International Financial Services Centres Authority Act, 2019 PDF

THE INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY ACT, 2019 THE INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY Telegram Channel link - https://t.me/CARamanLuthraClasses...

THE INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY ACT, 2019 THE INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY Telegram Channel link - https://t.me/CARamanLuthraClasses CHAPTER I PRELIMINARY Section Heading Details No. 1. Short title and 1. Act may be called the International Financial Services Centres Authority Act, commencement 2019 2. The provisions of International Financial Services Centres Authority Act, 2019, shall come into force on 27th April, 2020, 21st of August, 2020 and 29th September, 2020 2. Application Act is applicable on International Financial Services Centres set up under section 18 of the Special Economic Zones Act, 2005 3. Definitions "Financial institution" means a unit set up in an International Financial Services Centre and which is engaged in rendering financial services in respect of any financial product. "Financial product" means— i. securities; ii. contracts of insurance; iii. deposits; iv. credit arrangements; v. foreign currency contracts other than contracts to exchange one currency for another that are to be settled immediately; and vi. aircraft lease which shall include operating and financial lease and any hybrid of operating and financial lease of aircraft or helicopter and engines of aircraft or helicopter or any other part thereof,(16.10.2020) vii. any other product or instrument that may be notified by the Central Government from time to time. (24.12.2021) bullion spot delivery contract; Prepared by: Raman Luthra Chartered Accountant  bullion depository receipt with underlying bullion viii. ‘ship lease’ which shall include operating lease, and hybrid of operating and financial lease, of a ship or ocean vessel, engines of ship or ocean vessel, or any other part thereof. (07.01.2022) ix. operating lease, including an hybrid of operating and financial lease, in respect of ‘Aviation training simulation devices’, (11.04.2023) "financial service" means— (i) buying, selling, or subscribing to a financial product or agreeing to do so; (ii) acceptance of deposits; (iii) safeguarding and administering assets consisting of financial products, belonging to another person, or agreeing to do so; (iv) effecting contracts of insurance; (v) offering, managing or agreeing to manage assets consisting of financial product belonging to another person; (vi) exercising any right associated with a financial product or financial service; (vii) establishing or operating an investment scheme; (viii) maintaining or transferring records of ownership of a financial product; (ix) underwriting the issuance or subscription of a financial product; (x) providing information about a person's financial standing or creditworthiness; (xi) selling, providing, or issuing stored value or payment instruments or providing payment services; (xii) making arrangements for carrying on any of the services in sub-clauses (i) to (xi); (xiii) rendering or agreeing to render advice on or soliciting for the purposes of— (A) buying, selling, or subscribing to, a financial product; or (B) availing any of the services in sub-clauses (i) to (xi); or (C) exercising any right associated with a financial product or any of the services in clauses (i) to (xi); (xiv) Global in-House Centres (GIC) (16.10.2020) Global In-house Centres (GIC) are service delivery operations typically in low- cost jurisdictions, which are owned and operated by the same company receiving the services, i.e. the parent company which may be located in a different jurisdiction. (xiv) trading in bullion depository receipts with underlying bullion in relation to bullion spot delivery contracts; (24.12.2021) (xv) provision of bullion financing, bullion based loans, bullion loans against collateral, bullion vaulting, clearing and settlement services in relation to bullion spot delivery contracts and bullion depository receipts. (24.12.2021) Prepared by: Raman Luthra Chartered Accountant (xvi) courses offered in Financial Management, FinTech, Science, Technology, Engineering and Mathematics by foreign universities or foreign institutions in the International Financial Services Centre (23-05-2022) (xvii) (18.01.2024) 1. book-keeping services; 2. accounting services; 3. taxation services; and 4. financial crime compliance services: (financial crime compliance services” shall include services rendered in relation to compliances of Anti-Money Laundering (AML) / Countering the Financing of Terrorism (CFT) measures and Financial Action Task Force (FATF) recommendations) Provided that the financial services shall be offered by units in an International Financial Service Centre regulated by the International Financial Services Centres Authority, to non-residents whose business is NOT set up either by – (i) splitting up of business already in existence in India; or (ii) reconstructing of business already in existence in India; or (iii) reorganising of a business already in existence in India: Provided further that the units shall NOT offer the services by way of transferring or receiving of existing contracts or work arrangements from their group entities in India. A “non-resident” shall mean person resident outside India under Foreign Exchange Management Act, 1999 and shall also include units in International Financial Service Centre. As per FEMA 1999 Act, “Person resident in India” means— (i) a person residing in India for more than 182 days during the course of the preceding financial year but DOES NOT INCLUDE (A) a person who has gone out of India or who stays outside India, in either case— (a) for or on taking up employment outside India, or (b) for carrying on outside India a business or vocation outside India, Prepared by: Raman Luthra Chartered Accountant  or (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period; (B) a person who has come to or stays in India, in either case, otherwise than— (a) for or on taking up employment in India, or (b) for carrying on in India a business or vocation in India, or (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period; (ii) any person or body corporate registered or incorporated in India, (iii) an office, branch or agency in India owned or controlled by a person resident outside India, (iv) an office, branch or agency outside India owned or controlled by a person resident in India; CHAPTER II ESTABLISHMENT OF AUTHORITY Section Heading Details No. 4. Establishment The Authority shall be a body corporate having perpetual succession and a And common seal, and subject to the provisions of this Act, with power to enter into incorporation and execute contracts, acquire, hold and dispose of property, both movable and of Authority immovable, and shall, by the said name, sue and be sued. Central Government appointed 27th of April, 2020 as the date of the establishment of the International Financial Services Centres Authority and the head office of that Authority shall be at Gandhinagar, Gujarat 5. Composition of 1. The Authority shall consist of the following Members, to be appointed by the Authority. Central Government, a) a Chairperson; b) one Member each to be nominated by— (i) the Reserve Bank of India, ex officio; (ii) the Securities and Exchange Board of India, ex officio; (iii) the Insurance Regulatory and Development Authority of India, ex officio; and (iv) the Pension Fund Regulatory and Development Authority, ex officio; c) two Members, from amongst the officials of the Ministry dealing with Prepared by: Raman Luthra Chartered Accountant  Finance, to be nominated by the Central Government, ex officio; and d) two other Members to be appointed by the Central Government on the recommendation of a Selection Committee. 2. The Chairperson shall be a whole-time Member and other Members referred to in clause (d) may be appointed as whole-time or part-time Members as the Central Government may deem fit. 6. Terms of office 1. The term of Chairperson and a Member – 3 years and shall be eligible for re- and conditions appointment. Maximum age of chairman – 65 years, Whole-time member – 62 of service of years Chairperson and 2. Member may— other Members (a) resign from his office by giving in writing to the Central Government a notice of not less than three months; or (b) be removed from his office in accordance with the provisions of section 7. 3. Cooling-off Period for member(other than ex officio) – 2 years from the date on which they cease to hold office as such, except with the previous approval of the Central Government - (a) any employment either under the Central Government or under any State Government; or (b) appointment in any financial institution in the International Financial Services Centres. 7. Removal of Central Government may remove from office a Member- Member from a) is, or at any time has been, adjudged as insolvent; or office. b) has become physically or mentally incapable of acting as a Member; or c) has been convicted of an offence which in the opinion of the Central Government involves moral turpitude; or d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member; or e) has so abused his position so as to render his continuance in office detrimental to public interest: Provided that no Member shall be removed from office under clause (d) or clause (e) unless he has been given a reasonable opportunity of being heard in the matter. 8. Meetings of Meetings of the Authority - at least once in each quarter of the year by the Authority. Chairperson or in his absence, by any member nominated by the Chairperson, in this behalf. Any three members may require the Chairperson to convene a meeting of the Authority at any time and the Chairperson shall convene the meeting of the Authority accordingly Notice of meeting – Not less than 7 working days(unless emergency meeting) Quorum of meeting - 4 members of the Authority Resolution will be decided by a majority vote and in the event of any equality of Prepared by: Raman Luthra Chartered Accountant  votes, the Chairperson, or in his absence, the member presiding, shall have a second or casting vote. 9. Vacancies, etc., No act or proceeding of the Authority shall be invalid merely by reason of,— not to invalidate a) any vacancy or defect, in the constitution of the Authority; or proceedings of b) any defect in the appointment of a person as a Member of the Authority. Authority 10. Administrative The Chairperson shall have the powers of general superintendence and direction powers of in respect of all administrative matters of the Authority Chairperson. 11. Officers and The Authority may appoint such officers and other employees as it considers Other necessary for the efficient discharge of its functions under this Act. employees of Authority CHAPTER III POWERS AND FUNCTIONS OF AUTHORITY Section Heading Details No. 12. Functions of Duty of the Authority to develop and regulate the financial products, financial Authority. services and financial institutions in the International Financial Services Centres, by such measures as it deems fit. It shall include a) regulating the financial products, financial services and financial institutions in an International Financial Services Centre which have been permitted, before the commencement of this Act, by any regulator for any International Financial Services Centre b) regulating such other financial products, financial services or financial institutions in the International Financial Services Centres as may be notified by the Central Government from time to time. c) recommending to the Central Government such other financial products, financial services and financial institutions which may be permitted in an International Financial Services Centre by the Central Government. 13. Powers of All powers exercisable by an appropriate regulator, specified under shall, in the Authority in International Financial Services Centres, be exercised by the Authority (IFSCA) in so relation to far as it relates to the regulation of the financial products, financial services or financial financial institutions, as the case may be. products, financial services and financial Sl.No. Appropriate Name of Acts institutions Regulator Prepared by: Raman Luthra Chartered Accountant  1. RBI 1. The Reserve Bank of India Act, 1934 2. The Banking Regulation Act, 1949 3. The Deposit Insurance and Credit Guarantee Corporation Act, 1961 4. The Foreign Exchange Management Act, 1999 5. The Credit Information Companies (Regulation) Act, 2005 6. The Government Securities Act, 2006 7. The Payment and Settlement Systems Act, 2007 2. SEBI 1. The Securities Contracts (Regulation) Act, 1956 2. The Securities and Exchange Board of India Act, 1992 3. The Depositories Act, 1996 3. IRDAI 1. The Insurance Act, 1938 2. The General Insurance Business (Nationalisation) Act, 1972 3. The Insurance Regulatory and Development Authority Act, 1999. 4. PFRDA 1. The Pension Fund Regulatory and Development Authority Act, 2013 The penalties, fines, fees and settlement amounts shall be collected or realised in the foreign currency equivalent of the penalty or fine imposed. Explanation.—The rate of exchange for computing the foreign currency equivalent to Indian rupees shall be such as are as notified by the Reserve Bank of India on the date of the order imposing the penalty or fine, as the case may be. All sums realised by way of penalties or fines under this Act shall be credited to the Consolidated Fund of India in Indian rupees. CHAPTER IV FINANCE, ACCOUNTS AND AUDIT Section Heading Details No. 14. Grants by The Central Government may, after due appropriation made by Parliament by law in Central this behalf, make to the Authority grants of such sums of money as the Central Government Government may think fit for being utilised for the purposes of this Act. 15. Fund of Constitute a Fund to be called the International Financial Services Centres Authority Authority Fund and there shall be credited – Prepared by: Raman Luthra Chartered Accountant  a) all grants, fees and charges received by the Authority under this Act; and b) all sums received by the Authority from the sources as may be decided upon by the Central Government The Fund shall be applied for meeting a) the salaries, allowances and other remuneration of Members, officers and other employees of the Authority; and b) Other expenses incurred by the Authority in connection with the discharge of its functions and for the purposes of this Act. 16. Accounts and The Authority shall maintain proper accounts and other relevant records and audit. prepare an annual statement of accounts. Audited by the Comptroller and Auditor-General of India. 17. Performance Appointed by: IFSCA Review Members: At least 2 member Committee. Purpose: review the functioning of the Authority (IFSCA) The Performance Review Committee shall make the review at least once in every financial year, and submit a report of its findings to the Authority which shall forward a copy thereof along with action taken, if any, pursuant to such report to the Central Government within a period of three months from the date of receipt of the report. 18. Maintenance of Authority shall maintain such website or any other universally accessible website. repository of electronic information All the regulations and orders issued by the Authority shall be published in its website or repository maintained 19. Returns and Submit returns and statements to the Central Government reports. Authority shall, within 90 days after the end of each financial year, submit to the Central Government, a report giving a true and full account of its activities, policies and programmes during the previous financial year. A copy of the report shall be laid, as soon as may be after it is received, before each House of Parliament. CHAPTER V FOREIGN EXCHANGE TRANSACTIONS Section Heading Details No. 20. FOREIGN Every transaction of financial services in an International Financial Services Centre EXCHANGE shall be in such foreign currency as may be specified by regulations in consultation TRANSACTIONS with the Central Government. Prepared by: Raman Luthra Chartered Accountant  CHAPTER VI MISCELLANEOUS Section Heading Details No. 21. Power to issue IFSCA is bound by such directions on questions of policy as the Central Government directions may give. 22. Power of If at any time the Central Government is of the opinion that Central Government a) on account of circumstances beyond the control of the Authority, it is unable to to supersede discharge the functions or perform the duties imposed on it by or under this Act; Authority. or b) the Authority has persistently defaulted in complying with any direction given by the Central Government under this Act or in the discharge of the functions or performance of the duties imposed on it by or under this Act and as a result of such default the financial position of the Authority or the administration of the Authority has deteriorated; or c) circumstances exist which render it necessary in the public interest so to do, the Central Government may, by notification and for reasons to be specified therein, supersede the Authority for such period, not exceeding six months, as may be specified in the notification. Upon the publication of a notification of superseding the Authority a) the Chairperson and other Members shall, as from the date of supersession, vacate their offices as such; b) all the powers, functions and duties which may, by or under this Act, be exercised or discharged by or on behalf of the Authority shall, until the Authority is reconstituted, be exercised and discharged by such person or persons as the Central Government may direct. c) all properties owned or controlled by the Authority shall, until the Authority is reconstituted, vest in the Central Government 23. Delegation of The Authority may, by general or special order in writing, delegate to any Member powers. or officer of the Authority subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act 24. Members, The Members, officers and employees of the Authority shall be deemed, when officers and acting or purporting to act in pursuance of any of the provisions of this Act, to be employees of public servants within the meaning of section 21 of the Indian Penal Code. the Authority to be public Prepared by: Raman Luthra Chartered Accountant  servants. 25. Protection of No suit, prosecution or other legal proceedings shall lie against the Central action taken Government or the Authority or its Members, officers or other employees, for in good faith anything which is done, or intended to be done, in good faith under this Act. 26. Exemption from Nothing contained in any other law or enactment for the time being in force, in tax. relation to taxation, including the Income-tax Act,1961, shall make the Authority liable to pay income-tax or any other tax or duty with respect to its income, services or profits or gains. 27. Power to make The Central Government may, by notification, make rules for carrying out the rules provisions of this Act 28. Power to make The Authority may, by notification, make regulations consistent with this Act and the Regulations rules made thereunder for carrying out the provisions of this Act 29. Rules and Every rule and every regulation made under this Act shall be laid, as soon as may regulations to be after it is made, before each House of Parliament be laid before Parliament 30. Overriding The provisions of this Act shall have effect notwithstanding anything inconsistent effect therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. 31. Power to modify The Central Government may, by notification, direct that any of the provisions of any provisions of other Central Act or any rules or regulations made thereunder or any notification or other order issued or direction given- enactments in relation to a) shall not apply to financial products, financial services or financial institutions, as International the case may be, in an International Financial Services Centre; or Financial b) shall apply to financial products, financial services or financial institutions, as the Services case may be, in an International Financial Services Centre with such exceptions, Centres. modifications and adaptations, as may be specified in the notification 32. Power to 1. If any difficulty arises in giving effect to the provisions of this Act, the Central remove Government may, by order, published in the Official Gazette, make such difficulties provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty: Provided that no order shall be made under this section after the expiry of five year from the commencement of this Act. 2. Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. 33. Amendment to The enactments specified in the Second Schedule shall be amended in the manner certain specified therein. enactments. 1. Amendment to The Reserve Bank Of India Act, 1934 2. Amendment to The Insurance Act, 1938 3. Amendment to The Banking Regulation Act, 1949 4. Amendment to The Securities Contracts (Regulation) Act, 1956 5. Amendment to The Deposit Insurance And Credit Guarantee Corporation Act, Prepared by: Raman Luthra Chartered Accountant  1961 6. Amendment to The General Insurance Business (Nationalisation) Act, 1972 7. Amendment to The Securities And Exchange Board Of India Act, 1992 8. Amendment to The Depositories Act, 1996 9. Amendment to The Insurance Regulatory And Development Authority Act, 1999 10. Amendment to The Foreign Exchange Management Act, 1999 11. Amendment to The Credit Information Companies (Regulation) Act, 2005 12. Amendment to The Government Securities Act, 2006 13. Amendment to The Payment And Settlement Systems Act, 2007 14. Amendment to The Pension Fund Regulatory And Development Authority Act, 2013 34. Savings. All rules and regulations made or purporting to have been made or all notifications issued or purporting to have been issued under any Central Act relating to the financial products, financial services or financial institutions, as the case may be, shall, in so far as they relate to matters for which provision is made in this Act or the rules or regulations made or notification issued thereunder and are not inconsistent therewith, be deemed to have been made or issued under this Act as if this Act had been in force on the date on which such rules were made or notifications were issued and shall continue to be in force unless and until they are superseded by any rules or regulations made or notifications issued under this Act. Prepared by: Raman Luthra Chartered Accountant