GIFT City abbreviated as Gujarat International Finance Tec-City hosted India’ first IFSC (International Finance Services Center). This IFSC became operational from April 11th 2015 as the present Finance Minister Arun Jaitley launched it. He also unveiled the rules and regulations that govern the IFSC’s.
In the booklet releashed, the instructions for the IFSC’s were presented by RBI (Reserve Bank of India), Sebi (Securities and Exchange Board of India) and IRDA (Insurance Regulatory and Development Authority of India). The instructions by each regulator is as follows
RBI regulated as follows
- Indian and Foreign banks having presence in India will be allowed to set-up centers in IFSC with capital of $20 million.
- Fore-mostly the banking units wont be allowed to serve individual clients.
- No cash transactions are allowed and non-rupee transactions are allowed.
- CRR (Cash Reserve Ratio) and private sector lending wont be allowed.
Sebi regulated as follows
- Any Indian Stock exchange or any foreign judiciary stock exchange are allowed to form a subsidiary to provide stock exchange services in IFSC’s. The conditions being 51% of paid-up equity share capital held by an exchange and remaining held by an world recognised exchange in any jurisdiction.
- Share holding and profit withholding norms are flexible for stock exchanges and clearing corporations.
- To the extend of liberalized remittance scheme, resident Indians are allowed to trade in IFSC’s contracts.
- With net value of $1 million during the previous year is eligible under FEMA (Foreign Exchange Management Act) to invest offshore the funds, but with the limit of liberalized remittance scheme.
IRDA regulated as follows
- Every Indian insurer all allowed to set-up an IFSC office in the SEZ (Special Economic Zone).
- Investment of INR 10 crore is needed for foreign insurance and re-insurance companies.
- Re-insurance companies outside India are allowed in the SEZ.
Hasmukh Adia, Financial services secretary briefed that a law is being drafted along with the appointment of a regulator, during the launch function.
Knowledge is Wealth
- GIFT City is situated near Gandhinagar of Gujarat.
- GIFT Co. is a JV (joint venture) of IL&FS (Infrastructure leasing and Financial Services Ltd) and Gujarat government-owned Gujarat Urban Development Co.Ltd.
- Considered pet project of Modi when he was Gujarat CM (Chief Minister), it is to give tough competition to IFSC’s in Dubai, Singapore and Hong-kong
- Offshore Banking Unit to be set-up by Kotak Mahindra Bank, as the agreements are finalised.