Who among the following was the Head of the Expert Committee on Variable Capital Company in India which has submitted its report recently?

Correct — A, K. P. Krishnan. The International Financial Services Centres Authority set up an expert committee to examine whether the Variable Capital Company could be brought into Indian law for the international financial services centre at GIFT City, and the committee was headed by K. P. Krishnan, a former civil servant long associated with financial sector reform. Its report recommended enabling the structure so that funds set up in the centre could operate with the flexibility their competitors abroad already had.

• (b)Ketan Dalal — A well-known tax practitioner, of the kind such a committee draws on for its membership, but not the head of this one.
• (c)J. Ranganayakulu — A securities-law specialist who has served in senior legal roles in market regulation. Again a plausible member and not the chair.
• (d)Bobby Parikh — A tax and financial services adviser. The option set is built from practitioners in the same field, so only the chair's name distinguishes the answer.

A Variable Capital Company is a corporate form designed for investment funds. Its share capital moves up and down as investors subscribe and redeem, which an ordinary company's capital cannot easily do, and it can hold several sub-funds under one roof with the assets and liabilities of each kept legally separate. Singapore and Luxembourg have long had versions of it, and the absence of an equivalent in India was one reason fund managers set up offshore.

Committee questions are among the least rewarding to memorise and among the most commonly asked, so the practical approach is to hold the subject and the chair together rather than the whole membership. What is worth carrying from this one is the policy problem it addressed. Since the report, the International Financial Services Centres Authority has issued its own fund management regulations for GIFT City, which took much of the same ground forward.

• The International Financial Services Centres Authority was established in 2020 as the unified regulator for the GIFT City centre.
• The expert committee on the Variable Capital Company reported to that authority and was headed by K. P. Krishnan.
• A Variable Capital Company allows share capital to expand and contract with subscriptions and redemptions.
• It permits sub-funds whose assets and liabilities are segregated from one another.
• Singapore and Luxembourg operate comparable structures, which is why Indian fund managers had been setting up abroad.

• Memorising committee members instead of the chair and the subject.
• Confusing the Variable Capital Company with a variable capital requirement for banks.

A committee-chair recall item, with an option set of specialists from the same field.

No directly related past PYQ was found.

• practice — not a real PYQ

  The International Financial Services Centres Authority regulates financial services in which centre?

  • (a)GIFT City, Gandhinagar
  • (b)Bandra Kurla Complex, Mumbai
  • (c)Cyber City, Gurugram
  • (d)Hitec City, Hyderabad

  Answer(a) GIFT City, Gandhinagar — the authority was set up in 2020 as its unified regulator.

• practice — not a real PYQ

  The distinguishing feature of a Variable Capital Company is that

  • (a)Its share capital expands and contracts with subscriptions and redemptions
  • (b)It is exempt from all taxation
  • (c)It can be formed only by foreign nationals
  • (d)It cannot hold more than one class of asset

  Answer(a) Its share capital expands and contracts with subscriptions and redemptions — the flexibility an investment fund needs.