All about International Financial Services Centres Authority Act, 2019

The Author, Deepin Sahni is a 4th B.A.LLB. from Sharda University, Greater Noida. He currently interning with LatestLaws.com.

Q 1) What is International Financial Services Centres Authority Act, 2019?

Ans.) In order to regulate the working of the Financial Centres in India, a bill was introduced in the parliament:-

• International Financial Services Centres Authority bill was Introduced in Lok Sabha by Minister of finance , Ms. Nirmala Sitharaman.
• The Bill was Introduced in Lok Sabha on the 25th November, 2019 and received the assent of the President on the 19th December, 2019
• The Reason to establish such an authority was to advance and manage the financial services market within the International Financial Services Centres (IFSC) in India.
• Also,To get one authority which will seek a single sort of window to take care of the financial centres.

Section 2 of Act states that this Act is applicable to all IFSCs established under the Special Economic zones act, 2005.

Q 2) What is the Composition of The International Financial Services Centres Authority?

Ans.) Central Government shall, by notification in the official Gazette , establish an Authority under this Act.

The Authority comprises of nine members:-

1. a chairperson,
2. one member each to be proposed by RBI, the Securities and Exchange Board of India, the IRDAI and the Pension Fund Regulatory and Development Authority,

3. two members to be nominated by Central Government from amongst the officers of Ministry of Finance,
4. other two members also to be appointed by the Central Government on the recommendation of Selection Committee.

Q 3) Term of office and Removal of the Members of the Authority?

Ans.) The term of office for Chairperson and a Member shall be Three years from the day he enters upon in his office. He shall be eligible for re-appointment.

No person to hold the office of Chairperson beyond attaining 65 years of age, and No person to hold the office of a Whole time Member beyond attaining 62 years of age.

Removal of a Member:-

A Member may resign from his Office by giving in writing a notice, to the Central Government of not less than 3 months, or

Removed by the Central Government on the following grounds:-

• • adjudged as an insolvent, or
  • physically or mentally incapable of performing his functions, or
  • convicted of an offence which in the eyes of the Central Government involves moral turpitude, or
  • acquired financial or other interest, likely to affect prejudicially his functions as a Member; or
  • abused his position so as to render his continuance in office.

Provided that no Member shall be removed from office unless he has been given a reasonable opportunity of being heard in the matter.

Q 4) What are the Functions of the International Financial Services Centres Authority?

Ans.) The IFSC Authority has the following functions:-

• • The function of this Authority is advance and manage the financial products,financial services and financial institutions in the IFSCs.
  • To manage financial services, financial institutions and financial products in an IFSC which have been authorised prior to to the commencement of this Act by any regulator of IFSC i.e. RBI, SEBI etc.
  • To manage the financial services, financial institutions and financial products in an IFSC as the Central government may notify from time to time.
  • To suggest or recommend such other financial services, financial institutions and financial products to Central Government which may be permitted in an IFSC by the Central Government.
  • To perform any other function as the Central Government may prescribe.

Q 5) What are the Powers of the IFSC authority?

Ans.) Notwithstanding anything contained in any other law for the time being in force, all the powers that are exercised by an appropriate regulatory (eg- RBI,SEBI) shall be exercised the Authority as far as it relates to regulate the financial services, financial institution or financial product.

Central Government may, by notification, make amendments to the first schedule by including or omitting any financial regulators and such regulators Shall be deemed to be included or omitted from the First Schedule on publication of such notification.

Fines, Penalties, fees and settlement amount to be realized or collected by the Authority in foreign currency equivalent of the penalty imposed.

The Authority also has the power to specify the manner in which the Authority shall perform its functions in order to carry out the provisions of this Act.

Q 6) What is International Financial Services Centres Authority fund ?

Ans.) Section 15 of the IFSCA Act states that there shall be constituted a fund to be called as International Financial Services Centres Authority fund.

The following shall be credited to this fund:-

1. Fees, grants and charges received under this Act by the Authority.
2. All sums received from various sources as decided by the Central Government.

It shall be used following purposes :-

1. allowances, salaries and remuneration of the members, officers of the authority
2. any other expenses incurred by the authority while discharging its functions under this Act.

Q 7) What is Performance Review Committee?

Ans.) Section 17 of the Act talks about constituting a Performance Review Committee. It consists of atleast 2 members of the authority.

It shall Review the functioning of the Authority.

Q 8) What are the functions of Performance Review Committee?

Ans.) The Performance Review Committee has following functions:-

• • To examine whether the Authority has adhered to the provisions of applicable law while exercising it’s powers and functions.
  • To examine whether the rules and regulations made by the authority, to give effect to provisions of this act, promote transparency and best practices of governance.
  • To examine whether the authority is managing the risks to perform it’s functions in a reasonable manner.

Q 9) What are the Powers of the Performance Review Committee?

Ans.)

0. • To review functioning of the authority at least once in every financial year, and submit a report of it’s findings to the Authority shall forward a copy along with the actions taken, if any, to the Central Government within 3 months of date of receipt of report.
   • To maintain a system by which a person may directly submit to the committee in case of-
1. non adherence of provisions by the authority
2. misappropriation of resources by the authority

3. abuse of power by authority or its member
4. non compliance of any decision of authority by it’s member.

Q 10) What do you mean by Foreign Exchange Transaction?

Ans.) Section 20 of the Act talks about Foreign Exchange Transaction.

Transactions related to financial services in an IFSC shall be in such foreign currency as may be prescribed by regulations in accordance with the Central Government .

Q 11) What do you mean by the Power of Central Government to Supersede the Authority?

Ans.) If in any situation the Central Government is of the opinion that-

• • the authority may able to discharge its function or exercise its duties imposed under their, or
  • the authority has tenaciously defaulted to abide by the directions given by Central Government and which resulted in deterioration of the financial position of the authority, or
  • Such circumstances exist which makes it necessary in public Interest to do so,