More flexibility in IFSC dealing

Large foreign investments, including from cash-rich the Non-Resident Indians, is expected to flow into the International Financial Services Centre in which the Reserve Bank of India is allowing non-resident individuals to participate.

“It (the RBI’s move) would also be a great enabler for bringing large investment in India from foreign investors including NRIs,” said Dipesh Shah, Chief of IFSC at the Gujarat International Finance Tec-City (GIFT).

“IFSC provides a great platform to participants with business-friendly regulatory framework, tax incentives, low cost of operation and international dispute resolution mechanism,” he said.

“The clarification that non-resident individuals can also deal with beneficiaries in IFSC will help to create large number of jobs and business in IFSC,” said Shah.

The IFSC-GIFT City got a major boost with clarification from RBI that non-resident individuals both Indian and foreign can deal with beneficiaries in IFSC.

However, individuals are not permitted to open bank account with IFSC Banking Unit, but they can use their existing overseas bank account to deal in IFSC.

RBI, Security and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDAI) issued operating guidelines for entities and participants to deal in IFSC in 2015.

These guidelines permitted various participants to deal and transact in IFSC. However, in the absence of clarification from RBI, retail non-residents were not participating in IFSC.

SEBI in its earlier circular dated 27 March 2015 has already permitted all the categories of clients including resident and non-resident individuals.

RBI has now confirmed that non-resident individuals can deal with IFSC beneficiaries such as Stockbroker or Accredited Investment Fiduciary (AIF) registered with SEBI in IFSC.

The recent announcement by SEBI on Alternate Investment Fund (AIF) regime for IFSC, RBI’s clarification will provide larger participation from non-resident individuals including NRIs in IFSC.

The move would also provide larger participation in IFSC Exchanges.

Earlier, High Networth foreign individuals were trading through overseas exchanges even for India related products. It will bring large fund into Indian IFSC and would also generate employment in the country.

IFSC has been operational with 12 large banks with business transaction of US$18 billion, around 17 insurance firms carrying out reinsurance business and 2 international exchanges with around 100 intermediaries have also set up their shop in GIFT IFSC.

The IFSC Exchanges have been doing average daily trading volume of US$2 billion and have listed bonds of worth US$46 billion till date.

The Government approved IFSC in 2015 with an objective to tap the huge hinterland demand of international financial services and to bring back India-focus international financial services business from offshore jurisdictions.

Recently, the Government also announced setting up of Unified Regulator for IFSC which will further promote Indian IFSC as most preferred place to do international financial services business. fiinews.com