GIFT CITY

Subject : Economy

Context: The United Kingdom has entered into a strategic partnership to develop India’s fledgling international financial services centre GIFT City.

Concept:

• GIFT (Gujarat International Finance Tec-City), located in Gandhinagar is India’s first International Financial Services Centre.

International Financial Service Centre (IFSC)

• An IFSC enables bringing back the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches/subsidiaries of Financial Institutions (such as banks, insurance companies, etc.) to India.
• It offers a business and regulatory environment that is comparable to other leading international financial centres in the world like London and Singapore.
• IFSCs are intended to provide Indian corporates with easier access to global financial markets, and to complement and promote further development of financial markets in India.

Functions:

• The authority will regulate financial products such as securities, deposits or contracts of insurance, financial services, and financial institutions which have been previously approved by any appropriate regulator such as Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) etc., in an IFSC.
• It will also regulate any other financial products, financial services, or financial institutions in an IFSC, which may be notified by the central government.
• It may also recommend to the central government any other financial products, financial services, or financial institutions, which may be permitted in an IFSC.

Members:

• The International Financial Services Centres Authority will consist of nine members, appointed by the central government.
• They will include 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); and two members from the Ministry of Finance. In addition, two other members will be appointed on the recommendation of a Selection Committee.
• All members of the IFSC Authority will have a term of three years, subject to reappointment.

Possible Benefits:

• The banking, capital markets and insurance sectors in IFSC which are regulated by multiple regulators – the RBI, SEBI, and IRDAI will be unified under the IFSC authority.
• The single window regulatory institution would accelerate the development of India’s first IFSC at GIFT City, Gandhinagar.
• Both national and international institutions dealing with international financial services would utilise the IFSC platform for inbound and outbound investments with improved ease of doing business, thereby making GIFT IFSC a global financial hub.