Unified regulator IFSCA like an agile startup: K Rajaraman at BFSI Summit
The International Financial Services Centers Authority (IFSCA), which acts as a unified regulator for GIFT City IFSC, operates like a startup that carries no baggage and has the ability to be agile, says K Rajaraman, Chairman, IFSCA.
The IFSCA is the regulator of areas such as banking, capital markets, reinsurance, aircraft financing and ship leasing, and is therefore called the unified regulator.
Speaking at Business Standard’s BFSI Insight Summit, Rajaraman said: “We have an opportunity to learn from the world’s best and not get bogged down in the vastness of our past.”
Speaking on the occasion, Rajaraman said the ecosystem of banks and funds in GIFT City was robust and had the right building blocks to grow from here.
“Two banks have reached the $4 billion mark in assets. We believe this growth is very robust. We also believe that technology is a very important part of a global financial system. And we have created a fintech framework that helps financial services firms launch fintech products,” said Rajaraman.
The IFSCA chief further said that the body was in the process of notifying a payment services regulation to enable instant payments.
“We are also working on a payment settlement system. This may become possible in the second quarter of next year,” he said. This move will help the IFSC achieve immediate settlements and reduce its dependence on banks.
Rajaraman said the IFSCA is in the process of enabling direct listing by Indian companies on its stock exchanges.
“The government is likely to announce the regulations within a month. This will allow companies to make their IPOs in GIFT City early next year. The working group is tightening the regulations, and further adjustments may be needed to support the process,” he said.
In August, the IFSCA had proposed major exceptions to the current listing framework and measures for setting up holding companies (holdcos) and special purpose acquisition vehicles (SPACs) to encourage domestic startups to list in the GIFT City, the only international financial services center of the country. (IFSC).
Currently, the National Stock Exchange and BSE operate separate units in GIFT City. NSE IFSC has gained popularity after switching Nifty contracts traded on the Singapore Stock Exchange to GIFT City in July.
Last month, GIFT Nifty derivatives posted the highest ever turnover in a single day at $16 billion.
The newly appointed chairman reiterated that he adopted technology at the first IFSC to bring innovation and help build the global financial system at the centre.
“We have established a fintech framework that enables financial sector entities to launch financial and fintech products. We have admitted about 45 fintechs. Not all of these have permission to launch financial products. So these are in the process of being rolled out; there are about ten in the innovation sandbox phase, and then the rest are in the regulatory sandbox phase,” he said.
The sandbox initiative allows all financial and technology entities to test their products in a live environment. Moreover, all financial regulators in India have enabled interoperability to facilitate faster and better testing of such products and services.
“The innovation sandbox provides very fundamental research into the new financial products you want to design for the market, but as regulatory sandboxes, where I think a financial product is ready, we provide a limited live market environment in which the product can likely be sold. tested before it goes live. So you have a very robust testing system and the IFSCA has taken the lead in this,” said Rajaraman.
He highlighted the growing popularity of GIFT City among alternative investment funds (AIFs).
“If you look at the fund ecosystem, we have 78 fund managers registered with GIFT City, and they have registered about 68 AICBs. They have a target corpus of $19 billion, of which commitments of $5 billion have been reported to us. And through these operating funds, nearly $1 billion has been invested in India,” Rajaraman said.