New Delhi: Paving the way for creation of India's first International Financial Services Centre in Gujarat's GIFT City, regulator Sebi today approved a relaxed set of norms for setting up of stock exchanges and other capital market infrastructure in such centres.
The game-changing regulations are aimed at creating a vibrant IFSC within India on the lines of Dubai and Singapore and help check the flight of trading in rupee and Indian securities to such offshore financial hubs.
The move would allow companies incorporated outside India to raise money in foreign currencies by issuance and listing of their equity shares on the stock exchanges within the IFSC, where individual and institutional investors from India and abroad, including NRIs, would be allowed to trade.
The IFSC regulatory regime would allow the Indian and foreign stock exchanges to set up separate bourses within the IFSC as subsidiaries, while market entities from India and abroad would be allowed to operate there by providing issuance and trading in depository receipts and debt securities of domestic as well as overseas companies.
The capital and other requirements have been relaxed for some time for the exchanges, clearing corporations and depositories to set shop in the IFSC.
Mutual funds and Alternative Investment Funds set up in the IFSC can also invest in the securities listed there.
"Stock exchanges and clearing corporations would be provided concessions for setting up ventures in the IFSC. All existing exchanges would be allowed to set up their subsidiaries in the IFSC under the relaxed regimes," Sebi Chairman U K Sinha told reporters after a meeting of Sebi's board.
Finance Minister Arun Jaitley, who also addressed Sebi's board earlier this morning, had announced in the Budget last month that India's first IFSC would be set up in GIFT City in Gujarat.
Gujarat International Finance Tec-City (GIFT City) would be the country's first IFSC, with which top bourses BSE and NSE have already signed MoUs for setting up international exchanges there.
The move is expected to capture an estimated Rs 1,334 crore per day or Rs 2 lakh crore per year worth of trading in rupee derivatives that currently goes to locations outside India.
Presenting the Union Budget for 2015-16, Jaitley had said that appropriate regulations for IFSCs would be issued in March, which would be on the lines of global financial centres of Singapore and Dubai.
"Even though India produces some of the finest financial minds, including in international finance, they have few avenues in India to fully exhibit and exploit their strength to the country's advantage," he had said.
Under the new regime, rules and regulations differ from those applicable outside these IFSCs.
GIFT City's CEO Ramakant Jha said the new guidelines would provide a much-needed fillip to the new IFSC regime and it is a much needed step to save billions of dollars worth financial services business that India is losing out to other global hubs.
