International Financial Centres to come up in SEZs

The Government of India is keen on setting up International Financial Centres (IFC) and the first of its kind would be set up in Gujarat International Finance Tec-City, located in the notified SEZ

The Dollar Business Bureau IFC The Government of India (GoI) is keen on setting up of International Finance Centres (IFC) in India and the move is expected to provide avenue towards enabling India to become a producer and exporter of international financial services. This was informed by the Minister of State for Finance Jayant Sinha in his reply to Lok Sabha on Friday. This move towards setting up of financial centres is also expected to further provide scope for the finest financiers in India to exhibit his strength to the country’s advantage, the Minister added. The IFCs will be set up in Specially Economic Zones (SEZ) and the first of its kind would be set up in Gujarat International Finance Tec-City, located in the notified SEZ and the appropriate regulations to this effect would be released in March, informed the Minister. The Minister of State further informed that the GoI is in commitment with the World Trade Organization (WTO) with regard to regulation on issue of licenses and setting up of branches of foreign banks across the country. India has been complying with its commitment to the WTO under financial services, according to which the market access to foreign banks from all countries together, is restricted to 12 licenses a year. Based on the above commitment, India has been complying by allowing licenses for 12 new foreign banks per year and even in times it has gone beyond limits as a measure of autonomous liberalization, the Minister informed. However, according to the WTO’s commitment, the licenses for new foreign banks may be denied in case, if the total assets of the foreign banks’ branches in India, both on and off balance sheets of the banking system, exceeds 15%, the Minister added. Further, in the case of allocation of specific centres with in the country, the Reserve Bank of India has been following a consistent policy on ‘inclusive banking’ by foreign banks in India. In this regard, a mix of banked and under-banked centres is allotted by the RBI to each foreign bank, thereby allowing them to expand their presence across the country.