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CS Professional · Strategic Management and Corporate Finance · An Overview on Listing and Issuance of Securities in International Financial Services Centre

A unit in GIFT City underwrites the issuance of bonds for a client and also provides information about a person's creditworthiness. Under the IFSCA Act, 2019, how are these activities treated, and what is the unit?

Underwriting issuance of a financial product and providing creditworthiness information are both listed financial services in the IFSCA Act, 2019. A unit set up in an IFSC and rendering such services is a financial institution, not a product, regulator or the Authority.

  1. AOnly underwriting is a financial service; the unit is a financial product
  2. BBoth are financial services; the unit is a financial institution if set up in an IFSC and rendering financial servicesCorrect
  3. CNeither is a financial service unless the RBI notifies it; the unit is an appropriate regulator
  4. DBoth are financial products; the unit is the Authority

Explanation

The definition of financial service includes underwriting the issuance or subscription of a financial product and providing information about a person's financial standing or creditworthiness. A unit in an IFSC engaged in rendering financial services is a financial institution. The first option wrongly excludes creditworthiness information.

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