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International Financial Services Centres Authority (IFSCA) | UPSC
Framework for Setting up and operating International Trade Finance Services platform (‘ITFS’) for providing Trade Finance Services at International Financial Services Centres (‘IFSCs’)
WHY IN NEWS:
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INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY (IFSCA)
- The International Financial Services Centres Authority (IFSCA) has been set up vide IFSCA Act, 2019 to develop and regulate the financial products, financial services and financial institutions in the International Financial Services Centres (IFSCs).
- IFSCA has issued a framework for Setting up and operating International Trade Finance Services Platform (‘ITFS’) for providing Trade Finance Services at International Financial Services Centres (‘IFSCs’).
WHAT IS ITFS ?
- The framework will enable Exporters and Importers to avail various types of trade finance facilities at competitive terms, for their international trade transactions through a dedicated electronic platform viz, ITFS.
- This will help in their ability to convert their trade receivables into liquid funds and to obtain short term funding.
This framework will provide an opportunity to the participants to avail trade finance facilities for trade transactions such as :
- Export Invoice Trade Financing
- Reverse Trade Financing
- Bill discounting under Letter of Credit
- Supply Chain Finance for Exporters
- Export Credit (Packing Credit)
- Insurance/ Credit Guarantee
- Factoring and any other eligible product, on the ITFS platform.
ESTABLISHMENT OF IFSCA
- The International Financial Services Centres Authority (IFSCA) has been established on April 27, 2020 under the International Financial Services Centres Authority Act, 2019.
ROLE OF IFSCA
- The IFSCA 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.
- The IFSCA has been established as a unified regulator with a holistic vision in order to promote ease of doing business in IFSC and provide world class regulatory environment.
- The main objective of the IFSCA is to develop a strong global connect and focus on the needs of the Indian economy as well as to serve as an international financial platform for the entire region and the global economy as a whole.
- The authority will regulate financial products such as securities, deposits or contracts of insurance, financial services, and financial institutions which have been previously approved by any appropriate regulator such as Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) etc., in an IFSC.
- It may also recommend to the central government any other financial products, financial services, or financial institutions, which may be permitted in an IFSC.
- The International Financial Services Centres Authority will consist of nine members, appointed by the central government.
- They will include chairperson of the authority, a member each from the RBI, SEBI, the Insurance Regulatory and Development Authority of India (IRDAI), and the Pension Fund Regulatory and Development Authority (PFRDA); and two members from the Ministry of Finance.
- In addition, two other members will be appointed on the recommendation of a Selection Committee.
- The banking, capital markets and insurance sectors in IFSC which are regulated by multiple regulators – the RBI, SEBI, and IRDAI will be unified under the IFSC authority.
- Both national and international institutions dealing with international financial services would utilise the IFSC platform for inbound and outbound investments with improved ease of doing business, thereby making GIFT IFSC a global financial hub.