSCA is the regulatory body established by the Government of India to regulate financial services in the International Financial Services Centres (IFSCs).
- Objective:
- The primary objective of IFSCA is to develop and regulate the financial products, financial services, and financial institutions in the IFSCs to promote ease of doing business.
- IFSCA has a broad regulatory scope covering various financial services, institutions, and activities within the IFSCs.
- Regulation of Financial Services:
- IFSCA regulates a wide array of financial services, including banking, insurance, securities, and other financial products and services offered in the IFSCs.
- The authority oversees and regulates financial institutions operating within the IFSCs, ensuring compliance with international best practices and standards.
- IFSCA plays a crucial role in the development of financial markets within IFSCs by introducing innovative products and services, fostering competition, and attracting global investors.
- International Standards:
- IFSCA aligns its regulatory framework with international standards to facilitate global participation and enhance the competitiveness of IFSCs.
- Innovation and Technology:
- Encouraging innovation and the use of technology in financial services is another aspect of IFSCA’s mandate, promoting a modern and efficient financial ecosystem.
- Investor Protection:
- The authority is committed to ensuring investor protection and maintaining the integrity of the financial system within the IFSCs.
IFSCA’s regulatory framework is designed to strike a balance between facilitating business growth and ensuring a robust regulatory environment within the IFSCs.
International Financial Services Centres Authority (IFSCA):
- Formation and Purpose:
- IFSCA is a regulatory body established by the Government of India.
- It was formed in April 2020 with the aim of developing and regulating the financial services market in the International Financial Services Centre (IFSC) in India.
- Jurisdiction:
- IFSCA operates within the Gujarat International Finance Tec-City (GIFT City), which is India’s first operational IFSC.
- GIFT City, located in Gandhinagar, Gujarat, is designed to become a global financial hub, providing a conducive ecosystem for international financial services.
- Regulatory Functions:
- IFSCA is entrusted with the task of regulating various financial services in the IFSC, including banking, insurance, capital markets, and other financial products and services.
- It aims to create a robust and competitive environment for financial activities within the IFSC.
- Role in Global Financial Markets:
- IFSCA works towards positioning GIFT City as a competitive and attractive destination for global financial players.
- It facilitates ease of doing business and provides a regulatory framework that aligns with international standards.
- Regulated Entities:
- IFSCA regulates various entities operating within the IFSC, such as banking units, insurance entities, capital market intermediaries, and other financial institutions.
- Innovation and Development:
- IFSCA encourages innovation in financial products and services to enhance the competitiveness of the IFSC.
- It supports the development of a vibrant and dynamic financial ecosystem by fostering collaboration and partnerships.
- International Collaboration:
- IFSCA collaborates with international regulatory bodies and financial institutions to promote cross-border financial activities and maintain global best practices.
- Legal Framework:
- The regulatory framework for IFSCA is governed by the International Financial Services Centres Authority Act, 2019, and various regulations and guidelines issued by IFSCA.