The Lok Sabha on Wednesday passed a bill to set up a unified authority for regulating all financial activities in international financial services centres (IFSCs) in the country.
The first IFSC in India was set up at Gujarat International Finance Tec-City (GIFT) in Gandhinagar, Gujarat.
"... we are bringing several regulators together as one unit to the limited extent of dealing with various institutions which are present in the IFSC," Finance Minister Nirmala Sitharaman said.
The unified authority will act as a single-window for regulating various financial activities in the IFSC, she said.
All the laws of land, including the Prevention of Money Laundering Act, will apply, she said, adding the unified authority which will be independent would be subject audit by the CVC and the CAG.
Together with this, it will define various financial products including IT enabled services in the financial sector, she said, it has provided 10,000 jobs.
The government has already given some tax concession to help this centre develop as global financial hub in line with London and Singapore.
There will tax holiday only for 10 years in the IFSC, she said, adding it will not become a tax haven.
Replying to concerns raised by members on the economic slowdown, the Finance Minister said, "I am not undermining the challenges (economic). A blip in quarter should not prevent us from setting up the centre."
On the question of stake of crisis-ridden IL&FS in the GIFT City, Sitharaman said the Gujarat government wants to take over the stake in IFSC.
The Gujarat government has already appointed a new CEO replacing the IL&FS nominee.
The International Financial Services Centres Authority Bill, 2019, was introduced in the Lok Sabha after withdrawal from the Rajya Sabha.
Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators -- the RBI, the Securities and Exchange Board of India (SEBI), the Pension Fund Regulatory and Development Authority (PFRDA) and the Insurance Regulatory and Development Authority of India (IRDAI).
The bill seeks to amend 14 Acts, including the SEBI Act, the IRDA Act and the PFRDA Act.
The dynamic nature of business in IFSCs necessitates a high degree of inter-regulatory coordination and it also requires clarifications and frequent amendments in the existing regulations governing financial activities in IFSC.
On the criticism on why it is being set up in Gandhinagar, she said, the Gujarat government had applied for setting up financial sector Special Economic Zone and the approval given by the then Congress-led UPA in 2011.
She also said that there is no limit on how many IFSCs can be set up but others can come up after first centre (GIFT City) becomes fully operational.