The International Financial Services Centres Authority Act, 2019

--- Section 1. Section 1.Short title and commencement. --- (1) This Act may be called the International Financial Services Centres Authority Act, 2019. (2) It shall come into force on such date 1 as the Central Government may, by notification in the Official Gazette, appoint; and different dates may be appointed for different provisions of this Act, and any reference in any provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. [Footnotes] 1. 27th April, 2020 --- Sections 1 to 11 (both inclusive), 14, 15, 16, 27, 29, 30 and 34, vide notification No. S.O. 1384(E), dated 27th April, 2020, see Gazette of India, Extraordinary, Part II, sec. 3(ii). 21st August, 2020 --- Sections 12, 17 to 26 (both inclusive), 28, 31 and 32, vide notification No. S.O. 2844(E), dated 21st August, 2020, see Gazette of India, Extraordinary, Part II, sec. 3( ii ). 1st October, 2020 --- Section 13 and 33, vide notification No. S.O. 3374(E), dated 29 th September, 2020, see Gazette of India, Extraordinary, Part II, sec. 3(ii). --- Section 2. Section 2.Application. --- This Act shall apply to the International Financial Services Centres set up under section 18 of the Special Economic Zones Act, 2005 (28 of 2005). --- Section 3. Section 3.Definitions. --- (1) In this Act, unless the context otherwise requires,--- (a) "appropriate regulator" means any financial sector regulator specified in the First Schedule to this Act; (b)"Authority" means the International Financial Services Centres Authority established under sub-section (1) of section 4; (c) "financial institution" means a unit set up in an International Financial Services Centre and which is engaged in rendering financialservicesin respect of any financial product; (d) "financial product" means--- (i) securities; (ii) contracts of insurance; (iii) deposits; (iv) credit arrangements; (v) foreign currency contracts other than contracts to exchange one currency for another that are to be settled immediately; and (vi) any other product or instrument that may be notified by the Central Government from time to time. (e) "financial service" means-- (i) buying, selling, or subscribing to a financial product or agreeing to do so; (ii) acceptance of deposits; (iii) safeguarding and administering assets consisting of financial products, belonging to another person, or agreeing to do so; (iv) effecting contracts of insurance; (v) offering, managing or agreeing to manage assets consisting of financial products belonging to another person; (vi) exercising any right associated with a financial product or financial service; (vii) establishing or operating an investment scheme; (viii) maintaining or transferring records of ownership of a financial product; (ix) underwriting the issuance or subscription of a financial product; (x) providing information about a person's financial standing or creditworthiness; (xi) selling, providing, or issuing stored value or payment instruments or providing payment services; (xii) making arrangements for carrying on any of the services in sub-clauses (i) to (xi) ; (xiii) rendering or agreeing to render advice on or soliciting for the purposes of-- (A) buying, selling, or subscribing to, a financial product; or (B) availing any of the services in sub-clauses (i) to (xi) ; or (C) exercising any right associated with a financial product or any of the services in clauses (i) to (xi) ; (xiv) any other service that may be notified by the Central Government from time to time; (f) "foreign currency" shall have the meaning assigned to it in clause (m) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999); (g)"International Financial Services Centre" means an International Financial Services Centre set up, before or after the commencement of this Act, under section 18 of the Special Economic Zones Act, 2005 (28 of 2005); (h) "Member" means a Member of the Authority and includes the Chairperson; (i) "notification" means a notification published in the Official Gazette, and the expressions "notified" and "notify" shall be construed accordingly; (j) "prescribed" means prescribed by rules made by the Central Government under this Act; (k) "regulations" means the regulations made by the Authority under this Act. (2) Words and expressions used and not defined in this Act but defined in the Acts specified under column (3) of the First Schedule to this Act shall have the meanings respectively assigned to them in those Acts. --- Section 4. Section 4.Establishment and incorporation of Authority. --- (1) The Central Government shall, by notification, for the purposes of this Act, establish an Authority by the name of the International Financial Services Centres Authority. (2) TheAuthority shall be a body corporate having perpetualsuccession and a common seal, and subject to the provisions of this Act, with power to enter into and execute contracts, acquire, hold and dispose of property, both movable and immovable, and shall, by the said name, sue and be sued. (3) The head office of the Authority shall be at such place as the Central Government may, by notification,decide. (4) The Authority may, with the prior approval of the Central Government, establish its offices at other places in India or outside India. --- Section 5. Section 5.Composition of Authority. --- (1) The Authority shall consist of the following Members, to be appointed by the Central Government,namely:-- (a) a Chairperson; (b) one Member each to be nominated by-- (i) the Reserve Bank of India, ex officio ; (ii) the Securities and Exchange Board of India, ex officio ; (iii) the Insurance Regulatory and Development Authority of India, ex officio ; and (iv) the Pension Fund Regulatory and Development Authority, ex officio ; (c) two Members, from amongst the officials of the Ministry dealing with Finance, to be nominated by the Central Government, ex officio ; and (d) two other Members to be appointed by the Central Government on the recommendation of a Selection Committee. (2) The Chairperson shall be a whole-time Member and other Members referred to in clause (d) of sub-section (1) may be appointed as whole-time or part-time Members as the Central Government may deem fit. (3) The Members shall be persons of ability, integrity and standing who have shown capacity in dealing with matters relating to financial sectors or have special knowledge or experience of law,finance, economics, accountancy, administration or in any other discipline which in the opinion of the Central Government, shall be useful to the Authority. (4) The Selection Committee referred to in clause (d) of sub-section (1) shall consist of such Members and constituted by the Central Government in such manner as may be prescribed. --- Section 6. Section 6.Terms of office and conditions of service of Chairperson and other Members. --- (1) The Chairperson and a Member shall hold office for a term of three years from the date on which he enters upon his office and shall be eligible for re-appointment: Provided that no person shall hold office as a Chairperson after he has attained the age of sixty-five years or as a whole-time member after he has attained the age of sixty-two years. (2) The salaries and allowances payable to, and other terms and conditions of service of, the Members, other than ex officio Members, shall be such as may be prescribed. (3) Notwithstanding anything in sub-section (1), a Member may-- (a) resign from his office by giving in writing to the Central Government a notice of not less than three months; or (b) be removed from his office in accordance with the provisions of section 7. (4) No Member, other than ex officio Member, shall, for a period of two years from the date on which they cease to hold office as such, except with the previous approval of the Central Government, accept-- (a) any employment either under the Central Government or under any State Government; or (b) appointment in any financial institution in the International Financial Services Centres. --- Section 7. Section 7.Removal of Member from office. --- The Central Government may remove from office a Member, who-- (a) is, or at any time has been, adjudged as insolvent; or (b) has become physically or mentally incapable of acting as a Member; or (c) has been convicted of an offence which in the opinion of the Central Government involves moral turpitude;or (d) has acquired such financial or other interest as is likely to affect prejudicially his functions as a Member; or (e) hasso abused his position so asto render his continuance in office detrimental to public interest: Provided that no Member shall be removed from office under clause (d) or clause (e) unless he has been given a reasonable opportunity of being heard in the matter. --- Section 8. Section 8.Meetings of Authority. --- (1) The Authority shall meet at such times and places, and shall observe such rules of procedure in regard to the transaction of business at its meetings (including quorum at such meetings) as may be specified by regulations. (2) The Chairperson, if for any reason, he is unable to attend a meeting of the Authority, any other Member chosen by the Members present from amongst themselves at the meeting shall preside at the meeting. (3) All questions which come up before any meeting of the Authority shall be decided by a majority of votes of the Members present and voting, and, in the event of an equality of votes, the Chairperson, or in his absence, the person presiding, shall have a casting vote. (4) Any Member who has any direct or indirect interest in any matter likely to come up for consideration at a meeting of the Authority shall, as soon as possible after the relevant circumstances have come to his knowledge, disclose in writing, the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Authority and such Member shall not take part in any deliberation or decision of the Authority with respect to that matter. --- Section 9. Section 9.Vacancies, etc., not to invalidate proceedings of Authority. --- No act or proceeding of the Authority shall be invalid merely by reason of, -- (a) any vacancy or defect, in the constitution of the Authority; or (b) any defect in the appointment of a person as a member of the authority. --- Section 10. Section 10.Administrative powers of Chairperson. --- the Chairperson shall have the powers of general superintendence anddirection in respect of all administrative matters of the Authority. --- Section 11. Section 11.Officers and other employees of Authority. --- (1) the Authority may appoint such officers and other employees as it considers necessary for the efficient discharge of its functions under this act. (2) the salaries and allowances payable to, and other terms and conditions of service of, officers and other employees of the Authority appointed under sub-section (1) shall be such as may be specified by regulations. --- Section 12. Section 12.Functions of Authority. --- (1) Subject to the provisions of this Act, it shall be the duty of the Authority to develop and regulate the financial products, financial services and financial institutions in the International Financial Services Centres, by such measures as it deemsfit. (2) Without prejudice to the generality of the provisions in sub-section (1), the powers and functions of the Authority shall include-- (a) regulating the financial products, financial services and financial institutions in an International Financial Services Centre which have been permitted, before the commencement of this Act, by any regulator for any International Financial Services Centre; (b) regulating such other financial products, financial services or financial institutions in the International Financial Services Centres as may be notified by the Central Government from time to time; (c) recommending to the Central Government such other financial products, financial services and financial institutions which may be permitted in an International Financial Services Centre by the Central Government; (d) perform such other functions as may be prescribed. --- Section 13. Section 13.Powers of Authority in relation to financial products, financial services and financial institutions. --- (1) Notwithstanding anything contained in any other law for the time being in force, all powers exercisable by an appropriate regulator, specified under column (2) of the First Schedule, under the respective Acts as specified in the corresponding entry under column (3) of the said Schedule shall, in the International Financial Services Centres, be exercised by the Authority in so far as it relates to the regulation of the financial products, financial services or financial institutions, as the case may be. (2) The Central Government may, by notification, amend the First Schedule by including therein any financial sector regulator and the law administered by it, or omitting therefrom any financial sector regulator or any law specified therein, and on the publication of such notification, such regulator and the law shall be deemed to be included in, or omitted from, the First Schedule. (3) Every notification issued under sub-section (2) shall be laid before each House of Parliament. (4) For the purposes of sub-section (1), the provisions of the respective Acts specified under column (3) of the First Schedule relating to-- (a) the manner of filing an application for recognition or registration or withdrawal of recognition or registration or furnishing of information or reports; (b) the procedure of inspection, investigation or prosecution of offences, settlement of civil and administrative proceedings, compounding or adjudication of any offence or penalty, or actions to be taken in furtherance of such inspection, investigation, or adjudication or filing of appeals arising therefrom; (c) the determination or settlement, as the case may be, of any fee or fine or penalty or any other sum of amount or punishment for the contravention of any provisions of respective Acts specified in the First Schedule and recovery of such fine or penalty, shall, mutatis mutandis , apply to financial products, financial services and financial institutions under this Act, as they apply to the financial products, financial services and financial institutions under such respective Acts. (5) The penalties, fines, fees and settlement amounts shall be collected or realised in the foreign currency equivalent of the penalty or fine imposed. Explanation. --The rate of exchange for computing the foreign currency equivalent to Indian rupees shall be such as are as notified by the Reserve Bank of India on the date of the order imposing the penalty or fine, as the case may be. (6) All sums realised by way of penalties or fines under this Act shall be credited to the Consolidated Fund of India in Indian rupees. (7) The Authority may, in addition to the above, specify by regulations the manner in which the functions may be performed by the Authority for carrying out the provisions of this section. --- Section 14. Section 14.Grants by Central Government. --- The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the Authority grants of such sums of money as the Central Government may think fit for being utilised for the purposes of this Act. --- Section 15. Section 15.Fund of Authority. --- (1) There shall be constituted a Fund to be called the International Financial Services Centres Authority Fund and there shall be credited thereto-- (a) all grants, fees and charges received by the Authority under this Act; and (b) all sums received by the Authority from the sources as may be decided upon by the Central Government. (2) The Fund shall be applied for meeting-- (a) the salaries, allowances and other remuneration of Members, officers and other employees of the Authority; and (b) other expenses incurred by the Authority in connection with the discharge of its functions and for the purposes of this Act. --- Section 16. Section 16.Accounts and audit. --- (1) The Authority shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such form as may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India. (2) The accounts of the Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Authority to the Comptroller and Auditor-General of India. (3) The Comptroller and Auditor-General of India and any other person appointed by him in connection with the audit of the accounts of the Authority shall have the same rights and privileges and authority in connection with such audit as the Comptroller and Auditor-General of India generally has in connection with the audit of the Government accounts and, in particular, shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect any of the offices of the Authority. (4) The accounts of the Authority as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament. --- Section 17. Section 17.Performance Review Committee. --- (1) The Authority shall constitute a Performance Review Committee, consisting of at least two Members of the Authority to review the functioning of the Authority, whether-- (a) it has adhered to the provisions of the applicable laws while exercising powers or performing functions under this Act; (b) the regulations made by the Authority to give effect to the provisions of this Act promote transparency and best practices of governance; and (c) the Authority is managing risks to its functioning in a reasonable manner. (2) The Performance Review Committee shall make the review under sub-section (1) at least once in every financial year, and submit a report of its findings to the Authority which shall forward a copy thereof along with action taken, if any, pursuant to such report to the Central Government within a period of three months from the date of receipt of the report. (3) The Performance Review Committee shall maintain a system by which any person may submit to the committee, any incidence of-- (a) non-adherence of the provisions of any applicable law by the Authority; (b) misappropriation of resources of the Authority by any person; (c) abuse of powers of the Authority by any Member or employee of the Authority; or (d) non-compliance of any decision of the Authority by any Member or employee of the Authority. (4) The Authority shall make regulations governing the information to be provided to the Performance Review Committee, and the provision of adequate resources to enable the committee to discharge its functions under this section. --- Section 18. Section 18.Maintenance of website. --- (1) The Authority shall maintain such website or any other universally accessible repository of electronic information as may be specified by regulations. (2) All the regulations and orders issued by the Authority shall be published in its website or repository maintained under sub-section (1). (3) The Authority shall review the quality of the website or the repository, based on international best practices, once every year and publish the report containing its findings with the annual report. --- Section 19. Section 19.Returns and reports. --- (1) The Authority shall furnish to the Central Government at such time and in such form and manner as may be prescribed or as the Central Government may direct, such returns and statements and such particulars with regard to any proposed or existing programme for the development and regulation of the units in the International Financial Services Centres, as the Central Government may, from time to time, require. (2) Without prejudice to the provisions of sub-section (1), the Authority shall, within ninety days after the end of each financial year, submit to the Central Government, a report in such form, as may be prescribed, giving a true and full account of its activities, policies and programmes during the previous financial year. (3) A copy of the report received under sub-section (2) shall be laid, as soon as may be after it is received, before each House of Parliament. --- Section 20. Section 20.Transactions in foreign currency. --- Every transaction of financial services in an International Financial Services Centre shall be in such foreign currency as may be specified by regulations in consultation with the Central Government. --- Section 21. Section 21.Power to issue directions. --- (1) Without prejudice to the foregoing provisions of this Act, the Authority shall, in exercise of its powers or the performance of its functions under this Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time: Provided that the Authority shall, as far as practicable, be given an opportunity to express its views before any direction is given under this sub-section. (2)The decision of the Central Government, whether a question is one of policy or not, shall be final. --- Section 22. Section 22.Power of Central Government to supersede Authority. --- (1) If at any time the Central Government is of the opinion that--- (a) on account of circumstances beyond the control of the Authority, it is unable to discharge the functions or perform the duties imposed on it by or under this Act; or (b) the Authority has persistently defaulted in complying with any direction given by the Central Government under this Act or in the discharge of the functions or performance of the duties imposed on it by or under this Act and as a result of such default the financial position of the Authority or the administration of the Authority has deteriorated; or (c) circumstances exist which render it necessary in the public interest so to do, the Central Government may, by notification and for reasons to be specified therein,supersede the Authority for such period, not exceeding six months, as may be specified in the notification: Provided that before issuing any such notification, the Central Government shall give a reasonable opportunity to the Authority to make representations, if any, of the Authority. (2) Upon the publication of a notification under sub-section (1) superseding the Authority,--- (a) the Chairperson and other Members shall, as from the date of super session, vacate their offices as such; (b) all the powers, functions and duties which may, by or under this Act, be exercised or discharged by or on behalf of the Authority shall, until the Authority is reconstituted under sub-section (3) , be exercised and discharged by such person or persons as the Central Government may direct; and (c) all properties owned or controlled by the Authority shall, until the Authority is reconstituted under sub-section (3) , vest in the Central Government. (3) On or before the expiration of the period of super session specified in the notification issued under sub-section (1) , the Central Government shall reconstitute the Authority by a fresh appointment of its Chairperson and other Members and in such case any person who had vacated his office under clause (a) of sub-section (2) shall not be deemed to be disqualified for reappointment. (4) The Central Government shall, as soon as may be, cause a copy of the notification issued under sub-section (1) and a full report to any action taken by it, to be laid before each House of Parliament. --- Section 23. Section 23.Delegation of powers. --- (1) The Authority may, by general or special order in writing, delegate to any Member or officer of the Authority subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act (except the powers under section 28) as it may deem necessary. (2) The Authority may, by a general or special order in writing, also form committees of the Members and delegate to them the powers and functions of the Authority, as may be specified by regulations. --- Section 24. Section 24.Members, officers and employees of the Authority to be public servants. --- The Members, officers and employees of the Authority shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Act, to be public servants within the meaning of section 21 of the Indian PenalCode (45 of 1860). --- Section 25. Section 25.Protection of action taken in good faith. --- No suit, prosecution or other legal proceedings shall lie against the Central Government or the Authority or its Members, officers or other employees, for anything which is done, or intended to be done, in good faith under this Act. --- Section 26. Section 26.Exemption from tax. --- Nothing contained in any other law or enactment for the time being in force, in relation to taxation, including the Income-tax Act,1961 (43 of 1961),shall make the Authority liable to pay income-tax or any other tax or duty with respect to its income, services or profits or gains. --- Section 27. Section 27.Power to make rules. --- (1) The Central Government may, by notification, make rules for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-- (a) the composition and the manner of constitution of the Selection Committee under sub-section (4) of section 5; (b) the salaries and allowances and other terms and conditions of service of Members under sub-section (2) of section 6; (c) other functions to be performed by the Authority under clause (d) of sub-section (2) of section 12; (d) the form in which the accounts and other relevant records to be maintained and annual statement of accounts to be furnished under sub-section (1) of section 16; (e) the form and manner of furnishing of returns and statements and other particulars under sub-section (1) of section 19; (f) the form of annual report of activities, policies and programmes under sub-section (2) of section 19; (g) any other matter which is to be, or may be, prescribed. --- Section 28. Section 28.Power to make regulations. --- (1) The Authority may, by notification, make regulations consistent with this Act and the rules made thereunder for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:-- (a) the time and place of meetings and the rules of procedure in regard to transaction of business at such meetings under sub-section (1) of section 8; (b) the salaries and allowances and other terms and conditions of service of officers and other employees of Authority under sub-section (2) of section 11; (c) the manner in which the Authority may perform its functions under sub-section (7) of section 13; (d) the manner of providing information to the Performance Review Committee under sub-section (4) of section 17; (e) the maintenance of the website or any other universally accessible repository of electronic information under sub-section (1) of section 18; (f) the foreign currency in which transaction of financial services in International Financial Services Centres may be conducted under section 20; (g) the powers and functions of the Authority which may be delegated under sub-section (2) of section 23; (h) any other matter which is required to be or may be, specified by regulations. --- Section 29. Section 29.Rules and regulations to be laid before Parliament. --- Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. --- Section 30. Section 30.Overriding effect. --- The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. --- Section 31. Section 31.Power to modify provisions of other enactments in relation to International Financial Services Centres. --- (1) The Central Government may, by notification, direct that any of the provisions of any other Central Act or any rules or regulations made thereunder or any notification or order issued or direction given thereunder (other than the provisions relating to making of the rules or regulations) specified in the notification-- (a) shall not apply to financial products,financial services or financial institutions, as the case may be, in an International Financial Services Centre; or (b) shall apply to financial products, financial services or financial institutions, as the case may be, in an International Financial Services Centre with such exceptions, modifications and adaptations, as may be specified in the notification. (2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses. --- Section 32. Section 32.Power to remove difficulties. --- (1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, published in the Official Gazette, make such provisions not inconsistent with the provisions of this Act as may appear to be necessary for removing the difficulty: Provided that no order shall be made under this section after the expiry of five years from the commencement of this Act. (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament. --- Section 33. Section 33.Amendment to certain enactments. --- The enactments specified in the Second Schedule shall be amended in the manner specified therein. --- Section 34. Section 34.Savings. --- All rules and regulations made or purporting to have been made or all notifications issued or purporting to have been issued under any Central Act relating to the financial products, financial services or financial institutions, as the case may be, shall, in so far as they relate to matters for which provision is made in this Act or the rules or regulations made or notification issued thereunder and are not inconsistent therewith, be deemed to have been made or issued under this Act as if this Act had been in force on the date on which such rules were made or notifications were issued and shall continue to be in force unless and until they are superseded by any rules or regulations made or notifications issued under this Act.