IFSCA - The purpose and objective

The International Financial Services Centres Authority (IFSCA) was established for various reasons,  aimed to make India as a significant player in the global financial market. Let us try understand in brief:

Relevancy of the topic

CS exam preparation:

While preparing for CS Executive examination learning economic low, especially for next change, management act and related aspects are very important, and IFSCA is a relevant topic for the preparation.

1. To Create a Unified or single Regulatory Framework for IFSCs:

· Prior to IFSCA's establishment in 2020,  domestic regulators like the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority (PFRDA)used to regulate their respective sectors within the International Financial Services Centre (IFSC) at GIFT City.

· This multi-regulator approach could lead to complexities, overlaps, and potential regulatory arbitrage, hindering the "ease of doing business" for international entities. For example if one authority approves and the other have a different view, then the entire process will stop. IFSCA was created as a single authority to streamline regulation, provide a single point of contact, and offer a holistic vision for the IFSC. This mechanism helps to simplify the regulatory environment at IFSC.

2. Help India into Global Financial Services:

•  Vodafone case was in a way an eye opener in both revenue loss cases as well indian companies and investors use overseas territories to do business. So the main aim was to bring back financial transactions and services being conducted overseas through their associates, branches, subsediaries to India.

  
  

•  Having a unified regulatory authority will defenitely help to attract global capital inflow, which will help economic growth of India and also help the development needs.

  
  

•  IFSC through proper regulation from IFSCA Helps to create a platform for fundraising, global tax management, treasury management, and such other related international financial activities. This will help Indian companies to tap global markets without going to respective country and in the same way foreign companies without getting affected by Indian laws can root their investments through IFSC.

  
  

• lThis will help Indian companies or in Indian economy to develop a strong connection with global economy or global companies, which will help In the economy and also regional, global economy.

3. To Provide a World-Class Regulatory Environment:

• IFSCA develop a robust and dynamic laboratory framework in line with international bus practises to promote financial activities or services in IFSC. This will help the entities in IFSC to provide services with global standard, which will create more trust and will definitely attract global stakeholders.

  
  

• One of the important aspect which needs to be considered for development of business in IFSC is ease of doing business. By having one unified regulatory authority with global standards will ensure that the objective of ease of doing business is achieved.

  
  

• Another area of concern is financial stability, protecting the interest of investors, ensuring that IFSCs Are not used to do money, laundering and terrorist financing, and also no compromise on market integrity, these concerns will be well addressed by creating IFSCA.

4. To Foster Innovation and Development:

•  All we agree that this is an era of financial technologies (FinTech), And the development of this industry needs a lot of experimentation. This experimentations are done through initiatives like regulatory sandboxes and this can be effectively done through IFSC. IFSCA in endeavour to encourage innovation in new financial products and services provide a platform for new product research, and it's testing trial and implementation.

  
  

• The IFSCA actively promotes wide range of financial services includes banking, insurance, capital market, various fund, management, activities, aircraft, and ship leasing, and of course sustainable finance. This will help different prayers to use IFSC as a platform to channelise their investment into and out of India.

  
  

• In a nutshell, we can say that IFSCA Aims to establish GIFT city for various specialised and dynamic financial activities that are usually conducted offshore.

In essence, IFSCA exists to enable India to fully participate in the global financial services industry by creating a modern, competitive, and well-regulated international financial center that serves both India's needs and the broader global market