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

Arjun, a compliance officer, compares the IFSC carve-outs in different statutes. Which statement correctly describes the position for the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949?

Both the RBI Act (section 57A) and the Banking Regulation Act (section 51A) provide that the Reserve Bank's powers under them do not extend to an IFSC. Those powers are exercisable by the International Financial Services Centres Authority for financial products, services and institutions permitted in the IFSC.

  1. AOnly the RBI Act has an IFSC carve-out; the Banking Regulation Act has none
  2. BBoth Acts provide that the Reserve Bank's powers under the respective Act do not extend to an IFSC and are exercisable by the IFSC Authority for permitted financial products, services and institutionsCorrect
  3. CBoth Acts transfer the Reserve Bank's powers in an IFSC to SEBI
  4. DBoth Acts exclude the IFSC Authority's role and keep Reserve Bank powers intact

Explanation

Section 57A of the RBI Act and section 51A of the Banking Regulation Act use parallel wording: the Reserve Bank's powers under the Act do not extend to an IFSC and are exercisable by the IFSC Authority for permitted products, services and institutions. Option A is wrong because section 51A exists, and the others name the wrong authority or reverse the rule.

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