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

Mehta Global Bank, an Indian bank, opens a unit in an IFSC set up under the Special Economic Zones Act, 2005. Regarding the powers of the Reserve Bank under the Banking Regulation Act, 1949, which statement is correct?

The Reserve Bank's powers under the Banking Regulation Act do not extend to the IFSC; they are exercisable by the IFSCA for financial products, services and institutions permitted there. Section 51A applies this notwithstanding any other law, so the RBI does not retain parallel authority within the IFSC.

  1. AThe Reserve Bank's powers under that Act do not extend to the IFSC and are exercisable by the IFSCA for permitted financial products, services and institutionsCorrect
  2. BThe Reserve Bank's powers continue unchanged and the IFSCA only assists it
  3. CThe Reserve Bank's powers are shared equally with SEBI in the IFSC
  4. DThe Reserve Bank's powers apply only if the Central Government notifies each IFSC unit

Explanation

Section 51A of the Banking Regulation Act, 1949 states that the Reserve Bank's powers shall not extend to an IFSC and shall be exercisable by the IFSCA in so far as regulation of permitted financial products, services and institutions is concerned. No sharing with SEBI or case-by-case notification is provided.

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