Key highlights of the publication
- In India, the IFSC GIFT City has been approved by the government of India under the Special Economic Zones Act 2005. Activities carried out in an IFSC extend across the entire financial services spectrum, including banking, capital markets, insurance, global in-house centres (GICs), asset management and other sectors through respective regulations enabled by the financial services regulator from time to time.
- The International Financial Service Centre Authority (IFSCA) has regulatory oversight over all financial institutions incorporated in the IFSC, and it has been vested with the powers of four sectoral regulators, viz. the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory Development Authority of India (IRDAI) and Pension Fund Regulatory Development Authority of India (PFRDAI).
- IFSCA is the regulatory authority for the financial institutions, including banking units (BU) set up in an IFSC. Accordingly, banks are now required to obtain a licence from IFSCA for setting up IFSC Banking Units (IBUs) in the IFSC GIFT City.
- IFSCA Finance company (FC) regulations provide ample opportunities for domestic and foreign non-banking financial entities to set up operations in the IFSC GIFT City.
- The IFSCA prescribed a detailed regulatory framework for aircraft lease under the IFSCA (Finance Company) Regulations 2021, so that aircraft leasing activity could be undertaken from the IFSC GIFT City.
- In 2020, the IFSCA set up an expert committee (EC) with the objective of suggesting measures for scaling up venture capital and private equity investments in the IFSC GIFT City. The EC examined the regulatory regimes across various popular fund jurisdictions, such as Luxembourg, Singapore, Ireland, etc., and gave its recommendations. Based on these recommendations, the IFSCA (Fund Management) Regulations, 2022, were notified in 2022.
- Considering the importance of the fintech ecosystem in the overall development of International Financial Centres (IFCs), the IFSCA issued a detailed framework for a fintech entity in the IFSCs. The framework aims to boost the establishment of a world-class fintech hub at the IFSC GIFT City and encourage the promotion of financial technologies across the spectrum of banking, insurance, securities and fund management activities.
- The IFSCA (Bullion Exchange) Regulations, 2020, provides a framework for recognition of bullion exchanges, their clearing corporations, depositories and vaults.
