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CS Executive · Economic, Commercial and Intellectual Property Laws · Law relating to Foreign Exchange Management

A unit located in an International Financial Services Centre set up under the Special Economic Zones Act, 2005 faces a question on who exercises powers under FEMA over the IFSC. Which statement is correct?

The Reserve Bank's powers under FEMA do not extend to an IFSC set up under the Special Economic Zones Act, 2005. Those powers are exercisable by the International Financial Services Centres Authority instead, as provided in section 44A, so the Authority and not the Reserve Bank acts there.

  1. AThe Reserve Bank's powers under the Act do not extend to the IFSC and are exercisable by the International Financial Services Centres AuthorityCorrect
  2. BThe Reserve Bank retains all powers in the IFSC and the Authority only advises
  3. CBoth the Reserve Bank and the Authority exercise identical powers jointly
  4. DThe Central Government exercises all the powers directly

Explanation

Section 44A provides that, notwithstanding any other law, the Reserve Bank's powers under the Act do not extend to an IFSC set up under the SEZ Act and are exercisable by the International Financial Services Centres Authority. The other options contradict this transfer.

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