NBFCs to function in GIFT city, Gujarat

The International Financial Service Centre recently granted permission for the Non-Banking Finance Companies to operate in Gujarat GIFT City. The NBFCs will now be allowed to offer whole range of services such as loans, investment banking, exotic derivative trades and third-party product sales.

Significance

The move will attract top financial services from all over the world. Also, it will help to localise services that are usually offered overseas.

GIFT City

The GIFT City was the first International Financial Service Centre (IFSC) of India. It was established under Special Economic Act, 2005. The GIFT city provides services such as Offshore Banking, fund raising services for individuals, Offshore Asset management, etc.

The idea of GIFT city was conceived at the Vibrant Gujarat Global Investor Summit, 2007. It was established based on Fibre to the home. It is an intelligent building with piped supply of cooking gas. Also, it the first city if India to receive city-level District Cooling System.

The Gujarat Maritime Cluster is to be established in GIFT City. A maritime cluster is a collection of institutions, businesses in the maritime sector.

International Financial Service Centre

The IFSC conducts business in foreign currencies. These centres deal with financial products and services across borders.

The insurance sectors and capital markets in the IFSC were regulated by multiple regulators such as SEBI, RBI and IRDAI. Thus, GoI passed the International Financial Service Centre Authority Act to bring all them under a single authority called the IFSC Authority. The act was passed in December 2019.

Special Economic Zones Act, 2005

The Special Economic Zones Act, 2005 provides legal framework for establishment of Special Economic Zones.

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