Stating that time was ripe for setting up International Financial Services Centre (IFSC) in India, R Gandhi, the deputy governor of Reserve Bank of India on Friday said that “extra care” have been taken in framing rules for setting up IFSCs in the country.
“Earlier we have been hesitant… but now we feel it is time for IFSCs to come on to the scene,” Gandhi said while giving a presentation on the formal rules that RBI has framed for IFSCs. The country’s first IFSC is coming up at GIFT city project at Gandhinagar in Gujarat.
“IFSCs is a place where there is a heavy concentration of financial transactions, conducted by financial institutions from all over the world and where Information and Communication Technology infrastructure is very robust…. Most IFSCs and their regulations (in foreign countries) have evolved over a period of time. But we are starting from scratch and so we have been extra careful in framing the rules,” Gandhi said on a day when the regulatory framework for IFSCs in India was unveiled in form of a booklet.
“The international focus has been on anti-money laundering norms, anti-terrorism funding related requirements, governance related issues and transparency related issues. We have kept all this perspectives in mind while framing the rules,” he added.
Meanwhile, the chairman of SEBI, UK Sinha termed the unveiling of regulations as “just a beginning”. According to him IFSC in India will facilitate large and small corporates, and Indian start-ups to easily raise capital within India. It will also encourage Indians to park their surplus money in foreign securities or mutual funds and will also help large foreign companies to raise money in foreign currency from the country.
“We have made things very simple for them (corporates). Here we have made a lot of exemptions in the hope that our corporates will be able to use it; in the hope that domestic and foreign exchanges can come up here,” Sinha said while giving a formal presentation on the guidelines prescribed by SEBI for IFSC.
“Similarly, we have provided facilities for intermediaries like brokers and custodians to get registered here (at IFSC), to start their business,” he said narrating how the attempt to set up IFSC in India about 10 years ago has “come to fruition”.
The SEBI chairman said that IFSC will encourage individual Indians to invest their surplus money in foreign securities or mutual funds. “Those Indians who want to take advantage of liberalised remittance scheme can invest in foreign currency in IFSC.
“SEBI has also permitted NRIs to invest in companies and securities in dollar and other foreign currency denomination,” he said adding that IFSC will also permit large foreign companies to raise money in foreign currency from India.
“This is just the beginning. We have laid down the rules. A lot of work is needed to convince the industry and people to come and set up their business (within IFSC) and outsiders to take advantage of it,” Sinha remarked.
Talking about the potential business prospects in insurance, the chairman of IRDA, TS Vijayan said, that reinsurance business worth Rs 7300 crore that currently moves out the country can be retained with the help of IFSCs.
Hasmukh Adhia, secretary of Department of Financial Services said that the IFSC guidelines issued by RBI, SEBI and IRDA have been put together in form of a booklet that was released on Friday. “There are FEMA guidelines issued on March 23, then there are guidelines issued by RBI on setting up of International Banking Units issued on April 1, SEBI guidelines issued on March 27 and IRDA guidelines,” he remarked.
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