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GIFT City Update – Participation of IFSC Banking Units (IBUs) in International Payment Systems

SEBI Update

GIFT City Update – Participation of IFSC Banking Units (IBUs) in International Payment Systems

The International Financial Services Centres Authority (“IFSCA” or “Authority”), Section 18 of the Payment and Settlement Systems Act, 2007 (“PSS Act”) read with Section 13 of the International Financial Services Centres Authority Act, 2019 (“IFSCA Act”), vide E. File. No. IFSCA-FMPP0BR12/2023/Banking-Part(2),[1] dated May 21, 2025, modified the provisions relating to the participation of IFSC Banking Units (“IBUs”) in International Payment Systems (“Circular”).

The key highlights of the Circular are as follows:

  1. General Permission for International Transactions: IBUs shall now be permitted to participate as members of international payment systems for making or receiving payments to/ from banks or financial institutions outside the IFSC, without prior approval from the Authority.
  2. Authorization for Domestic Transactions within IFSC: If the international payment system allows IBUs to make or receive payments among themselves (affecting domestic IFSC transactions), such participation shall require prior authorization from the Authority, as per Section 7(1) of the PSS Act.
  3. IBUs Participation in Transactions with Other IBUs: IBUs shall be allowed to participate as members of international payment systems for making or receiving payments with other IBUs, without prior approval from the Authority, provided the system complies with the condition that it does not affect domestic transactions.
  4. Compliance Requirements: Every IBU, through this Circular, has been directed to review its participation in international payment systems in line with the newly issued policies. IBUs are required to notify the Department of Banking Supervision about their compliance within 30 (Thirty) days from the date of this Circular. IBUs must also submit a list of all international payment systems they are participants of as of March 31, 2025.

[1]https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2Fcircular-participation-of-ibus-in-international-payment-systems22052025022132.pdf&Title=Participation%20of%20IFSC%20Banking%20Units%20in%20international%20payment%20systems&Date=22%2F05%2F2025