DOMESTIC FINANCIAL SECTOR
Domestic Financial Sector Laws in India:-
India has a good number of financial and economic laws – banking, non-banking and other sectors. While substantive law is laid down by the main statutes, procedural aspects are taken care of by subordinate legislations, which are mainly in the form of Rules, Regulations, Notifications etc. While the banking sector is regulated by the Banking Regulations Act, 1949, the Reserve Bank of India Act, 1934, the Insurance and Reinsurance sectors are governed by (i) the Insurance Act, 1938, (ii) the Insurance Regulatory and Development Authority Act, 1999, (iii) the Life Insurance Corporation Act, 1956, (iv) the Marine Insurance Act, 1963 and (v) the General Insurance (Nationalisation) Act, 1972. Non-banking financial services other than Insurance and Reinsurance, on the other hand, are regulated by the Securities and Exchange Board of India Act, 1992 and the Reserve Bank of India Act, 1934. Specific sector laws apart, laws like Foreign Exchange and Management Act, 1999, the Income Tax Act, 1962, the Customs Act, 1962, the Central Sales Tax Act, 1956 etc. are laws that apply across the board to all financial sectors. The Reserve Bank of India is the Regulator for the banking and non-banking sector; the Insurance Regulatory and Development Authority is the Regulator for the Insurance and Reinsurance Sector; the Securities and Exchange Board of India is the main Regulator of the securities and fund management market in India.
Though the different financial sectors in India are regulated by the respective sector specific statutes, the procedural details are laid down by the various Rules, Regulations, Guidelines, Notifications etc. issued by the Regulatory Bodies, which are different for the sectors.
CLG Domestic Financial Sector Practice:-
CLG has considerable expertise on a wide range of legal and regulatory issues relating to the financial sector. Our financial sector practice in India focuses on the following services:-
- Consultancy services on the domestic financial sector - anti-money laundering measures, fair lending procedures, electronic commerce, internet banking, inward and outward remittance of foreign currency etc.
- Due diligence on financial viability, liquidity status of corporate entities from the perspective of commercial ‘transactions’ in question.
- Consultancy Services on Mutual Fund, Securities, Fund Management and other non-banking financial services.
- Policy landscaping, risk management for most financial sectors.
- Representing Clients in a broad range of economic and financial issues before judicial and quasi-judicial authorities on various segments – trusts, real estates, unclaimed and abandoned property, bankruptcy, liquidation etc.
- Special expertise in winding up proceedings, financial reconstruction proceedings, debt recovery and enforcement, securitization of debts, venture capital, bank guarantee, derivatives, corporate financing, leasing and hire purchase, securities etc.
- Advising clients and has rendered services in obtaining Regulatory Clearances from nodal Agencies like the RBI, SEBI, IRDA etc.
OFFSHORE FINANCE
Offshore Financial Services and India
Offshore Financial Services Centres (‘IFSCs’) have been of great interest in the financial sector around the World. According to an IMF Report, the total cross border assets of selected ‘Offshore Financial Centers’ was about 4.6 trillion in 1999 i.e. 50% of the total cross border assets, out of which US $0.9 trillion was in the Caribbean, US$1 trillion in Asia, and most of the remaining US$2.7 trillion by the IFSCs in London, US and Japan. The main activities in an IFSC are:-
- Offshore Banking
- Offshore Insurance, Reinsurance and Captive Insurance
- Offshore Mutual Fund and Securities
- Offshore Trust and Fund Management
- Offshore Financial Consultancy Services
- Offshore Non-Banking Financial Services
On the line of IFSCs in other jurisdictions, India has conceptualized an IFSC in India by incorporating Section 18 in the Special Economic Zone Act, 2005. The IFSC sought to be established under Section 18 of the Special Economic Zone Act, 2005 would be different from other such Centers in as much as the proposed IFSC in India would be located within a Special Economic Zone.
CLG Offshore Finance Practice
CLG has extensive experience in Offshore Finance and has drafted laws for establishment of such a Center in India. Corporate Law Group has the experience of assisting the Ministry of Commerce and Industry, Govt. of India in preparing a Report on the feasibility of establishment of a full-fledged IFSC in India. As a part of this project, CLG has submitted a detailed Report on Offshore Finance to the Government of India and has submitted the following draft Regulations:-
- International Financial Services Center Regulations, India
- Offshore Mutual Fund and Securities Regulations, India
- Offshore Non-Banking financial Services Regulations, India
- Offshore Banking Regulations, India
- Offshore Insurance, Reinsurance and Captive Insurance Regulations, India
- Offshore Financial Consultancy Services Regulations, India
Apart from the above-listed involvement with the proposed IFSC in India, CLG has advised many corporate bodies on offshore financing issues and has undertaken due diligence exercises for ensuring transparency and safety in such cross-border transactions. |
