Financial Services Centres Authority (IFSCA)

👉An IFSC enables bringing back the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches/subsidiaries of Financial Institutions (such as banks, insurance companies, etc.) to India.

👉It offers a business and regulatory environment that is comparable to other leading international financial centres in the world like London and Singapore.

👉IFSCs are intended to provide Indian corporates with easier access to global financial markets, and to complement and promote further development of financial markets in India.

👉The International Financial Services Centres Authority (IFSCA), headquartered at GIFT City, Gandhinagar Gujarat, has been established under the International Financial Services Centres Authority Act, 2019.

👉The SEZ Act 2005 allows setting up an IFSC in an SEZ or as an SEZ after approval from the central government.

❇️IFSC can provide:

✔️Fund-raising services for individuals, corporations and governments.

✔️Asset management and global portfolio diversification undertaken by pension funds, insurance companies and mutual funds.

✔️Wealth management and Risk management operations such as insurance and reinsurance.

✔️Global tax management and cross-border tax liability optimization, which provides a business opportunity for financial intermediaries, accountants and law firms.

✔️Global and regional corporate treasury management operations that involve fund-raising, liquidity investment and management and asset-liability matching.

✔️Merger and acquisition activities among trans-national corporations.

👉An IFSC caters to customers outside the jurisdiction of the domestic economy.


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Privatisation of Banks

👉The government’s plan to privatise two public sector banks (PSBs) through the Banking Laws (Amendment) Bill, 2021.

👉The government had listed the Banking Laws (Amendment) Bill, 2021 as one of the agenda items for the Winter session before it began.

👉 The Bill aims to amend banking companies acquisition and transfer laws of 1970 and 1980 and the Banking Regulation Act, 1949 to achieve privatisation of two PSBs to meet disinvestment targets as stated by finance minister Nirmala Sitharaman in the Union Budget 2021-22.

👉Years of capital injections and governance reforms have not been able to improve the financial position of public sector banks significantly.

👉Many of them have higher levels of stressed assets than private banks, and also lag the latter on profitability, market capitalisation and dividend payment record.

👉The government is trying to strengthen the strong banks and also minimise their numbers through privatisation to reduce its burden of support.


#UPSC #prelims2022 #importantTopics #CurrentAffairs2022 #Economy #Banking


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