IFSCA (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     6th April 2024        

Context: Recently, the Reserve Bank of India (RBI) announced on Friday that foreign investors in the International Financial Services Centre would be allowed to invest in sovereign green bonds.

International Financial Services Centre Authority

  • About: IFSCA was established on April 27, 2020, as mandated by the International Financial Services Centres Authority Act, 2019.
  • Headquarters: GIFT City, Gandhinagar in Gujarat.
  • Composition: Nine members, appointed by the central government.
  • Objective: To develop a strong global connect and focus on the needs of the Indian economy as well as to serve as an international financial platform for the entire region and the global economy as a whole.

Sovereign Green Bond

  • Meaning: Bonds issued by any sovereign entity, inter-governmental groups or alliances and corporates with the aim that the proceeds of the bonds are utilised for projects classified as environmentally sustainable.
  • They are financial instruments that finance green projects and provide investors with regular or fixed income payments.

Role of IFSCA

  • Unified Regulatory Authority: IFSCA serves as a unified regulatory authority responsible for the development and oversight of financial products, services, and institutions within India's International Financial Services Centre (IFSC).
  • Transition from Domestic Regulators: Before IFSCA's establishment, domestic financial regulators such as RBI, SEBI, PFRDA, and IRDAI governed business activities within IFSC.
  • Inter-Regulatory Coordination: Recognizing the complexity of IFSC business dynamics, IFSCA facilitates inter-regulatory coordination within the financial sector to ensure effective regulation and foster a conducive business environment.
  • Global Connect and Economic Focus: IFSCA's primary objectives include developing strong global connections, addressing the needs of the Indian economy, and serving as a prominent international financial platform for the region and the global economy at large.
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