INTERNATIONAL FINANCIAL SERVICES CENTRE (Syllabus: GS Paper 3 – Economy)

Context: Companies listing on stock exchanges at the International Financial Services Centre in GIFT City are now allowed to have a lower public float of 10%.

International Financial Services Centre

• About: An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centres deal with flows of finance, financial products and services across borders. 
• Centres: London, New York and Singapore can be counted as global financial centres. 
• Many emerging IFSCs around the world, such as Shanghai and Dubai, are aspiring to play a global role in the years to come. 
• Legal Foundation: The concept of IFSCs was introduced under the Special Economic Zones Act, 2005, in India.
• First IFSC: The first IFSC in India, the Gujarat International Finance Tec City (GIFT).

o Establishment: on April 27, 2020, by the International Financial Services Centres Authority Act, 2019.

o Headquarters: GIFT City, Gandhinagar in Gujarat.

o Objective: It is a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India.

Mechanism of IFSC 

• Target Customers: IFSCs cater primarily to customers and financial activities outside the domestic economy’s jurisdiction.
• Cross-Border Financial Services: IFSCs handle financial flows, products, and services across international borders.
• Range of Services: The services offered by IFSCs include fund raising, asset management, wealth management, and global corporate treasury management.
• Risk Management: IFSCs provide risk management services, such as insurance and reinsurance.
• Mergers & Acquisitions: They facilitate mergers and acquisitions (M&A) activities among transnational corporations