The International financial service centre in the country needs to transform as a hub for international transactions for better economic development. Elucidate (200 Words)
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IAS Parliament 4 years
KEY POINTS
· International finance no longer depends on physical amenities, as people with expertise may already be working digitally from remote locations.
· In 2015, the financial sector provided 5 million jobs and 5% of India’s gross domestic product (GDP).
· With the right plan and the right incentives, it is possible to increase the GDP contribution of financial services to 15% and employment to 11 million.
· A recent report published by the Global Financial Centres Index ranks GIFT City third among 15 centres that could grow in significance over the next few years.
· The base of this digital superstack has to be an Indian custodian bank that can provide global wealth management services in an investor’s currency of choice.
· This would be possible if India’s banking regulator, the Reserve bank of India, allows Indian custodian bank licences under a new differentiated bank licensing scheme.
· Businesses such as re-insurance, insurance, banking services, and investment in equities and commodities will be transacted through this digital superstack.
· Intermediaries (banks, custodians, brokers and fund managers) in India should be allowed to set up branches in GIFT City after applicable regulatory clearances.
· These branches will specifically cater only to foreign or overseas investors and work through the digital superstack.
