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The International Financial Services Authority has issued a discussion paper to seek comments and opinions of the general public on the new IFSCA (Preparation & Presentation of Financial Statements of IIOS) Regulations, 2022. IFSCA is the unified regulator for maintaining the development and regulation of fintech and financial products in the Indian Market. To facilitate the growth and maintenance of the regulatory framework in the insurance and reinsurance sector, IFSCA, from time to time, has issued various regulations. To maintain a healthy business environment and strengthen the industry’s regulatory framework, IFSCA has prepared a comprehensive guideline for the Preparation and Presentation of Financial Statements of IIOs operating in India or abroad.
The provisions in these regulations apply to the International Financial Service Centre Insurance Offices (IIOs) registered with IFSCA under the IFSCA (Registration of Insurance Business) Regulations 2021. The objective behind the development and regulation of these broad guidelines is to put in place the process of preparation and presentation of Financial statements of IIOs.
The key definitions put forth in the draft regulations are as follows;
An insurance contract refers to the mutual understanding between the parties, under which one party (insurer) accepts significant insurance risk from another party (the policyholder) under which it agrees to pay the second party the agreed sum of money that is agreed on the happening of an uncertain event in the future.
A parent entity is defined as a company that holds and manages the function of the IIOs that are unincorporated with IFSCA. In the case of an unincorporated IIO, the rules and regulations followed by the parent company are preferred over the regulations set for the IIOs incorporated by the IFSCA.
The first chapter of the draft regulations deals with the general instructions for preparing and presenting Financial Statements of IIOs.
Chapter 3 of the draft resolution provides the following guidelines for the financial statements of IIOs;
Chapter 4 of the draft regulations provides the following regulations;
The authority has the power to notify and specify procedures, norms, processes and manners of compliance to the IIOs for implementation, facilitation, regulation and presentation of financial statements of IIOs.
The authority shall have the power to investigate the day-to-day affairs of the IIOs, including the parent entity of unincorporated IIOs, for any information or disclosures to be made in the financial statements of IIOs.
These draft regulations are places on the website of IFSCA to invite comments and suggestions from the General Public and various stakeholders. Suggestions are invited till 12th December 2022 in the manner prescribed in the draft regulations. These guidelines will encourage the preparation and preparation of financial statements of IIOs procedurally in line with best international practices, which will bring about much-needed transparency in the financial reporting of the IIOs. The financial statement mentioned in the draft regulations shall be prepared by the end of each financial year by the IIO, with comparative data from each preceding year for a better presentation of the financial records.
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