The GIFT International Financial Services Centre ("GIFT IFSC"), established in Gandhinagar, Gujarat, is India's first international financial services centre with the intent of catering to global MNCs and financial institutions in alignment with international standards of business. To ensure that the utmost benefits can be provided, the entire zone has been equipped with world-class infrastructure akin to global standards. This newsletter navigates the journey of GIFT IFSC and the International Financial Services Centres Authority ("IFSCA") set up under the International Financial Services Centres Authority Act 2019.
IFSCA as a unified regulator is also head quartered at GIFT IFSC and is committed to providing a sound and well-structured regulatory environment by providing a single window clearance system. The IFSCA has been able to achieve this through the unification of the powers previously held by four separate regulators: the Reserve Bank of India ("RBI"), the Securities and Exchange Board of India ("SEBI"), the Insurance Regulatory and Development Authority of India ("IRDAI"), and Pension Fund Regulatory and Development Authority of India ("PFRDAI").
We are providing transactional updates, including a bird's eye view of legal and regulatory updates related to the GIFT IFSC.
Gift IFSC advances to 46th position in Global Financial Centres Index
March 26, 2025 – GIFT IFSC has advanced to the 46th position from its previous ranking of 52nd in the latest edition of the Global Financial Centres Index ("GFCI 37"). The GFCI, compiled by the Z/Yen Group, evaluates assesses financial hubs worldwide using 140 key indicators sourced from third-party organisations, including the World Bank, the Organisation for Economic Co-operation and Development ("OECD"), and the United Nations. These indicators evaluate financial centres based on factors such as business environment, infrastructure, human capital, financial sector development, and overall competitiveness.
Source: The Hindu BusinessLine
23rd IFSCA Authority Meeting on New Regulatory Approvals
March 26, 2025 – The IFSCA has notified the approval of the IFSCA (Capital Market Intermediaries) Regulations, 2025, ("New CMI Regulations") which will replace the extant IFSCA (Capital Market Intermediaries), 2021. The New CMI Regulations revises the regulatory provisions for the registration, regulation, and supervision of capital market intermediaries operating in the IFSC, incorporating insights from past experience, stakeholder consultations, and alignment with global standards. Under the revised regulations, all intermediaries must submit a copy of their annual compliance audit to the IFSCA by September 30 each year.
The key changes in the New CMI Regulations include-
1. It establishes a regulatory framework for 'Research Entity' as a new category of intermediary, while discontinuing the 'Account Aggregator' category. Further, regulatory framework for "Distributors" and "ESG Ratings and Data Products Providers" has also been incorporated in the New CMI Regulations.
2. It specifies the minimum qualification and experience requirements for the Principal Officer and Compliance Officer applicable for each category of capital market intermediaries. Additionally, entities holding multiple registrations under the New CMI Regulations are required to appoint or designate a separate Principal Officer for each registered activity.
3. The minimum net-worth requirements for the following categories have also been revised as:
Credit Rating Agency - USD 200,000
Investment Adviser - USD 25,000
Investment Banker - USD 100,000
4. Submission of Annual Compliance Audit: The New CMI Regulations mandate that all intermediaries submit a copy of their annual compliance audit to the IFSCA by September 30 each year.
Further, to register and regulate the KYC Registration Agency ("KRAs") in GIFT-IFSCA, IFSC has approved the IFSCA (KYC Registration Agency) Regulations, 2025. The regulations outline eligibility, registration (including net worth), qualifications, functions, obligations, and the code of conduct for KRAs. All IFSCA-regulated entities must upload client KYC records to the KRA, though exemptions may apply.
Lastly, to approve the proposal towards one-time opportunity to extend the validity of expired private placement memoranda, IFSCA has approved Transition to IFSCA (Fund Management) Regulations, 2025.
Source: GIFT IFSCA website [Press Release dated March 26, 2025]
IFSCA Constitutes Standing Committee on Insurance to Strengthen GIFT-IFSC's Position as a Global Insurance Hub
March 24, 2025 – The IFSCA constituted a 16 (sixteen) member Standing Committee on Insurance ("SCI") to foster the development and regulation of the insurance and reinsurance eco-system within GIFT-IFSC. SCI shall be headed by Mr. M. R. Kumar (Former Chairperson, LIC of India).
The committee's responsibilities include evaluating the Ease of Doing Business and Cost of Doing Business in GIFT-IFSC by comparing it with other major IFSCs and suggesting enhancements. Additionally, it will advise on strategies for stakeholder engagement, particularly with Non-Resident Indian ("NRIs") and Person of Indian Origin ("PIOs") and support outreach and educational efforts. The committee will also propose measures to attract investments from Insurance Funds and Global Insurance Pools into IFSC.
Source: GIFT IFSCA website [Press Release dated March 24, 2025]
Guidelines on Cyber Security and Cyber Resilience for Regulated Entities in IFSCs
March 10, 2025 – As the IFSC evolves as a global financial hub, the sophistication of cyber threats targeting financial entities is also increasing. Institutions operating in this international jurisdiction must maintain robust cybersecurity to protect IT systems from fraudulent transactions, data breaches, and infrastructure disruptions. Ensuring strong cyber resilience is critical to maintaining trust in the IFSC.
These guidelines on cyber security and cyber resilience intend to lay down IFSCA's broad expectations from its Regulated Entities ("REs") including any entity licensed, recognized, registered, or authorized by IFSCA. Implementation will follow the principle of proportionality, considering the entity's scale, complexity, operations, and exposure to cyber risks.
Key components of the guidelines are stated below:
1. Governance: REs must establish governance mechanisms to manage cyber risks effectively. Oversight may be handled by the governing board, senior management, or a designated committee. The Board and senior leadership must have sufficient expertise to manage cyber risks and foster a strong security culture. Each RE must appoint a Chief Information Security Officer ("CISO") or a senior officer to assess risks, respond to incidents, and implement cybersecurity processes. This individual will be referred to as the "Designated Officer."
2. Cybersecurity and Cyber Resilience Framework: REs must develop a cybersecurity framework to ensure confidentiality, integrity, and availability of IT assets. This framework should:
- define cyber risk appetite and resilience objectives;
- identify and mitigate third-party cyber risks;
- establish clear roles and communication protocols for incident response; and
- be periodically reviewed and updated.
3. Third Party Risk Management: REs must work collaboratively with third-party vendors to ensure cybersecurity standards are met. These service providers should undergo security audits at least every 6 (six) months, with other vendors reviewed periodically. Clear escalation procedures must be in place to manage risks, with ultimate responsibility resting on the RE.
4. Communication & Awareness: REs shall provide training to its employees on topics in relation to issues but not limited to cyber security, social engineering, password hygiene and incident reporting procedures. REs shall have a clear and accessible channels for employees to report suspicious activity, vulnerabilities and potential cyber incidents.
5. Audit: REs must conduct annual cybersecurity audits through an independent or CERT-In empaneled auditor. Audit reports must be submitted to IFSCA within 90 (ninety) days of the financial year-end. Higher-risk entities may conduct audits more frequently.
REs registered as Broker Dealers, Clearing Members, or Depository Participants can submit the same audit report filed with Market Infrastructure Institutions or Bullion Exchanges to IFSCA within 7 (seven) days of submission.
Source: GIFT IFSCA website [Circular dated March 10, 2025]
Press release on Public Consultation for Enabling Operating Lease, including any Hybrid of Operating and Financial Lease, of Oilfield Equipment as a Financial Product
March 07, 2025 – IFSCA had issued a public consultation paper dated March 7, 2025, to enable the operating lease, including hybrid models of operating and financial leases, of oilfield equipment as a financial product under the IFSCA Act, 2019.
As of December 31, 2024, IFSCA has registered 30 (thirty) Aircraft Operating Lease (AOL) entities and 15 (fifteen) ship leasing entities, demonstrating significant growth. By the end of 2024, registered AOL entities had leased 196 (one hundred and ninety six) assets, reflecting an annual growth rate of 55% (fifty five percent), while ship leasing entities tripled their total leased assets to 13 (thirteen) over the same period.
Building on this momentum, IFSCA has now released a consultation paper proposing the inclusion of oilfield equipment under its specified powers. The definition of oilfield equipment is proposed to align with the list of relevant goods annexed to the table in GST Notification No. 3/2017-Central Tax (Rate) dated June 28, 2017, which provides concessional CGST rates for supplies to the exploration and production sector. This oilfield equipment are intended for use in both onshore and offshore operations.
The said Public Consultation Paper can be accessed here.
Source: GIFT IFSCA website [Press Release dated March 07, 2025]
Circular on Contribution to Settlement Guarantee Fund ("SGF")
March 07, 2025 – IFSCA has recently notified the amendments to the IFSCA (Market Infrastructure Institutions) Regulations, 2021 ("MII Regulations").
The key highlights of these amendments are stated below:
1. As per Regulation 15 of the MII Regulations (amended as of November 1, 2024), the net worth of a Clearing Corporation is defined as the aggregate value of its liquid assets, as specified by the IFSCA. Further it has been stated in the MII Regulations that "Cash and bank balance, fixed deposits, Government Securities and other instruments as may be specified by the Authority from time to time shall be considered as 'liquid assets' for the purpose of calculation of net worth of a clearing corporation."
2. Regulation 31 of the MII Regulations states that the SGF of a Clearing Corporation may receive contributions from the Clearing Corporation, Stock Exchange, and Clearing Members. It is clarified that a Clearing Corporation's contribution to its SGF shall be included in its net worth. Additionally, interest earned on cash contributions to the SGF shall be credited to the fund and allocated pro-rata among contributors in proportion to their respective contributions.
Source: GIFT IFSCA website [Circular dated March 07, 2025]
Fee structure for ITFS operators/ applicants desirous to set up an ITFS in IFSC
March 07, 2025 – The IFSCA notified the fee structure for International Trade Financing Services Platform ("ITFS") operators/applicants desirous of setting up an ITFS in IFSC, in reference to Clause 22 of the circular on "Guidelines on setting up and operation of International Trade Finance Service Platform, 2024" dated December 23, 2024. The fees under different sub-heads are as follows-
1. Application Fee- $ 1,000
2. Registration Fee- $ 10,000
3. Recurring Fee-
$ 3,000 for ITFS operators/applicants having value of transactions on the ITFS platform (annual turnover) of less than or equal to $ 25,000,000.
$ 5,000 for ITFS operators/applicants having annual turnover of more than $ 25,000,000 but less than or equal to $ 50,000,000.
$ 7,000 for ITFS operators/applicants having annual turnover of more than $ 50,000,000 but less than or equal to $ 100,000,000.
$ 10,000 for ITFS operators/applicants having annual turnover of more than $ 100,000,000 but less than or equal to $ 200,000,000.
$ 15,000 for ITFS operators/applicants having annual turnover of more than $ 200,000,000.
4. Processing Fee for modification of terms- 20% of registration fee
5. Relaxation/ waiver on Processing Fee- $ 500.
All other provisions of the circular titled "Fee Structure for Entities Undertaking or Intending to Undertake Permissible Activities in IFSC" dated May 17, 2023 (as amended) shall remain in effect.
Source: GIFT IFSCA website [Circular dated March 07, 2025]
Axis Bank executes Aircraft Financing Deal from GIFT IFSC unit
March 07, 2025 – Axis Bank has become the first Indian bank to execute an aircraft financing transaction through its International Banking Unit (IBU) at GIFT IFSC unit. The bank did not disclose the size of the loan. The deal was completed for AI Fleet Services Limited, the leasing arm and wholly owned subsidiary of Air India (a Tata Group Company). It involves a long-term loan for the purchase of 34 training aircraft, which will be deployed at Air India's upcoming Flight training Organisation (FTO) in Amravati, Maharashtra.
Source: The Hindu
The Second Edition of IFSCA Chintan Shivir was organised in Udaipur, Rajasthan
March 05, 2025 –This year's IFSCA Chintan Shivir fostered discussions on emerging financial trends, learning, and team building. On February 28, 2025, Team IFSCA engaged in brainstorming sessions, workshops, and presentations, focusing on key strategies to advance Viksit Bharat@2047 and strengthen GIFT IFSC's regulatory ecosystem. The Shivir featured 6 (six) dynamic brainstorming sessions, each exploring key themes in financial services development and regulation, aimed at shaping the future of international finance and strengthening IFSCA's strategic positioning. The sessions covered key themes in financial services: enhancing supervision through SupTech, AI's impact on finance, attracting NRIs/PIOs with tailored products, and emerging global regulations like Robo Advisory and Digital Banking. Discussions focused on innovation, regulatory advancements, and expanding IFSC's global reach.
Source: GIFT IFSCA website [Press Release dated March 05, 2025]
Financial Action Task Force ("FATF") – High-Risk and Monitored Jurisdictions (February 21, 2025)
March 5, 2025 – The FATF, an inter-governmental body established in 1989, sets global standards and promotes effective measures to combat money laundering, terrorist financing, and threats to financial system integrity.
The FATF's public statement on February 21, 2025, urges members to refer to its previous advisories from February 2020 and October 2022 regarding high-risk jurisdictions. The FATF has identified 24 jurisdictions under increased monitoring, including Algeria, Bulgaria, Kenya, Nigeria, and Vietnam, among others. The Philippines has been removed from this list. This advisory does not restrict IFSCA-regulated entities from conducting legitimate trade and business with these jurisdictions.
The FATF plenary issues document titled "High-Risk Jurisdictions subject to a Call for Action" and "Jurisdictions under Increased Monitoring" to identify and support jurisdictions with strategic AML/CFT deficiencies.
Source: GIFT IFSCA website [Press Release dated March 05, 2025]
Indian Diaspora Investments in GIFT IFSC Funds Exceed $7 Billion
March 4, 2025 – Investments by the Indian diaspora in GIFT IFSC -based funds have exceeded $ 7 billion, according to IFSCA Chairman, Mr. K Rajaraman. Approximately 5,000 NRIs have invested nearly $ 1.5 billion in banking products and around $ 7 billion in the funds ecosystem. To further attract diaspora investments, dedicated facilities were introduced in GIFT IFSC in 2024.
Source: Business Standard
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