New Delhi, Feb 2 (PTI) Government and various financial sector regulators including RBI and Sebi are mulling over a new set of norms to be applicable to IFSCs (International Financial Services Centres), which can be set up in different parts of the country for domestic and international investors.
The GIFT City in Gujarat can be the first off the block under this new regime, which could entail rules and regulations different from those applicable outside these IFSCs, sources said.
The issue is being actively discussed by various regulators internally as also collectively including at the forums like Financial Stability and Development Council (FSDC) and a further roadmap in this regard can be announced later this month in the Union Budget, sources said. At a recent Sub-Committee meeting of the FSDC, the regulators discussed the "matters relating to IFSC".
The meeting was chaired by RBI Governor Raghuram Rajan, while those who attended include capital markets regulator Sebi Chairman U K Sinha, insurance watchdog IRDA chief T S Vijayan, PFRDA Chairman Hemant Contractor, FMC Chairman Ramesh Abhishek, as also other top officials of RBI and the Finance Ministry.
GIFT City (Gujarat International Finance Tec-city) was conceptualised as a pet project of the Gujarat government when Prime Minister Narendra Modi was the state chief minister.
According to its website, "GIFT city aspires to cater to Indias large financial services potential by offering global firms a world-class infrastructure and facilities.
"It aims to attract the top talent in the country by providing the finest quality of life all with integrated townships, IFSC and multi speciality special economic zone (SEZ)." The city is 12 kms away from the Ahmedabad International Airport and eight kms from Gandhinagar.
There have been several attempts in the past to develop the country's financial capital Mumbai into an IFC.
Recently, Maharashtra Chief Minister Devendra Fadnavis also said during the World Economic Forum summit in Davos that his government would push forward plans to make Mumbai an International Finance Centre (IFC).
"We are talking to a host of investors. We are working on improving connectivity and infrastructure. With the new set of reforms, Mumbai can be an international financial centre," Fadnavis had told PTI.
Among others GIFT City would also have an international exchange, for which leading bourse BSE has already signed a memorandum of understanding with the Gujarat government. BSE CEO Ashish Chauhan said recently that the concept was to have an IFSC on the likes of Dubai, Singapore, Hong Kong and London.
"Even Indian companies have to go and raise funds from those IFSCs. This concept has been deliberated several times in India as well, but could not fructify somehow," Chauhan had said.
There would be a different kind of jurisdiction for the There would be a different kind of jurisdiction for the IFSC. The GIFT City basically will have two areas -- one is for the domestic business activities and the other is an international one.
In the international area, taxation and other regulations could be entirely different. "The idea is to set up an international exchange there that will cater to the companies and investors from across the world," Chauhan had said.
At IFSC, a foreign company can raise funds from European or American or even Indian investors. Similarly, an Indian company can also go to raise funds from the global investors. As per Chauhan, IFSC would be totally independent from the existing BSE.
Once rules and regulations are finalised for this IFSC, then BSE would begin identifying partners and other details for this exchange. The exchange would just be a small portion of a large vision that GIFT City has. Besides, several countries around the world have successfully unlocked their financial services potential by establishing hubs, which over time have become IFSC.
These financial services centres help provide suitable regulatory regimes and create a business environment to promote talent and help increase capital flow.
As these financial services centres develop, they create significant economic value for their domestic economies. "While India has enormous potential in financial services ...it is currently not in a position to fully realise it.
All leading Indian cities are far from measuring up to benchmarks set by successful IFSCs. They severely lag behind on the quality of infrastructure, are not able to offer the required quality of life, and more importantly are constrained by regulations," as per the GIFT City webiste.
"If India is to effectively unlock its financial services potential it would need unrestricted access to globally benchmarked financial services centres, which match international standards in infrastructure, attract quality talent, offer a high quality of life and are supported by a strong regulatory environment," it added.
GIFT will target a 6-8 per cent share of the financial services potential in India. This would result in creation of 5 lakh direct and an equal number of indirect jobs.