New guidelines for IFSC

New guidelines for IFSC
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Highlights

New guidelines for IFSC.Moving forward with efforts for setting up financial hubs in the country, Sebi on Friday issued detailed and relaxed set of guidelines for establishing international financial services centres (IFSC).

Financial service centres can be set up on the lines of Dubai, Singapore The norms would enable setting up of stock exchanges, clearing corporations, financial intermediaries, asset management companies and related capital market infrastructure in the IFSC

  • The first centre is coming up in Gujarat’s Gift City
  • The guidelines are effective from April 1
  • Initially, stock exchanges can be set up with `25 cr net worth in these centres, to be increased to `100 cr in 3 years
  • The entities operating in centres can issue debt securities

Mumbai (PTI): Moving forward with efforts for setting up financial hubs in the country, Sebi on Friday issued detailed and relaxed set of guidelines for establishing international financial services centres (IFSC).The game-changing norms are aimed at creating a vibrant IFSC within India on the lines of Dubai and Singapore, and also help check trading in Indian securities and rupee derivatives at offshore financial hubs.

Easier norms would be in place for setting up stock exchanges, clearing corporations, financial intermediaries, asset management companies and related capital market infrastructure in the IFSC the first of which is to come up in Gujarat's GIFT City.The guidelines, to be effective from April 1, provide for domestic as well as foreign entities, including stock exchanges, to set up their operations in IFSCs.In such centres, domestic and foreign entities can raise money in Indian as well as overseas currencies while such fund raising activities should be in compliance with relevant Indian regulations.To attract more players for setting up their ventures in the IFSC, Sebi said that to begin with stock exchanges there need to have only a minimum net worth Rs 25 crore.

The same should be increased to Rs 100 crore within three years of setting up the operations.For establishing clearing corporations in these financial services centres, the initial minimum networth requirement would be Rs 50 crore, which has to be enhanced to Rs 300 crore in three years.Under the IFSC regime, any recognised domestic or foreign stock exchange can set up a subsidiary, in the financial services centre, provided they hold at least 51 per cent stake in the venture. Similar criteria would be applicable to clearing corporations and depositories desirous of operating in IFSC.

As per the guidelines, an alternative investment fund or mutual fund operating in IFSC can accept money from eligible investors only in foreign currency."An asset management company of a mutual fund operating in IFSC shall have a net worth of not less than $2 million which shall be increased to $10 million within three years of commencement of business in IFSC," Sebi said. The requirements regarding rising of funds in foreign currency such as minimum investment amount, corpus of fund, disclosures, investment conditions and valuations, among others, would be specified later by the regulator.

"The minimum subscription amount in case of private placement per investor shall not be less than $100,000 or equivalent or such amount as may be specified by Board (Sebi) from time to time," Sebi said. The regulator also said that stock exchanges operating in IFSC would be permitted to deal in "securities and products in such securities in any currency other than Indian rupee, with a specified trading lot size on their trading platform".An intermediary operating within the IFSC would be allowed to provide financial services to various categories of clients including foreigners, NRIs (Non-resident Indians) and a financial institution in the country that is eligible to invest funds offshore.

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