Section 38A of The General Insurance Business (Nationalisation) Act, 1972
1[38A. Powers of Insurance Regulatory and Development Authority of India not to apply to International Financial Services Centre.--Notwithstanding anything contained in any other law for the time being in force, the powers exercisable by the Insurance Regulatory and Development Authority of India under this Act,
- (a)shall not extend to an International Financial Services Centre set up under sub-section (1) of section 18 of the Special Economic Zones Act, 2005 (28 of 2005);
- (b)shall be exercisable by the International Financial Services Centres Authority established under sub-section (1) of section 4 of the International Financial Services Centres Authority Act, 2019, in so far as regulation of financial products, financial services and financial institutions that are permitted in the International Financial Services Centres are concerned.]
Summary
- The standard insurance regulator in India, the Insurance Regulatory and Development Authority of India, does not have power over certain special economic areas under this Act.
- Specifically, their powers do not extend to an International Financial Services Centre created under the Special Economic Zones Act, 2005.
- Instead, all regulatory powers over financial products, services, and institutions within these Centres are handed over to a different body.
- This replacement body is the International Financial Services Centres Authority, established under its own 2019 Act.
Practical examples
FAQ
1. Does the regular national insurance regulator control branches located in an International Financial Services Centre?
No, their powers do not apply inside those specific Centres.
2. Who is in charge of regulating insurance services inside these Centres?
The International Financial Services Centres Authority takes over those regulatory duties.
3. Does this rule override older insurance laws?
Yes, the text explicitly says this applies "notwithstanding anything contained in any other law for the time being in force".
Test yourself
Q1.Under Section 38A of The General Insurance Business (Nationalisation) Act, 1972, which entity loses its regulatory power over an International Financial Services Centre?
Q2.Under Section 38A of The General Insurance Business (Nationalisation) Act, 1972, regulatory power shifts to a new authority inside an International Financial Services Centre. If an Indian insurance company had its shares transferred to the Central Government under Section 4, and its basic functions defined by Section 18, how does Section 38A affect it if it operates inside such a Centre?
Q3.Under Section 38A of The General Insurance Business (Nationalisation) Act, 1972, which specific law is cited as the legal foundation for setting up the International Financial Services Centre itself?
Q4.Under Section 38A of The General Insurance Business (Nationalisation) Act, 1972, which entity is granted the power to regulate financial institutions permitted within the International Financial Services Centre?