What is an International Financial Service centre ? Discuss the need for such an authority in India ?

An International Financial Services Centre (IFSC) results in bringing the financial services and transactions to India which are currently being carried out in offshore financial centers by corporate entities and overseas branches / subsidiaries of financial institutions (FIs). The IFSC centre is India seeks to offer a business environment which will match other leading centres in the world like Singapore and London. This would result in providing the Indian corporate sector access to global financial markets.

 Services provided by an IFSC include – 

• Fundraising operations for individuals, corporations and governments.
• Asset management, portfolio diversification by pension funds, insurance companies and mutual funds.
• Global tax management and Wealth management
• Global and regional corporate treasury management operations
• Risk management operations 
• Merger and acquisition activities 

The Government of India seeks to introduce the IFSC Bill, 2019 which seeks to setup The International Financial Services Centres Authority. It will consist of a Chairperson and one member each will be nominated from RBI, SEBI, IRDA, PFRDA, two members from the Central Government and two full or part-time members. 

It will regulate all such financial services and products which has already been permitted by the Financial Sector Regulators for IFSCs. It will Regulate financial products, financial services or FIs as may be notified by the Central Government from time to time.

It will recommend to the Central Government such financial products, services and institutions which may be permitted in the IFSCs.

It is applicable to all IFSCs set up under the Special Economic Zones Act, 2005. The first IFSC was setup at Gujarat International Finance Tec-City (GIFT City) in Gandhinagar.

 Need for a Unified authority – 

• There are multiple regulators in the banking, capital and insurance sectors i.e, RBI, SEBI and IRDA
• The business is ever changing which requires a high degree of inter-regulatory coordination, clarifications and frequent amendments in the existing regulations governing activities in IFSCs.
• Financial services and products will require a more focussed and dedicated regulatory intervention. 

Therefore, a Unified financial regulator would provide world class environment to financial market players with the goal of achieving the ease of doing business target.