Business Standard February 23, 2016

GIFT to create regulatory crisis for RBI, SEBI: Mistry

The empowered committee responsible for the report on developing Mumbai as an IFC has strong reservations of the Central government’s proposal of pursuing the model followed in development of GIFT City without basic infrastructure and regulatory framework.

The chairman of the committee Percy Mistry was interacting with media during the Make in India Week at Mumbai wherein GIFT City and Mumbai were promoted as an IFC. Mr. Mistry emphasized that the emotive exuberance is concealing the underlying policy failures and the foundational deficiencies in the Indian financial and economic system with the help of advertising slogans and mega events which actually distract attention from real problems.

Mr. Percy feels that the GIFT project is like some of the other big-bang projects like Make in India, Swacchh Bharat, Connect India, Digital India, Support Start-ups which have become gospel in the recent past. He feels that GIFT city project is a non-starter and it can succeed by arm-twisting and the domestic and foreign financial institutions are forced to act to please the authorities.

It is believed that both RBI and SEBI will have a real tough time to deal effectively with the arbitrage problems which GIFT City will generate.

The MIFC report in 2007 had clearly argued against the setting up of an ‘Offshore Financial Centre’ or OFC in India on the lines of Dubai, the Cayman Islands or Mauritius. GIFT City is now opening up the similar setup of the OFC wherein the financial institutions can setup and operate in an off-shore financial regime which will be differently regulated from the domestic regime in India.





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