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CS Executive · Capital Market and Securities Laws · International Financial Services Centres Authority (IFSCA)

IFSCA levies a penalty on a financial institution operating in an International Financial Services Centre. Which statement correctly reflects the Act on collection and credit of such penalties?

Penalties are collected in the foreign currency equivalent, converted at the rate notified by the RBI on the date of the penalty order. All sums realised as penalties or fines are credited to the Consolidated Fund of India in Indian rupees, not to the IFSCA Fund.

  1. APenalties are collected in the foreign currency equivalent, using the RBI-notified rate on the date of the order, and sums realised are credited to the Consolidated Fund of India in Indian rupeesCorrect
  2. BPenalties are collected only in rupees and credited to the IFSCA Fund
  3. CPenalties are collected in foreign currency at the rate on the date of recovery and kept in the IFSCA Fund
  4. DPenalties are collected in foreign currency and credited to the Consolidated Fund of India in foreign currency

Explanation

Section 13(5) requires collection in the foreign currency equivalent of the penalty, with the exchange rate as notified by the RBI on the date of the order. Section 13(6) credits all sums realised as penalties or fines to the Consolidated Fund of India in Indian rupees, not to the IFSCA Fund, which under Section 15 holds grants, fees and charges.

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