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The Indian government plans to ease rules for finance companies in GIFT City, its International Financial Services Centre, to boost financial activity and global appeal. The Ministry of Corporate Affairs has proposed extending regulatory exemptions under Section 186 of the Companies Act, 2013-currently given to RBI-registered NBFCs-to firms registered with the International Financial Services Centres Authority (IFSCA). Section 186 governs limits on inter-corporate loans, guarantees, and investments. This change would make it easier for GIFT City firms to borrow and lend across companies. Public feedback is open until mid-July. The move aims to strengthen GIFT City's competitiveness as a global financial hub.
The Indian government, through the Ministry of Corporate Affairs, is preparing to ease regulations for finance companies operating within GIFT City, its International Financial Services Centre. This initiative, with public feedback invited until mid-July, aims to stimulate financial activity and make it a more attractive global hub. Advertisement
The Ministry of Corporate Affairs (MCA) has proposed amending specific board rules. This amendment seeks to extend exemptions similar to those enjoyed by non-banking finance companies (NBFCs) under Section 186 of the Companies Act, 2013, to finance companies registered with the International Financial Services Centres Authority (IFSCA). Section 186 of the Companies Act, 2013, governs the limits and requirements for inter-corporate loans, guarantees, and investments made by companies.
Currently, only NBFCs registered with the Reserve Bank of India (RBI) and actively involved in lending or providing loan guarantees are largely exempt from most requirements of this section. The proposed change aims to grant this special dispensation to finance companies operating within GIFT City. This move is expected to significantly ease inter-corporate borrowings for firms, thereby boosting overall financial activity.
The MCA has consulted with the Department of Economic Affairs, RBI, and IFSCA regarding this proposal. The IFSCA, a statutory authority, is responsible for developing and regulating financial products, services, and institutions within IFSCs like GIFT IFSC.
The relaxation of these rules is anticipated to significantly benefit firms at GIFT City in Gujarat, enhancing its appeal as a financial center and contributing to its growth as a global hub. Such policy adjustments are crucial for GIFT City to compete effectively with established international financial centers and attract foreign investment.
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