The Lok Sabha today passed the International Financial Services Centres Authority Bill, 2019.
It seeks to establish a unified Authority to develop and regulate the financial services market in the International Financial Services Centres or IFSC’s in India. Currently, multiple agencies are entrusted with regulating the specific market including the RBI, SEBI, Insurance Regulatory and Development Authority, IRDA and the Pension Fund Regulatory and Development Authority, PFRDA.
Fourteen Central Acts would be amended including seven relating to the RBI, three each relating to the SEBI and the IRDA and one on the PFRDA.
Finance Minister Nirmala Sitharaman, in her reply, said, the proposed authority will be subjected to the scrutiny of the CAG and the CVC. She said, the Central agencies like the CBI, the ED and the Prevention of Money Laundering Act-PMLA will have jurisdiction over the proposed authority.
Ms Nirmala Sitharaman asserted that the IFSC’s are not necessarily restricted to the Gujarat International Finance Tech-City, known as the GIFT city in Gujarat alone.
She said, due to the farsightedness of Mr Narendra Modi, it was promoted during his tenure as the Chief Minister of Gujarat, who is now the Prime Minister, and the Union Commerce Ministry accorded its permission during the UPA Government in 2011.
She added that other states can also seek nod for similar centres, though she referred to her predecessor late Arun Jaitley’s standpoint that the optimal potential of the existing centre be realized fully before creating new ones.
Referring to the ILFS, which is a major stakeholder in the GIFT IFSC, being on the verge of collapse, Ms Sitharaman said, the Gujarat state government has expressed its willingness to take over the stakes of the ILFS.
GIFT City in Gandhi Nagar is the only functional IFSC in India as of now.
Earlier, while introducing the Bill, Minister Nirmala Sitharaman said, all these years, the international finance transactions were being made through financial hubs abroad.
She said, since the inception of the GIFT centre at Gandhi Nagar, a considerable volume of transactions is being made through the facility in India itself.
She said, the BSE and the NSE have established their facilities there with a daily transaction of about four billion US dollars, besides thirteen international banking firms making transactions worth 24 billion dollars. She pointed out that there are also a host of other firms involved in IT and ITES and insurance sectors who deal with international financial transactions in the GIFT centre.
Initiating the discussion, Mr Karti Chidambaram of Congress said, the bill is all about a single entity, which he said, lacks an enabling environment for such financial hubs. He said, there is no visibility of policy on international financial service centres.
Mr P P Choudhary of the BJP welcomed the bill as a game-changer. He said, it will contribute to enhancing the ease of doing business, boost the economy and serve as a catalyst for job generation.
He observed that the growing inter-dependency of the global economy required such a unified authority to regulate international financial services sector in the country. He noted that the vastly changed financial landscape has necessitated the bill.
Mr D M Kathir Anand of DMK said, in his maiden speech, rather than putting all eggs in a single basket, let the International Financial Services Centres be broad-based in cities like Mumbai, Kolkata and Chennai as well.
Mr Saugata Roy of AITC said, the GIFT centre at Gandhi Nagar is already embroiled in controversies with its major stakeholder ILFS on the verge of collapsing and asked the Finance Minister to remove what he termed the clouds surrounding the project.