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CS Professional · IFSCA - Regulations, Listing and Compliances · International Financial Services Centres: An Introduction

Kavya Advisors, located in an IFSC, advises clients on buying units of a fund and also provides credit information about a borrower's creditworthiness to lenders. Which statement about the 'financial service' definition is correct?

Both activities are financial services. The IFSCA Act, 2019 lists rendering advice on buying, selling or subscribing to a financial product, and providing information about a person's financial standing or creditworthiness, as separate financial services. Holding client assets is not required.

  1. ANeither activity is a financial service because no assets are held
  2. BOnly advising on buying a financial product is a financial service
  3. COnly providing creditworthiness information is a financial service
  4. DBoth are financial services as the definition covers advice on buying a financial product and providing information about a person's financial standing or creditworthinessCorrect

Explanation

The definition of financial service includes rendering advice on buying, selling or subscribing to a financial product, and also providing information about a person's financial standing or creditworthiness. Holding assets is not a precondition. Hence both activities qualify.

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