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CS Executive · Setting Up of Business, Industrial and Labour Laws · Financial Services Organization

A GIFT City IFSC unit offers an insurance product permitted in the IFSC. Which statement correctly reflects the Insurance Act, 1938 and the Reserve Bank of India Act, 1934 on regulatory powers?

The insurance Authority's powers under the Insurance Act and the Bank's powers under the RBI Act do not extend to an IFSC. They are exercisable by the IFSCA for financial products, services and institutions permitted in the IFSC.

  1. AThe Insurance Authority's powers under its Act extend to the IFSC, while the RBI's powers do not
  2. BThe Authority's powers under the Insurance Act and the Bank's powers under the RBI Act do not extend to the IFSC and are exercisable by the IFSCA for products, services and institutions permitted thereCorrect
  3. CBoth the Authority and the Bank share the powers with the IFSCA equally
  4. DThe powers go to the IFSCA only for banking and not for insurance

Explanation

Section 118A of the Insurance Act and section 57A of the RBI Act both state that the respective powers shall not extend to an IFSC and shall be exercisable by the IFSCA in so far as regulation of permitted financial products, services and institutions is concerned. Section 51A of the Banking Regulation Act is similar. So neither the shared-power nor the banking-only view is correct.

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