The International Financial Services Centre Authority Bill is aimed at brushing shoulders with the UK and Singapore in terms of global financial hub and make it possible for Indian firms to access the international market through the centre.
This was stated by Finance Minister Nirmala Sitharaman while tabling the Bill in the Lok Sabha on Wednesday.
“We are bringing several of these regulators together as one unit to the limited extent of having to deal with various institutions that are present in the IFC (International Financial Corporation). We are also defining what are the actual businesses that are being recognised there,” Sitharaman said.
She said the Bill was withdrawn from the Rajya Sabha because being a Finance Bill it was meant to be tabled only in the Lok Sabha. “This Bill is something that was foreseen long time ago,” Sitharaman said.
The Bill had received Cabinet clearance in February 2019.
Stating that the government wanted unified authorities to deal with a particular specialised financial services hub, the Minister said, “We want to have something similar to London and Singapore in terms of international financial hub.”
It would allow Indian firms to access the international market and deal with the internal market through this centre, she added.
Explaining the background, the Minister said the Ministry of Finance had set up a committee, headed by Percy Mistry, in 2008 that examined the issue of financial services.
Even at that time it was felt that by 2015 up to $50 billion would be spent on international financial services by Indian firms and that amount would obviously be going out of the country because of lack of our own international financial services centre, Sitharaman said.
Therefore, the necessity of a financial services centre in India was recognised and in 2011 Section 18 in the SEZ Act was brought in.
By 2015, it was made operational and regulators, like the RBI and the SEBI, which dealt with various financial institutions, started issuing notifications to regulate institutions that had started functioning in the Gift city, referred to as International Financial Services Centre, of Ahmedabad, she said.
The BSE set up the India International Exchange (INX) and the National Stock Exchange, IFSC, there and the daily volume had crossed $4 billion, the Minister said.
Around 13 international banking institutions were functioning from there, she said. Banking transaction alone had crossed $24 billion, she said and added, there were 40 more operational brokers, 19 players in the insurance business and more than 30 IT and IT-enabled services units there.
“All of these are bringing certain advantages to India and Indian companies because now they don’t need to go elsewhere to deal with international markets and also to participate in international financial functions,” the Minister said.