Amid the call for a single regulator for the financial operations in the GIFT-IFSC, on the lines of the global International Financial Services Centres (IFSCs), a push for the same came from the apex regulator, Reserve Bank of India (RBI).

Expressing the need for a single regulator for IFSC at Gujarat International Finance Tec - City (GIFT City), the RBI governor Urjit Patel called for a unified financial regulatory framework for GIFT City. “A unified financial regulatory framework providing for a single regulator for GIFT City could contribute to better regulation and supervision of the financial entities in the City,” Patel said addressing a gathering of capital markets participants and bankers in presence of the Union Minister of State for Corporate Affairs Arjun Ram Meghwal and Gujarat deputy chief minister Nitin Patel.

“While individual regulators can supervise the entities initially when the size of the business is small, a unified regulator would be necessary to pay undivided attention to the IFSC,” he said adding that work on the design of such a framework should begin soon so as to be able to implement this in time.

Addressing a gathering at Mahatma Mandir, Gandhinagar on Wednesday, Patel stated that there was a need to review the existing laws governing financial contracts in India and make world-class legal framework for the financial contracts in GIFT.

Adding further he mentioned that based on such review, a world class legal framework for financial contracts in GIFT could be enabled, either by appropriately amending the existing laws governing financial contracts or enacting a fresh law. “Either way, this should be expedited, may be by constituting a high level working group to address this gap in mission mode,” stated Patel.

Without making any reference to the demonetisation issue, Patel focused more on the IFSC and GIFT projects, which has been the pet project of the Prime Minister Narendra Modi.

On January 9, Prime Minister Modi had inaugurated country's first international exchange set up by BSE - India INX at the GIFT-IFSC.

“An IFSC should have a legal structure that is sufficiently supportive of the swift resolution of conflicts and disputes arising from the settlement/enforcement of complex international financial contracts. The contract should be of international standard and enforceable in the court of law and preferably similar to ISDA documentation,” Patel stated in his speech.

On the recapitalisation of public sector banks, RBI governor stated that efforts of developing an attractive offshore financial centre should also include measures for adequate provision of capital to the domestic banking system. “A well-capitalised domestic banking system enhances the comfort of the various stakeholders to conduct business in the offshore IFSC as well.”

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