The central government on Wednesday approved an establishment of a unified authority for regulating all financial services in International Financial Services Centres (IFSCs) in India through International Financial Services Centres Authority Bill, 2019.
The decision of the cabinet was announced by Union Minister Ravi Shankar Prasad on Wednesday.
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 or subsidiaries of financial institutions (FIs) to India by offering business and regulatory environment that is comparable to other leading international financial centres in the world like London and Singapore.
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 and 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 focussed and dedicated regulatory interventions. Furthermore, this would also be essential from the ease of doing business perspective.
The establishment of a unified financial regulator for IFSCs will result in providing a world-class regulatory environment to market participants from the ease of doing business perspective and will provide a stimulus for further development of the same.
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