The International Financial Services Centres Authority Act, 2019
The International Financial Services Centres Authority Act, 2019 (IFSCA Act, 2019) is an important legislation passed by the Indian Parliament to establish a unified regulatory body for financial services conducted in International Financial Services Centres (IFSCs) in India.
Here’s a detailed explanation along with a summary table to help you understand the Act better:
🔍 Overview of the IFSCA Act, 2019
📌 Purpose:
To establish the International Financial Services Centres Authority (IFSCA) to regulate and develop the financial services market in IFSCs, such as GIFT City (Gujarat International Finance Tec-City) in Gujarat, India.
✅ Key Features of the IFSCA Act, 2019
| Section | Feature | Explanation |
|---|---|---|
| 1 | Title & Commencement | Named the IFSCA Act, 2019. Came into force via notification from the Central Government. |
| 2 | Definitions | Defines key terms like IFSC, financial institutions, financial products, financial services, etc. |
| 3 | Establishment of IFSCA | Sets up the IFSCA headquartered at Gandhinagar, Gujarat. |
| 4 | Composition of Authority | The Authority comprises: ChairpersonOne member each from RBI, SEBI, IRDAI, PFRDATwo members nominated by Central GovtTwo full-time/part-time members appointed by Govt |
| 12 | Powers and Functions | The IFSCA can regulate financial products, financial services, and institutions in an IFSC. It also promotes ease of doing business. |
| 13 | Powers of Central Govt | The Central Government retains power to issue directions to IFSCA and make rules. |
| 14-19 | Finance & Audit | IFSCA’s budget is approved by the Central Government. It must maintain accounts and undergo CAG audits. |
| 22 | Transfer of Powers | Powers from other regulators (RBI, SEBI, IRDAI, PFRDA) for IFSCs are transferred to IFSCA. |
| 28 | Rule-making Power | The Central Government can make rules, and the IFSCA can make regulations under this Act. |
🔧 Important Functions of IFSCA
Regulation of financial services, products, and institutions in IFSCs.
Development of the financial ecosystem in IFSCs.
Promotion of ease of doing business and innovation.
Collaboration with international and domestic regulators.
Issuance of licenses to financial institutions in IFSCs.
🧩 Why was the IFSCA needed?
Before 2019, multiple regulators like:
RBI (banks),
SEBI (capital markets),
IRDAI (insurance),
PFRDA (pensions),
...regulated their respective sectors even in IFSCs. This fragmented regulation created confusion and inefficiency.
👉 The IFSCA Act unified this regulation, creating a single-window clearance and global-standard governance in IFSCs.
📊 Summary Table of the IFSCA Act, 2019
| Aspect | Details |
|---|---|
| Name of Act | International Financial Services Centres Authority Act, 2019 |
| Objective | To establish IFSCA as a unified regulator for IFSCs |
| Date Passed | December 2019 |
| Regulatory Scope | Financial products, services, and institutions in IFSCs |
| Key Regulatory Bodies Involved | RBI, SEBI, IRDAI, PFRDA (powers transferred) |
| Headquarters of IFSCA | Gandhinagar, Gujarat (GIFT City) |
| Chairperson | Appointed by Central Government |
| Composition | Max 9 members including 4 from sector regulators |
| Primary IFSC in India | GIFT IFSC |
| Powers | Licensing, regulation, promotion, development, and dispute resolution in IFSCs |
| Audit Authority | Comptroller and Auditor General (CAG) of India |
🧠 In Summary:
The IFSCA Act, 2019 is a transformative piece of legislation that simplifies and strengthens regulation in India’s IFSCs by creating a single, dedicated authority (IFSCA). This move enhances India’s competitiveness in global finance, streamlines regulations, and promotes innovation and ease of doing business in these special zones. Do write to us if you need any further assistance.
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