Welcome to India Juris, IFSCA Newsletter. For the ease of readers and to keep them updated on Indian legal position on the subject of IFSCA, we endeavour to provide summaries of different circulars issued by the IFSCA in the first week of April 2025.
International Financial Services Centres Authority (“IFSCA”) issued this circular on 04.04.2025 in exercise of the powers conferred on it by Section 28(1) read with Section 12(1) and Section 13(1) of the International Financial Services Centres Authority Act, 2019 (“IFSCA Act”). This circular refers to the Finance Company Regulations, 2021, which allow Finance Companies/Units in IFSCs to undertake specified activities, including Global/Regional Corporate Treasury Centres (GRCTC). The framework is effective from the date of issuance of this circular, i.e., 04.04.2025.
This circular supersedes the earlier framework issued on June 25, 2021, namely, Framework for undertaking Global/Regional Corporate Treasury Centres Activities by Finance Company/Finance Unit in IFSC’. It aims to promote ease of doing business and align with international best practices.
This updated framework applies to (i) Entities seeking registration as Finance Companies/Units under FC Regulations to undertake GRCTC activities; and (ii) Already registered Finance Companies/Units planning to engage in GRCTC activities.
Provisions relating to Registration:
1. Conditions for Grant of Registration
To apply for GRCTC registration, the applicant must:
🔸 Apply as a Finance Company/Unit under Regulation 3(4) of the FC Regulations.
🔸 Have or plan to establish required infrastructure in IFSC.
🔸 Employ at least 5 qualified staff (including Head of Treasury and Compliance Officer).
🔸 Meet owned fund requirements (USD 0.2 million).
🔸 Be from a FATF-compliant jurisdiction.
🔸 Ensure “fit and proper” status of key persons.
🔸 Not have been refused registration in the past year.
2. Application for Registration
The Application must be submitted via SWIT portal at https://swit.ifsca.gov.in/. Along with the Application, a list of its Service Recipients must be provided.
3. Legal Form
The Application must be a company or branch of a company incorporated in India or outside India to be set up in IFSC.
4. Owned Fund Requirements
The Applicant shall have a minimum USD 0.2 million owned fund maintained at all times. In case of Finance Units undertaking the activity of GRCTC, they are required to maintain the fund at the parent level.
5. Fit and Proper Criteria
The Relevant Persons must comply with “fit and proper” criteria as specified in Annex I of the Framework.
6. Provisional Registration
Provisional Registration may be granted if initial conditions are met. However, this does not guarantee final registration.
7. Grant of Registration
The final certificate is issued after satisfying all conditions and payment of fee. The Applicant can conduct business only after receiving the certificate and maintaining a valid Letter of Approval (LoA) under the SEZ Act, 2005.
8. Commencement of Operations
The Finance Company/Finance Unit must begin operations within 6 months from the date of grant of Certificate of Registration.
Governance Requirements & Miscellaneous
1. Corporate Governance Policy: It must be Board-approved and should define governance arrangements and roles of the Board and senior management.
2. Risk Management Policy: It must be a Board-approved policy and must cover systems to identify, assess, and manage all risks related to GRCTC activities.
3. Policy for Permissible Activities: It must be Board-approved and should include, (i) Approval process and delegation; (ii) Financial limits; (iii) Oversight/audit procedures; and (iv) Other control mechanisms.
4. Review of Policies: All key policies must be periodically reviewed by the Board.
5. Change in Control or Ownership: This requires prior approval from the Authority if 20% or more shareholding/control changes.
6. Currency of Operations
🔸 Transactions in IFSC must be in Specified Foreign Currencies.
🔸 Outside IFSC, other currencies may be used.
🔸 SNRR (Special Non-resident Rupee) accounts may be opened outside IFSC for business transactions.
🔸 Clarification: Transactions denominated in other currencies but settled in a Specified Foreign Currency are valid.
7. AML/CFT/KYC Compliance: The Finance Company undertaking the activity of GRCTC must comply with the IFSCA AML/CFT/KYC Guidelines, 2022 and related circulars, including exemptions dated 18.11.2024 (where applicable).
8. Fees
🔸 Application Fee: USD 1,000 (one-time)
🔸 Registration Fee: USD 12,500 (one-time)
🔸 Recurring Annual Fee: USD 25,000
🔸 Payment has to be made as per IFSCA circular dated 17.05.2023.
🔸 No separate fees if a Finance Company/ Finance Unit is already registered under the IFSCA (Registration of Factors and Registration of Assignment of Receivables) Regulations, 2024.
On and from the date of issuance of this Framework, the earlier GRCTC Circular dated 25.05.2021 is repealed. The Existing entities must comply with this new framework within 6 months.
IFSCA Circular (F. No 172/ IFSCA/Finance Company Regulations/2021-22/9 dated 09.08. 2021) updated as on 04.04.2025
Vide a circular dated 04.04.2025, IFSCA issued Guidelines on Corporate Governance and Disclosure Requirements for a Finance Company to strengthen corporate governance, transparency, and accountability in Finance Companies operating in International Financial Services Centres (IFSCs), ensuring long-term sustainability and stakeholder confidence.
This circular applies to all Finance Companies registered under IFSCA (Finance Company) Regulations, 2021, except for a Finance Company engaged in Corporate Treasury Centre activities.
Key Guidelines:
1. Corporate Governance Framework
🔸 Must be Board-approved and regularly reviewed.
🔸 Disclosures in line with Companies Act, 2013 and public reporting via website/Annual Report.
2. Fit & Proper Criteria for Board Members
🔸 Due diligence on appointment and periodic verification.
🔸 Annual declarations to be submitted to IFSCA.
3. Board of Directors
🔸 Should include experts in finance, law, and business.
🔸 Directors must sign a Deed of Covenants affirming integrity, independence, compliance, and oversight.
4. Compliance Officer
🔸 Senior-level executive reporting directly to the Board.
🔸 Responsible for regulatory compliance and internal policy enforcement.
5. Board Committees
🔸 Audit, Risk, Remuneration, and Stakeholder committees to be formed as needed based on complexity.
6. Related Party Transactions
🔸 Governed by a Board-approved policy; subject to periodic review.
7. Disclosure Requirements
🔸 To Board: Strategic plans, significant events, director changes, governance matters.
🔸 Website/Annual Report: Corporate structure, governance reports, policies.
🔸 Financial Statements:
- Financial ratios (RoA, RoE), provisioning details
- Ownership structure, off-balance exposures
- NPAs, fines/penalties, regulatory disclosures
These guidelines are enforceable under Section 12 of the IFSCA Act, 2019.
IFSCA Circular (F. No. 172/IFSCA/Finance Company Regulations/2025-26/01) dated 04.04.2025
The IFSCA issued a circular on Amendment to the ‘Guidelines on Corporate Governance and Disclosure Requirements for a Finance Company’ to amend the applicability clause in the earlier issued “Guidelines on Corporate Governance and Disclosure Requirements for a Finance Company” (originally issued on August 9, 2021), in line with updated IFSCA Finance Company Regulations (amended up to July 1, 2022) and the newly introduced Framework for Global/Regional Corporate Treasury Centres (G/RTC) dated 04.04.2025.
This circular is issued under Sections 12 and 13 of the IFSCA Act, 2019, which empowers the authority to develop and regulate financial services and entities in IFSCs.
Key Amendments:
Clause 3 (Applicability) – Replaced With:
3.1 Generic Guidelines (Part I):
🔸Applicable to all Finance Companies registered under Regulation 3 of the IFSCA Finance Company Regulations,
🔸Excludes companies solely registered for Global/Regional Corporate Treasury Centre (G/RTC) activities.
3.2 Detailed Guidelines (Part II):
🔸Applicable to Finance Companies registered under Regulation 3 that intend to undertake one or more core activities (with or without non-core activities),
🔸Also excludes companies solely involved in G/RTC activities.
The amendments come into immediate effect upon issuance of the circular i.e., 04.04. 2025.
IFSCA Circular (IFSCA-LPRA/9/2024- Legal and Regulatory Affairs) dated 03.04.2025
The IFSCA has issued a circular directing all regulated entities in the IFSC to ensure they hold valid licenses, registrations, or authorization certificates as per IFSCA Act, 2019 and a valid Letter of Approval (LoA) under the SEZ Act, 2005.
Key Points:
1. Mandatory Valid Documents: Entities must always have valid Certificate of Registration, licenses, approvals, or equivalent documents, along with the Letter of Approval under the SEZ Act, 2005.
2. Expiry and Renewal: Failure to renew the LoA (having validity of 1 year, if business not commenced or 5 years, after commencement of business) may lead to enforcement actions, including cancellation of licenses.
3. Compliance Requirement: These conditions are part of the terms for all past CoRs/licenses/approvals issued. Non-compliance may result in regulatory actions.
4. Immediate Effect: The circular is effective immediately, and entities must comply to avoid operational disruptions or sanctions.
IFSCA Circular (F. No. IFSCA-IF-10SUP/1/2024-Capital Markets) dated 03.04.2025
The IFSCA has issued a circular regarding the revision of reporting formats for Fund Management Entities (FMEs) in IFSC. This circular has been issued under Sections 12 & 13 of the IFSCA Act, 2019, and Regulation 120 of the IFSCA (Fund Management) Regulations, 2025.
Vide a circular dated 31.05.2023, reporting norms were initially specified for Fund Management Entities and were further amended vide circular dated 03.11.2023 modifying the frequency of reporting from half-yearly to quarterly.
Key Points:
1. The reporting formats have been revised (i) To capture detailed information on Retail Schemes; (ii) Include granular data for supervisory purposes; (iii) Provide clearer guidance through restructured tables and notes; and (iv) Align with the new IFSCA (Fund Management) Regulations, 2025.
2. The updated reporting formats are available on the IFSCA website under the “Downloads” section: IFSCA Downloads so that FMEs are able to access the updated formats for future filings to ensure compliance.
IFSCA Circular (IFSCA-FMPP0BR/12/2023-Banking-Part(2) – PSO/001) dated 02.04.2025
The IFSCA has issued a circular outlining the fee structure for Payment System Operators (PSOs) and applicants wishing to set up PSOs in IFSCs. This circular is issued under Regulation 6(2) and 12(2) of the IFSCA (Payment and Settlement Systems) Regulations, 2024, read with Clause 6(iii) of the circular dated 17.05.2023 on Fee Structures for the entities undertaking or intending to undertake permissible activities in IFSC. The circular is effective immediately.
1. Fee Structure for PSOs:
🔸Application Fees: $1,000 (flat rate for all types)
🔸Authorization Fees: Vary based on the activity type (e.g., $5,000 for Trade Repository, $15,000 for Card Payment Networks)
🔸Annual Licensing Fees: Ranges from $5,000 to $15,000
🔸Activity-Based Fees: 20% of the Authorization Fee (e.g., $2,500)
🔸Modification & Waiver Fees: Additional charges for substantive changes or waivers (specific amounts not detailed)
2. Types of PSOs Covered:
🔸Real-time/Deferred Large Value Payment Systems
🔸Trade Repositories
🔸Legal Entity Identifier (LEI) Issuers
🔸Card Payment Networks
🔸TREDS Platforms (under Payment and Settlement Systems Act, 2007)
🔸Other PSOs
All other provisions from the Circular dated 17.05.2023 on fee structures remain applicable. This structure ensures clarity on the financial obligations for PSOs and applicants operating within IFSCs.
Disclaimer: The information published in the above newsletter is collected from various sources in electronic medium and analyzed by the firm. The reader is advised to consult the attorney qualified in their jurisdiction, before acting on any information contained in this newsletter. India Juris excepts no liability what so ever in this regard.
