WHAT IFSC GIFT CITY HOLDS FOR THE BFSI INDUSTRY?

The Gift City has been the talk of the town ever since the Modi Government launched it in 2015. There have been multiple rules and guidelines launched under it, which will benefit different industries. In this article, we dive deep into what is expected from the institution and how it would revolutionise the BFSI space.

Over the last couple of years, there have been multiple initiatives which the Modi-led NDA government has introduced in the enhancement of the financial services sector. One of the most significant ones is the setting up of India’s maiden International Financial Services Centre (IFSC) in GIFT City.

Ø  What is an IFSC?

These stand for financial institutions such as banks, stock markets, insurance firms, fund managers, fintech companies and so on and so forth. This system enables the promotion of financial innovation and even promotes cross-border payments. a move that will bring down the cost of financing for outbound mergers and acquisitions (M&A).

Ø  Who regulates IFSC?

Just like banks are regulated by the RBI, the Insurance sector is governed by IRDAI and capital markets by SEBI, IFSC is regulated by International Financial Services Centres Authority (IFSCA) through an Act of Parliament in 2019.

Ø  How will IFSC Gift City bolster the BFSI space?

There are multiple ways through which the BFSI sector will benefit immensely from the recent announcements made in the Budget and even the Economic Survey 2023.

#1.NSE IFSC-SGX Connect

This is an endeavour to promote cross border collaboration between India and Singapore in the capital market domain. Moreover, it plays an important role in onshoring derivative trading in Nifty products from SGX-which is Singapore’s index to NSE-IFSC Gift City. This will usher in ease of access to investors and NSE IFSC for trading and clearing derivative contracts in a much easier and systematic manner.

#2.India-luxembourg stock exchange agreement

This is a mutual agreement between India INX and Luxembourg Stock Exchange to focus on advancing green finance in India. This collaboration between INX and LuxSE will go a long way in attracting more investors and offer green capital from international investors.

#3.FinTech bridge with the Monetary Authority of Singapore(MAS)

MAS is the Apex Bank of Singapore, which will facilitate a regulatory alliance in the fintech space to promote joint regulatory sandbox collaboration, which will leverage existing sandboxes in respective jurisdictions to support experimentation of technology innovations.

#4.Having Data embassies of other countries:

The government is interested in and has even assured the facilitation and construction of data embassies of foreign nations.

#5.Establishing IFSC banking units:

The budget has also envisioned acquisition financing by IFSC banking units of foreign banks, which will recognise offshore derivative instruments as valid contracts. The budget has also proposed the setting up of a subsidiary of EXIM Bank which will bolster trade refinancing.

The government has huge plans for transforming the GIFT city and thereby even accelerating the presence of BFSI industry on a global scale.

-       Bfsi ET