International Financial Services Centres (IFSCs)

International Financial Services Centres (IFSCs)

• An IFSC is a jurisdiction that caters to customers outside its own jurisdiction, dealing with the flow of finance and financial products/services across borders.
• IFSCs offer specialized financial services to non-residents and residents, promoting financial innovation and facilitating cross-border transactions.
• Examples of financial services offered by IFSCs include:
  • Raising of funds (debt and equity)
  • Risk management
  • Mutual funds and pension funds
  • Asset management by insurance companies
  • Corporate treasury management operations

International Financial Services Centres Authority (IFSCA)

• The IFSCA was established on April 27, 2020, under the International Financial Services Centres Authority Act, 2019.
• It is headquartered at GIFT City, Gandhinagar in Gujarat.
• The IFSCA assumed powers of four domestic regulators (RBI, SEBI, IRDA, PFRDA) on October 1, 2020, and regulates the development and regulatory affairs of India's maiden IFSC in GIFT City.

GIFT IFSC

• The Gujarat International Finance Tech-city (GIFT) SEZ is India's maiden International Financial Services Centre (IFSC) set up under Section 18 of the Special Economic Zone Act, 2005.
• It is being developed as a global financial services hub.
• GIFT IFSC is a Multi Services Special Economic Zone that commenced its business in April 2015.
• The Chairperson of GIFT IFSC is K Rajaramn.

Role of IFSCA

• The IFSCA is a unified authority for the development and regulation of financial products, financial services, and financial institutions in the International Financial Services Centre (IFSC) in India.
• The main objective of the IFSCA is to develop a strong global connect and focus on the needs of the Indian economy, as well as serve as an international financial platform for the entire region and the global economy.
• The IFSCA has been statutorily empowered to develop and regulate the financial markets in the IFSCs in India.

Benefits of IFSC

• Funds set up in IFSC can pool capital from foreign investors and NRIs for investments into various products in securities markets in India.
• The fund ecosystem in IFSC can contribute towards attracting foreign investments in certain sectors such as start-ups, SMEs, green and sustainable projects, real estate projects, and infrastructure investments.
• Indian corporates can raise capital through listing of foreign currency bonds and/or masala bonds on the stock exchanges in IFSC.