The IFSCs (International Financial Service Centre) granted permission for the NBFCs (Non-Banking Finance Companies) to operate in GIFT City located in Gujarat. The Non-Banking Finance Companies will now be allowed to offer whole range of services such as loans, investment banking, exotic derivative trades and third-party product sales.

Significance

The move will attract top financial services from across the world. Also, it will help to localise services that are usually offered overseas.

About GIFT City

This was the first IFSC of India. GIFT City was established under Special Economic Act of 2005. This city provides services such as Offshore Banking, fund raising services for individuals, Offshore Asset management, etc.

The idea of the GIFT city was conceived at the Vibrant Gujarat Global Investor Summit, 2007. It was established based on Fibre to the home. It is an intelligent building with piped supply of cooking gas. Also, it the first city if India to receive city-level District Cooling System.

The Gujarat Maritime Cluster is to be established in GIFT City. A maritime cluster is a collection of institutions, businesses in the maritime sector.

International Financial Service Centre (IFSC)

The International Financial Service Centre conducts business in foreign currencies. These centres deal with financial products and services across borders.

The insurance sectors and capital markets in the IFSC were regulated by multiple regulators such as SEBI (Securities and Exchange Board of India), RBI (Reserve Bank of India) and IRDAI (Insurance Regulatory and Development Authority). Thus, Government of India passed the IFSC Authority Act to bring all them under a single authority called the IFSC Authority. The act was passed in December 2019.

Special Economic Zones Act of 2005

This Act provides legal framework for establishment of Special Economic Zones.

NBFCs to function in Gujarat’s GIFT city NBFCs to function in Gujarat’s GIFT city