Services Sector

Services Sector

[pib] Guidelines for Other Service Providers (OSP)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Other Service Providers (OSPs), Sectors of economy

Mains level : Not Much

The Union Minister for Electronics & Information Technology has further liberalized the guidelines for Other Service Providers (OSPs).

Do you remember quaternary and quinary sectors of Economy from NCERTs?

What are OSPs?

  • These entities are business process outsourcing (BPO) organizations giving Voice based services, in India and abroad.
  • The term Business Process Outsourcing or BPO as it is popularly known, refers to outsourcing in all fields.
  • A BPO service provider usually administers and manages a particular business process for another company.
  • BPOs either use new technology or apply an existing technology in a new way to improve a particular business process.
  • India is currently the number one destination for business process outsourcing, as most companies in the US and UK outsource IT-related business processes to Indian service providers.

Main features of the liberalized guidelines

  • Distinction between Domestic and International OSPs has been removed. A BPO centre with common Telecom resources will now be able to serve customers located worldwide including in India.
  • EPABX (Electronic Private Automatic Branch Exchange) of the OSP can be located anywhere in the world. OSPs apart from utilising EPABX services of the Telecom Service Providers can also locate their EPABX at third Party Data Centres in India.
  • With the removal of the distinction between Domestic and International OSP centres, the interconnectivity between all types of OSP centres is now permitted.
  • Remote Agents of OSP can now connect directly with the Centralised EPABX/ EPABX of the OSP/ EPABX of the customer using any technology including Broadband over wireline/ wireless.
  • No restriction for data interconnectivity between any OSP centres of same company or group company or any unrelated company.

Services Sector

[pib] International Financial Services Centres Authority Bill, 2019

Note4students

Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

From UPSC perspective, the following things are important:

Prelims level: IFSC Authority Bill

Mains level: Terms of reference of the IFSC Authority


News

  • The Union Cabinet has approved establishment of a unified authority for regulating all financial services in International Financial Services Centres (IFSCs) in India through International Financial Services Centres Authority Bill, 2019.
  • The first IFSC in India has been set up at GIFT City, Gandhinagar, Gujarat.

What is an IFSC?

  1. An IFSC enables bringing back the financial services and transactions that are currently carried out in offshore financial centers by Indian corporate entities.
  2. They offer business and regulatory environment that is comparable to other leading international financial centers in the world like London and Singapore.

Why regulate IFSCs?

  1. Currently, the banking, capital markets and insurance sectors in IFSC are regulated by multiple regulators, i.e. RBI, SEBI and IRDAI.
  2. The dynamic nature of business in the IFSCs necessitates a high degree of inter-regulatory coordination.
  3. It requires regular clarifications and frequent amendments in the existing regulations governing financial activities in IFSCs.
  4. The development of financial services and products in IFSCs would require focussed and dedicated regulatory interventions.
  5. It provides world class regulatory environment to financial market participants.
  6. Further, this would also be essential from an ease of doing business perspective.

Benefits

  1. The establishment of a unified financial regulator for IFSCs will result in providing world-class regulatory environment to market participants from an ease of doing business perspective.
  2. This will provide a stimulus for further development of IFSCs in India and enable bringing back of financial services and transactions that are currently carried out in offshore financial centres to India.
  3. This would also generate significant employment in the IFSCs in particular as well as financial sector in India as a whole.

Features of IFSC Authority Bill, 2019

Management of the Authority

  • The Authority shall consist of a Chairperson, one Member each to be nominated by the RBI, the Securities Exchange Board of India SEBI, the IRDAI and the PFRDA.
  • Two members are to be dominated by the Central Government and two other whole-time or full-time or part-time members.

Functions

  • The Authority shall regulate all such financial services, financial products and FIs in an IFSC which has already been permitted by the Financial Sector Regulators for IFSCs.
  • The Authority shall also regulate such other financial products, financial services or FIs as may be notified by the Central Government from time to time.
  • It may also recommend to the Central Government such other financial products, financial services and financial institutions which may be permitted in the IFSCs.

Powers

  • All powers exercisable by the respective financial sector regulatory (viz. RBI, SEBI, IRDAI, and PFRDA etc.) under the respective Acts shall be solely exercised by the Authority in the IFSCs.
  • This is so far as the regulation of financial products, financial services and FIs that are permitted in the IFSC are concerned.

Grants by the Central Govt

  • The Central Govt. 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 utilized for the purposes of the Authority.

Transactions in foreign currency

  • The transactions of financial services in the IFSCs shall be done in the foreign currency as specified by the Authority in consultation with the Central Govt.
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