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

Neha, a company secretary, advises a client planning to offer insurance products from GIFT City IFSC. She notes that the Insurance Act, 1938 contains a provision similar to those in the Banking Regulation Act, 1949 and the RBI Act, 1934. What is the common effect of these provisions?

Each provision removes the regulator's powers over an IFSC and makes the IFSCA exercise them for financial products, services and institutions permitted in the IFSC. This is seen in section 118A of the Insurance Act, section 51A of the Banking Regulation Act and section 57A of the RBI Act.

  1. AThey make the IFSC fully exempt from all financial regulation
  2. BThey transfer the regulator's powers for IFSC-permitted products, services and institutions to the IFSCACorrect
  3. CThey transfer the IFSC's powers to the RBI for all purposes
  4. DThey require every IFSC entity to obtain separate approval from SEBI

Explanation

Section 118A of the Insurance Act, section 51A of the Banking Regulation Act and section 57A of the RBI Act each provide that the respective regulator's powers do not extend to an IFSC. The IFSCA exercises them for products, services and institutions permitted in the IFSC. They do not create full exemption from regulation.

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