The International Financial Services Centres Authority (IFSCA) has enabled the setting up and functioning of global in-house centres (GIC) in IFSCs by notifying its GIC regulations on Wednesday.
The move will enable multinational corporations to set up GICs, service delivery operators or subsidiaries that are usually located in low-cost geographies, in the IFSC established in GIFT City in Gujarat.
Under the regulations, GICs set up in an IFSC will only be allowed to serve non-resident entities while only supervisory personnel may be relocated from within India to work in the GIC in an IFSC.
Further, these GICs will only be permitted to deal in freely convertible foreign currency apart from maintaining an account in Indian currency for its administrative expenses, the notification said.
The subsidiaries will be permitted to function in branch mode to its parent firm, apart from any other mode specified by the authority, it said.
Earlier in October, the government had notified GICs as financial services at IFSCs in a move to incentivise banks, insurance firms, brokerages and financial intermediaries to set up subsidiaries there.
In order to be eligible for a GIC registration, the entity shall have to exclusively cater to its financial services group wherein the entities served must be located in Financial Action Task Force compliant jurisdictions, the notification said.
Additionally, the support services provided to its financial services group should be for the purpose of carrying out a financial service in respect of a financial product, it said.
In terms of statutory filings with the IFSCA, a GIC within the IFSC will have to submit all its reports to the authority in US dollars unless specified otherwise.
The government envisages GIFT City as a global financial hub along the lines of established global financial centres like London, Hong Kong, Dubai and Singapore.
Source : Times of India