“International Financial Services Centre Authority” has been established by Government of India

To regulate contracts of insurance, deposits and securities of the financial institutions

• Government of India has established International Financial Services Centre Authority
• The headquarters of the authority is to be established in Gandhinagar, Gujarat
• The main function of the authority is to regulate financial products such as contracts of
  insurance, deposits, and securities of the financial institution

Background for the establishment

• Currently, the banking, capital markets and insurance sectors in IFSC are regulated by
  multiple regulators, i.e. 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
• Further, this would also be essential from an ease of doing business perspective
• The unified authority would also provide the much needed impetus to further development of
  IFSC in India in-sync with the global best practices

Salient highlights of the IFSCA

• The Authority was established through a notification. The notification issued by the
  government of India brings into effect certain effects of IFSCA Act, 2019
• The authority will regulate financial markets in the International Financial Service Centers in
  India
• The main function of the authority is to regulate financial products such as contracts of
  insurance, deposits and securities of the financial institution
• The regulators include RBI, SEBI, Pension Fund Regulatory and Development Authority,
  IRDAI

Authority and its functions

• The Authority shall consist of a Chairperson, one Member each to be 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)
• Two members to be dominated by the Central Government and two other whole-time or fulltime or part-time members
• The Authority shall regulate all such financial services, financial products and FIs in an IFSC
  which has already been permitted by the Financial Sector Regulators for IFSCs
• The Authority shall also regulate such other financial products, financial services or FIs as
  may be notified by the Central Government from time to time
• It may also recommend to the Central Government such other financial products, financial
  services and financial institutions which may be permitted in the IFSCs

Grants and Foreign currency

• The Central Govt. may, after due appropriation made by Parliament by law in this behalf,
  make to the Authority grants of such sums of money as the Central Government may think fit
  for being utilized for the purposes of the Authority
• The transactions of financial services in the IFSCs shall be done in the foreign currency as
  specified by the Authority in consultation with the Central Government.

Pic courtesy : currentaffairs.gktoday.in