The International Financial Services Centres Authority (“IFSCA”) approved a range of regulatory amendments and new frameworks aimed at enhancing the ease of doing business and strengthening the regulatory ecosystem at GIFT-IFSC. Key decisions include:
- IFSCA (Registration of Insurance Business) Regulations, 2021 (As Amended Up To 08-Jan-2026)
- IFSCA (AML, CFT and KYC) Guidelines, 2022 – updated as on February 26, 2026
- Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC or persons seeking guidance under the Informal Guidance Scheme
- IFSCA (Registration of Insurance Business) Regulations, 2021
The IFSCA (Registration of Insurance Business) Regulations, 2021 as amended upto Jan. 08, 2026. It substitutes the definition for “Service Companies of Lloyd’s IFSC” present in the Second Schedule of the principal 2021 regulations. Service Companies of Lloyd’s IFSC are specialized entities registered in India that are established to facilitate the insurance and reinsurance operations of Lloyd’s of London underwriters within the GIFT International Financial Services Centre.
According to the 2026 regulatory framework, these companies can be promoted by the following eligible entities:
- Group Entities: Subsidiary or associated entities of either Managing Agents or Members of Lloyd’s, provided they have permission from Lloyd’s.
- Members of Lloyd’s: The actual capital providers for Lloyd’s syndicates, which may include body corporates or Indian persons.
- Indian Companies: Domestic firms that meet the specific criteria defined within the IFSCA regulations.
The definition was significantly expanded in 2026 to include “Members of Lloyd’s” and their “group entities,” a move designed to provide greater structural flexibility for large global insurance groups. This allows these international participants to establish a presence in GIFT City using corporate structures that align with their existing global models, ultimately helping to onshore reinsurance activities and deepen the specialized insurance ecosystem in India.
- IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022
The amendment to the IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, introduced via the circular dated February 26, 2026, adds “(e) OTP based Aadhaar e-KYC authentication,” under Clause 1.2.2 of Part-A of Annexure-II of the guidelines. This widens the permissible methods that an authorized official of a Regulated Entity can use to obtain identification information during a video-based onboarding session. Earlier, the guidelines primarily focused on “Offline Verification of Aadhaar” and other manual document captures. This addition reduces the operational cost, enhances ease of doing business and facilitates seamless onboarding of customers.
- Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC or seeking guidance under the Informal Guidance Scheme
The transition from the 2025 to the 2026 fiscal framework marks a significant milestone in the maturity of the IFSCA regulatory ecosystem. The revised structure reflects a strategic shift from rigid, headcount-based models toward more equitable, turnover linked, and activity specific fee categories.
I. Structural Redefinitions and General Provisions
A fundamental change in the 2026 framework is the bifurcation of “Late Fees.” While the 2025 structure grouped all delays under a single heading, the 2026 circular distinguishes between financial delinquency and administrative negligence:
- Interest on Delay in Payment: Strictly defined as a simple interest of 0.75% per month on outstanding dues.
- Charges for Delay in Submission: Set at USD 100 per month for each instance of delayed reports or returns. Crucially, these charges now apply separately to each activity undertaken by a Regulated Entity, significantly increasing the cost of negligence for diversified institutions.
The 2026 framework also introduces more equitable refund policies. Unlike the 2025 stance, where fees were entirely non-refundable, the 2026 structure allows for pro-rata refunds of recurring fees upon the voluntary surrender of a license. Additionally, the reference rate for Indian applicants paying in INR has shifted from the RBI reference rate to the Financial Benchmarks India Pvt. Ltd. (FBIL) reference rate.
II. Banking and Capital Markets: Scaling for Global Volume
To accommodate the growing institutional footprint, the 2026 fee structure for IFSC Banking Units (IBUs) introduced refined turnover slabs and a revised basis for calculation:
- Turnover Definition: In 2025, turnover was simply the sum of interest and other income. The 2026 definition expanded to “daily turnover, both fund-based and non-fund based,” aligning regulatory costs with operational risk and systemic activity.
- New Turnover Tiers: A higher tier was added for IBUs with turnover exceeding USD 20 billion, carrying a conditional fee of USD 250,000.
In the capital markets, the 2026 amendments introduced a “Master Key” or unified registration mechanism. Intermediaries can now submit a single consolidated application through the SWIT portal rather than navigating multiple pathways for different activities like brokerage and investment advice. However, activity-specific fees remain in place to ensure institutional accountability. Notably, the minimum net worth requirement for Custodians was raised to USD 1 million.
III. Fund Management and Lifecycle Flexibility
The 2026 framework for Fund Management Entities (FMEs) introduces significant operational leeway, particularly regarding fundraising timelines:
- Graded Extension Fees: While the 2025 model allowed only a one-time six-month extension, the 2026 model permits multiple extensions with a graded fee: 25% of the fresh filing fee for the first extension and 50% for subsequent instances.
- Third-Party Fund Management (TPFM): A landmark addition in 2026 is the formalization of TPFM services. FMEs offering management services to third parties now face a specific application fee (USD 2,500), an authorization fee (USD 7,500), and an annual recurring fee of USD 2,000 per TPFM client.
Personnel Qualifications: Recognition of professional diversity now allows individuals with CA, CS, or STEM degrees to qualify as Key Managerial Personnel (KMP) with only three years of post-qualification experience, down from the standard five years.
IV. Professional Services: The Shift to Turnover-Based Models
Perhaps the most pivotal change is the overhaul of fees for Global In-House Centres (GICs) and BATF (Book-keeping, Accounting, Taxation, and Financial Crime Compliance) providers.
The 2025 model utilized an employee-based fee (e.g., USD 7,500 for fewer than 500 employees), which acted as a “tax on employment.” The 2026 model replaced this with a turnover-based model, where entities with turnover under USD 1 million pay no recurring fee, while those exceeding USD 50 million pay USD 10,000. This shift, combined with the removal of minimum carpet area requirements per employee, is designed to encourage firms to scale their talent pools without fiscal penalties.
V. Insurance and Emerging Technology
The insurance sector saw modest adjustments, with the minimum annual fee for IFSC Insurance Offices increasing from USD 11,500 to USD 12,500. In the FinTech space, the 2026 structure maintains a low entry barrier for “Limited Use Authorizations” in sandboxes (USD 500 application fee) while formalizing fees for KYC Registration Agencies (KRAs) to streamline ecosystem-wide due diligence.
Conclusion
The 2026 updates signify a shift toward a more equitable regulatory environment at GIFT-IFSC. By transitioning to turnover based fee models and introducing unified registration mechanisms, the IFSCA has effectively removed “growth caps” for participants. Enhancements like OTP based Aadhaar e-KYC and flexible fundraising timelines for FMEs further reduce operational friction. These strategic redefinitions align fiscal burdens with actual economic activity, reinforcing position of IFSC as a premier, scalable, and globally competitive financial center.
