Keen on further strengthening the framework of international financial services centres (IFSCs), the government has asked regulators such as the RBI, Sebi and Irda, and the department of corporate affairs, to study models adopted by global financial hubs like London, Singapore and Dubai and suggest best practices that can be replicated in India.
In a recent meeting of a task force on the IFSC, headed by minister of state (MoS) for finance Jayant Sinha, the regulators were told to study rules and regulations in such international financial centres relating to their respective areas and give ideas.
The government has already brought down the level of taxation substantially for the IFSCs, and the adoption of global standards will create conditions for more IFSCs to come up by boosting the confidence of potential investors as well as other stakeholders, a senior government official said.
Finance minister Arun Jaitley, in the Budget 2016-17, proposed to trim the minimum alternate tax from 18.5% to 9% and waived transaction taxes like STT and CTT, long-term capital gains tax and also scrapped the dividend distribution tax. The Gujarat International Finance Tec-City (GIFT) in Gandhinagar, a pet initiative of PM Narendra Modi, is the only IFSC in India which has been given the status of a multi-speciality SEZ. Another IFSC is proposed to come up in Mumbai.
The GIFT IFSC has witnessed business transactions of over $250 million in first six months of operations. Yes Bank, Federal Bank and ICICI Bank have already started operations there with their IFSC banking units. SBI is expected to follow suit soon.
Moreover, PNB, Corporation Bank, Kotak Mahindra Bank, IDBI and IndusInd Banks are some other players which could begin operations at IFSC in near future. GIFT City MD Ajay Pandey said after the banks, a few insurance companies could also start operations soon at the IFSC.