International Financial Services Centres Authority (“IFSCA” or “Authority”), in exercise of powers conferred by Section 12 and Section 13 of the International Financial Services Centres Authority Act, 2019 (“IFSCA Act”), vide Circular No. IFSCA-LPRA/9/2024-Legal and Regulatory Affairs,[1] dated April 03, 2025 (“Circular”), issued a direction to all Regulated Entities (“REs”) operating in the International Financial Services Centre (“IFSC”). The Circular shall come into effect immediately.
The key highlights of the Circular are as follows:
It has been noted that certain entities are operating within the IFSC without holding a valid license, registration, or authorization certificate from the Authority or a Letter of Approval (“LoA”) under the Special Economic Zones Act, 2005 (“SEZ Act”). This is in violation of the provisions outlined in the IFSCA Act and the SEZ Act, 2005.
I. Mandatory Compliance for Regulated Entities: All REs operating in the IFSC must ensure that they hold, at all times, a valid and subsisting Certificate of Registration (“CoR”), license, recognition, authorization letter, permission, approval, or any equivalent document, as per the applicable IFSCA regulations or framework. Additionally, they must also hold a valid LoA under the SEZ Act, 2005.
II. Expiry and Renewal of LoA: The validity of the LoA is as follows:
- 1 (one) year if the business has not commenced.
- 5 (Five) years after the commencement of business.
The expiry of the LoA or failure to renew it in a timely manner may lead to enforcement actions, including the cancellation of the registration, license, recognition, authorization, permission, or approval granted under the applicable IFSCA regulations or framework.
III. Deemed Conditions for Past Approvals: The requirements set forth in this Circular shall now be considered part of the conditions for the grant of all CoR, licenses, authorization letters, permissions, or approvals issued to the REs in the past under the applicable IFSCA regulations or framework. Non-compliance may constitute a breach of the terms and conditions of such documents and may result in the enforcement actions mentioned in the Circular.
IV. Enforcement Actions: Entities failing to comply with the regulations outlined in this Circular may face appropriate enforcement actions, which may include the cancellation of their operating licenses or other regulatory sanctions.
REs are strongly advised to ensure strict compliance with the outlined requirements to avoid any operational disruptions or regulatory sanctions. Failure to comply with these conditions could lead to serious legal and operational consequences, including loss of the right to operate within the IFSC.
[1] https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Fcircular-on-holding-valid-and-subsisting-loa-andcor03042025080912.pdf&Title=Direction%20for%20all%20Regulated%20Entities%20&Date=03%2F04%2F2025