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

Gujarat Finserve Ltd plans a banking unit inside an International Financial Services Centre (IFSC) set up under the Special Economic Zones Act, 2005. Under the Banking Regulation Act, 1949, who exercises the regulatory powers over financial products, services and institutions permitted in the IFSC?

The International Financial Services Centres Authority exercises the powers. Section 51A says the Reserve Bank's powers under the Banking Regulation Act do not extend to an IFSC, and the Authority regulates financial products, services and institutions permitted in the IFSC.

  1. AThe Reserve Bank, as for all banks in India
  2. BThe International Financial Services Centres AuthorityCorrect
  3. CThe Central Government through the Ministry of Finance only
  4. DThe Insurance Regulatory Authority

Explanation

Section 51A provides that the Reserve Bank's powers under the Act do not extend to an IFSC. Those powers are exercisable by the International Financial Services Centres Authority for matters permitted in the IFSC. The Reserve Bank option ignores this carve-out.

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