International Financial Services Centres Authority (IFSCA) is a statutory authority established by the Government of India. Read here to know more.
- Recently, the Prime Minister laid the foundation stone of the headquarters building of the International Financial Services Centers Authority (IFSCA) in GIFT City, Gandhinagar.
- The India International Bullion Exchange (IIBX), India’s first International Bullion Exchange in GIFT-IFSC the NSE IFSC-SGX Connect were also launched.
The International Financial Services Centres Authority (IFSCA) has been established on April 27, 2020, under the International Financial Services Centres Authority Act, 2019.
It is headquartered at GIFT (Gujarat International Finance Tec-City) City, Gandhinagar in Gujarat.
- The GIFT city consists of a multi-service Special Economic Zone (SEZ), which houses India’s first International Financial Services Centre (IFSC) and an exclusive Domestic Tariff Area (DTA).
- It is established as an integrated hub for financial and technology services not just for India but for the world.
Role of International Financial Services Centres Authority (IFSCA)
The GIFT IFSC is the maiden international financial services center in India. Before the establishment of IFSCA, the domestic financial regulators, namely, RBI, SEBI, PFRDA, and IRDAI regulated the business in IFSC.
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 connection and focus on the needs of the Indian economy as well as to serve as an international financial platform for the entire region and the global economy as a whole.
- It thrives on promoting ease of doing business in IFSC and providing a world-class regulatory environment.
- It will also regulate any other financial products, financial services, or financial institutions in an IFSC, which the central government may notify.
- It may also recommend to the central government any other financial products, financial services, or financial institutions, which may be permitted in an IFSC.
Benefits of IFSCA
- The financial services and transactions that are currently carried out in offshore financial centers by Indian corporate entities and overseas branches/subsidiaries of Financial Institutions (such as banks, insurance companies, etc.) can be brought back to India through the International Financial Service Center (IFSC).
- It offers a business and regulatory environment compared to other leading international financial centers in the world like London and Singapore.
- IFSCs is intended to provide Indian corporates with easier access to global financial markets and to complement and promote further development of financial markets in India.
- National and international institutions dealing with international financial services would utilize the IFSC platform for inbound and outbound investments with improved ease of doing business, thereby making GIFT IFSC a global financial hub.
The IFSCA consists of nine members appointed by GOI. The members are:
- A member each from RBI, SEBI, PFRDA, IRDAI
- Two members from the Finance Ministry
- Two members to be appointed on the recommendation of a Selection Committee
The term of each member is three years subject to reappointment.
India International Bullion Exchange (IIBX)
Bullion refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins. They can be considered legal tender and are often held as reserves by central banks or institutional investors.
- The Government had notified in August 2020 about the Bullion Spot Delivery Contract and Bullion Depository Receipt (BDR) with underlying Bullion as Financial Product and related services as Financial Services.
A bullion exchange is a platform that enables the trading of gold and silver.
- The primary global market trading platform for gold and silver is the London Bullion Market.
- The bullion conducts trading of precious metals at market spot prices.
The International Bullion Exchange will be the Gateway for Bullion Imports into India:
- All the bullion imports for domestic consumption will be channelized through the exchange.
- The India International Bullion Exchange is the third such exchange in the world. It has been set up to enable India to become an influencer for global bullion prices.
- It will offer a diversified portfolio of products and technology services at a cost more competitive than other global exchanges in London, Hong Kong, Singapore, Dubai, and New York.
- It will facilitate the transition of the Indian Bullion Market towards a more organized structure by roping in qualified jewelers.
- It also aims to standardize gold pricing in India and bring transparency to the trading of these precious metals.
- IIBX also seeks to make it easier for small bullion dealers and jewelers to trade.
- It will also facilitate efficient price discovery, ensure standardization, quality assurance, and sourcing integrity and provide impetus to the financialization of gold in India.
NSE IFSC-SGX Connect
NSE IFSC Limited (NSE International Exchange) is a fully-owned subsidiary company of the National Stock Exchange of India Limited (NSE).
NSE IFSC-SGX Connect is a collaboration between the NSE and the Singapore Exchange (SGX) to bring global investors to India.
- Under Connect, all orders on NIFTY derivatives placed by members of the Singapore Exchange will be routed to and matched on the NSE-IFSC order matching and trading platform.
- Broker-Dealers from India and across international jurisdictions are expected to participate in large numbers for trading derivatives through Connect.
- It will deepen liquidity in derivative markets at GIFT-IFSC, bringing in more international participants and creating a positive impact on the financial ecosystem in the GIFT-IFSC.