IFSCA Annual Report 2022-23_English

International Financial Services Centres Authority ANNUAL REPORT 2022-23 Beyond Borders Bridging Markets, Building FuturesANNUAL REPORT 2022-23 ANNUAL REPORT 2022-23 This report is in conformity with the form prescribed in the International Financial Services Centres Authority (Annual Report and Returns and Statements and Other Particulars) Rules, 2022, notified on February 28, 2022, in the Gazette of India. IANNUAL REPORT 2022-23 ANNUAL REPORT 2022-23 This report is in conformity with the form prescribed in the International Financial Services Centres Authority (Annual Report and Returns and Statements and Other Particulars) Rules, 2022, notified on February 28, 2022, in the Gazette of India. IANNUAL REPORT 2022-23 II International Financial Services Centres Authority IIIANNUAL REPORT 2022-23 II International Financial Services Centres Authority IIISECTION‑A IV International Financial Services Centres Authority VSECTION‑A IV International Financial Services Centres Authority VANNUAL REPORT 2022-23 STATEMENT OF GOALS & OBJECTIVES The International Financial Services Centres Authority (IFSCA) was set up by the Government of India on April 27, 2020, as a unified financial regulator under the International Financial Services Centres Authority Act, 2019. It is headquartered at Gujarat International Finance Tec‐City (GIFT City), Gandhinagar in Gujarat. The main objective of IFSCA (hereinafter referred to as “the Authority”) is to develop and regulate financial services in the International Financial Services Centres (IFSCs) established in India, with a mandate to create a world‐class financial ecosystem based on ease of doing business and to provide best in class regulatory system to make IFSCs in India a preferred global destination for international financial services. As a unified financial regulator, having power to regulate banking, capital market, insurance and pension funds, which in domestic India are being regulated by RBI, SEBI, IRDAI and PFRDA respectively, and other related activities in IFSC, IFSCA adopts a holistic vision towards the development and regulation of financial products, financial services, and financial institutions in IFSCs in India. At present, the GIFT IFSC is the maiden International Financial Services Centre in India. Vision To provide world‐class regulatory environment and develop IFSCs into leading Global Financial Centres with a primary focus on India's economic development apart from serving as a regional and global financial hub. Mission To develop IFSCs into well‐diversified and globally competitive financial hubs for international banking, insurance, and capital market activities through a pro‐business environment, duly supported by a progressive regulatory architecture, state‐of‐the‐art technology and infrastructure, and talented financial professionals, which serve both the Indian economy and the region as a whole. Goals & Objectives 1. To facilitate the development of a strong base of international financial services in the country 2. To promote IFSCs as a dominant gateway for international capital flows into and out of India 3. To emerge as a regional and global hub for international financial services 4. To provide a state‐of‐the‐art unified regulatory framework, with robust regulation and supervisory technology aligned with international best practices 5. To develop a strong global connect with leading international financial jurisdictions VI International Financial Services Centres Authority VIIANNUAL REPORT 2022-23 STATEMENT OF GOALS & OBJECTIVES The International Financial Services Centres Authority (IFSCA) was set up by the Government of India on April 27, 2020, as a unified financial regulator under the International Financial Services Centres Authority Act, 2019. It is headquartered at Gujarat International Finance Tec‐City (GIFT City), Gandhinagar in Gujarat. The main objective of IFSCA (hereinafter referred to as “the Authority”) is to develop and regulate financial services in the International Financial Services Centres (IFSCs) established in India, with a mandate to create a world‐class financial ecosystem based on ease of doing business and to provide best in class regulatory system to make IFSCs in India a preferred global destination for international financial services. As a unified financial regulator, having power to regulate banking, capital market, insurance and pension funds, which in domestic India are being regulated by RBI, SEBI, IRDAI and PFRDA respectively, and other related activities in IFSC, IFSCA adopts a holistic vision towards the development and regulation of financial products, financial services, and financial institutions in IFSCs in India. At present, the GIFT IFSC is the maiden International Financial Services Centre in India. Vision To provide world‐class regulatory environment and develop IFSCs into leading Global Financial Centres with a primary focus on India's economic development apart from serving as a regional and global financial hub. Mission To develop IFSCs into well‐diversified and globally competitive financial hubs for international banking, insurance, and capital market activities through a pro‐business environment, duly supported by a progressive regulatory architecture, state‐of‐the‐art technology and infrastructure, and talented financial professionals, which serve both the Indian economy and the region as a whole. Goals & Objectives 1. To facilitate the development of a strong base of international financial services in the country 2. To promote IFSCs as a dominant gateway for international capital flows into and out of India 3. To emerge as a regional and global hub for international financial services 4. To provide a state‐of‐the‐art unified regulatory framework, with robust regulation and supervisory technology aligned with international best practices 5. To develop a strong global connect with leading international financial jurisdictions VI International Financial Services Centres Authority VIIANNUAL REPORT 2022-23 CHAIRPERSON’S MESSAGE The year 2022‐23 marked a significant milestone for IFSCA in its journey towards developing GIFT IFSC as a preferred international financial centre. It witnessed several noteworthy achievements including the inauguration of India International Bullion Exchange, the launch of NSE IFSC ‐ SGX Connect and laying the foundation stone of IFSCA headquarters building by the Hon’ble Prime Minister of India. India is the second largest importer of gold in the world, which accounts for nearly 25% of world production. IIBX will facilitate transparency, efficient price discovery and provide impetus to Shri Injeti Srinivas financialisation of gold in India. This initiative shall empower India to Chairperson gain its rightful place in global bullion market and serve the global value chain with integrity and quality. With India’s economy projected to become the world’s third largest in the foreseeable future, the launch of NSE IFSC ‐ SGX Connect presents a robust pathway for global investors to participate in India’s growth story. It will deepen liquidity in derivative markets and create a positive impact on the financial ecosystem in the IFSC. I believe that the Connect has the potential to emerge as a capital corridor for various other products and services in the future. With the objective to onshore the fund management activities, IFSCA has laid down the regulatory framework aligned with global best practices. During the year, a significant number of fund managers have chosen the IFSC for setting up their new funds across categories such as venture capital, angel, private equity, hedge funds, etc. I am delighted that the global investor community including large pension funds, sovereign funds and other institutional investors have begun their journey in GIFT IFSC. I am confident that IFSC is now well poised to emerge as a global hub for fund management. In the endeavour to onshore re‐insurance business placed with Cross Border Re‐insurers across the globe, IFSCA has formulated comprehensive regulatory regime covering operational and supervisory aspects of the (re)insurers established in the IFSC. These principle‐based regulations are based on global standards and lay the foundation for attracting (re)insurance business in the IFSC. In the words of Hon’ble Prime Minister, "IFSCA will not only become an enabler but will also support innovation and will also act as a catalyst for growth opportunities.” Today, India is one of the leaders in the world in the field of technology, particularly in the area of digital payments. IFSCA’s regulatory framework for Fintech provides the start‐ups an opportunity to experiment their innovative solutions under the regulatory/innovation sandbox, supported by one of its kind incentive scheme. We have received applications from more than ten jurisdictions and have granted authorisations in more than fifteen areas, with remittances and payments, AI/ ML and RegTech emerging as the top three. VIII International Financial Services Centres Authority IXANNUAL REPORT 2022-23 CHAIRPERSON’S MESSAGE The year 2022‐23 marked a significant milestone for IFSCA in its journey towards developing GIFT IFSC as a preferred international financial centre. It witnessed several noteworthy achievements including the inauguration of India International Bullion Exchange, the launch of NSE IFSC ‐ SGX Connect and laying the foundation stone of IFSCA headquarters building by the Hon’ble Prime Minister of India. India is the second largest importer of gold in the world, which accounts for nearly 25% of world production. IIBX will facilitate transparency, efficient price discovery and provide impetus to Shri Injeti Srinivas financialisation of gold in India. This initiative shall empower India to Chairperson gain its rightful place in global bullion market and serve the global value chain with integrity and quality. With India’s economy projected to become the world’s third largest in the foreseeable future, the launch of NSE IFSC ‐ SGX Connect presents a robust pathway for global investors to participate in India’s growth story. It will deepen liquidity in derivative markets and create a positive impact on the financial ecosystem in the IFSC. I believe that the Connect has the potential to emerge as a capital corridor for various other products and services in the future. With the objective to onshore the fund management activities, IFSCA has laid down the regulatory framework aligned with global best practices. During the year, a significant number of fund managers have chosen the IFSC for setting up their new funds across categories such as venture capital, angel, private equity, hedge funds, etc. I am delighted that the global investor community including large pension funds, sovereign funds and other institutional investors have begun their journey in GIFT IFSC. I am confident that IFSC is now well poised to emerge as a global hub for fund management. In the endeavour to onshore re‐insurance business placed with Cross Border Re‐insurers across the globe, IFSCA has formulated comprehensive regulatory regime covering operational and supervisory aspects of the (re)insurers established in the IFSC. These principle‐based regulations are based on global standards and lay the foundation for attracting (re)insurance business in the IFSC. In the words of Hon’ble Prime Minister, "IFSCA will not only become an enabler but will also support innovation and will also act as a catalyst for growth opportunities.” Today, India is one of the leaders in the world in the field of technology, particularly in the area of digital payments. IFSCA’s regulatory framework for Fintech provides the start‐ups an opportunity to experiment their innovative solutions under the regulatory/innovation sandbox, supported by one of its kind incentive scheme. We have received applications from more than ten jurisdictions and have granted authorisations in more than fifteen areas, with remittances and payments, AI/ ML and RegTech emerging as the top three. VIII International Financial Services Centres Authority IXANNUAL REPORT 2022-23 MEMBERS OF THE AUTHORITY (As on 31.03.2023) IFSCA has also taken significant steps in accelerating global sustainable capital flows by creating a conducive regulatory environment, based on international best practices, focused especially on the needs of developing countries. The listing of more than USD 10 billion ESG‐labelled debt securities on IFSC exchanges indicates that GIFT IFSC has emerged as a preferred destination for raising sustainable finance. Further, new initiatives such as mandatory sustainable lending by banks and disclosure regime of ESG Funds are aimed at creating a comprehensive suite of products catering to green and sustainable projects. IFSCA intends to play a key role in channelizing funds for India and other emerging economies to meet their net zero ambitions and achieve SDGs by developing the IFSC as a global hub for sustainable finance. GIFT IFSC has the potential to emerge as a preferred centre for various areas beyond traditional finance to transform into a bustling financial hub. In this direction, IFSCA has enabled the top ranked foreign universities to establish their international branch campus in IFSC. Apart from making available world class education within India, setting up of foreign universities is also expected to be a huge value proposition in terms of reduced costs for students with greater Shri Injeti Srinivas international employment opportunities. This will also lead to greater internationalisation of GIFT Chairperson IFSC by attracting students from all parts of the world. I am delighted that Deakin University, Australia became the first foreign university to set up its branch campus. Considering that IFSC is an international financial centre, it is imperative to establish collaborations with international bodies and authorities. IFSCA is a member of IOSCO and IAIS, the global standard setting bodies of the securities market and insurance market respectively. During the year, IFSCA has become a signatory to the IOSCO MMoU enabling it to exchange information with the regulators of more than 125 jurisdictions, and implement various cross‐border initiatives. IFSCA has also signed bilateral MoUs with regulators of six jurisdictions for information sharing and bilateral cooperation. There are several ongoing reforms to establish IFSC as a reputed international financial centre towards achieving the dual mandate of development and regulation of financial services. IFSCA is Shri Suchindra Misra Ms. Surbhi Jain Shri Saurav Sinha in the process of implementing robust regulatory and supervisory systems backed by best‐in‐class Member Member Member technology. The announcements made in the Union Budget 2023‐24, such as single window IT system for registrations and delegating powers under the SEZ Act to IFSCA to avoid dual regulations, will be important enablers towards enhancing ease of doing business. Going forward, I believe the IFSC will emerge as a preferred gateway for global capital flows into and out of the country. Shri Sujit Prasad Shri Ananta Gopal Das Dr. (Ms.) Mamta Suri Member Member Member X International Financial Services Centres Authority XIANNUAL REPORT 2022-23 MEMBERS OF THE AUTHORITY (As on 31.03.2023) IFSCA has also taken significant steps in accelerating global sustainable capital flows by creating a conducive regulatory environment, based on international best practices, focused especially on the needs of developing countries. The listing of more than USD 10 billion ESG‐labelled debt securities on IFSC exchanges indicates that GIFT IFSC has emerged as a preferred destination for raising sustainable finance. Further, new initiatives such as mandatory sustainable lending by banks and disclosure regime of ESG Funds are aimed at creating a comprehensive suite of products catering to green and sustainable projects. IFSCA intends to play a key role in channelizing funds for India and other emerging economies to meet their net zero ambitions and achieve SDGs by developing the IFSC as a global hub for sustainable finance. GIFT IFSC has the potential to emerge as a preferred centre for various areas beyond traditional finance to transform into a bustling financial hub. In this direction, IFSCA has enabled the top ranked foreign universities to establish their international branch campus in IFSC. Apart from making available world class education within India, setting up of foreign universities is also expected to be a huge value proposition in terms of reduced costs for students with greater Shri Injeti Srinivas international employment opportunities. This will also lead to greater internationalisation of GIFT Chairperson IFSC by attracting students from all parts of the world. I am delighted that Deakin University, Australia became the first foreign university to set up its branch campus. Considering that IFSC is an international financial centre, it is imperative to establish collaborations with international bodies and authorities. IFSCA is a member of IOSCO and IAIS, the global standard setting bodies of the securities market and insurance market respectively. During the year, IFSCA has become a signatory to the IOSCO MMoU enabling it to exchange information with the regulators of more than 125 jurisdictions, and implement various cross‐border initiatives. IFSCA has also signed bilateral MoUs with regulators of six jurisdictions for information sharing and bilateral cooperation. There are several ongoing reforms to establish IFSC as a reputed international financial centre towards achieving the dual mandate of development and regulation of financial services. IFSCA is Shri Suchindra Misra Ms. Surbhi Jain Shri Saurav Sinha in the process of implementing robust regulatory and supervisory systems backed by best‐in‐class Member Member Member technology. The announcements made in the Union Budget 2023‐24, such as single window IT system for registrations and delegating powers under the SEZ Act to IFSCA to avoid dual regulations, will be important enablers towards enhancing ease of doing business. Going forward, I believe the IFSC will emerge as a preferred gateway for global capital flows into and out of the country. Shri Sujit Prasad Shri Ananta Gopal Das Dr. (Ms.) Mamta Suri Member Member Member X International Financial Services Centres Authority XIANNUAL REPORT 2022-23 SENIOR MANAGEMENT OF THE AUTHORITY CONTENTS (As on 31.03.2023) SR. NO. PARTICULARS PAGE NO. Name Designation A SECTION A Statement of Goals & Objectives VII Shri Praveen Trivedi Executive Director Chairperson’s Message IX Shri Dipesh Shah Executive Director Members of the Authority XI Shri Kumar Raghuraman General Manager Senior Management of the Authority XII Shri Supriyo Bhattacharjee General Manager Contents XIII Shri Kamlesh Sharma General Manager List of Tables XIV List of Figures XVI Shri Ashutosh Sharma General Manager List of Boxes XVII Shri Joseph Joshy C J General Manager List of Images XVIII Shri Sathyaraj C M General Manager List of Abbreviations XX B SECTION B: The Year in Review: Overview of the General Economic Environment I. Global Economic Assessment and Outlook 02 II. Domestic Economic Assessment and Prospects 05 C SECTION C: Review of Policies, Programmes and Activities of the Authority 1. Banking 12 2. Finance Companies 18 3. Capital Markets 24 4. Fund Management 38 5. International Bullion Exchange 44 6. Fintech Hub 52 7. Insurance 64 8. Global In‐House Centres 72 9. Sustainable Finance 74 10. Ancillary Services 84 11. Aircraft Leasing 88 12. Foreign Universities and Institutions 90 XII International Financial Services Centres Authority XIIIANNUAL REPORT 2022-23 SENIOR MANAGEMENT OF THE AUTHORITY CONTENTS (As on 31.03.2023) SR. NO. PARTICULARS PAGE NO. Name Designation A SECTION A Statement of Goals & Objectives VII Shri Praveen Trivedi Executive Director Chairperson’s Message IX Shri Dipesh Shah Executive Director Members of the Authority XI Shri Kumar Raghuraman General Manager Senior Management of the Authority XII Shri Supriyo Bhattacharjee General Manager Contents XIII Shri Kamlesh Sharma General Manager List of Tables XIV List of Figures XVI Shri Ashutosh Sharma General Manager List of Boxes XVII Shri Joseph Joshy C J General Manager List of Images XVIII Shri Sathyaraj C M General Manager List of Abbreviations XX B SECTION B: The Year in Review: Overview of the General Economic Environment I. Global Economic Assessment and Outlook 02 II. Domestic Economic Assessment and Prospects 05 C SECTION C: Review of Policies, Programmes and Activities of the Authority 1. Banking 12 2. Finance Companies 18 3. Capital Markets 24 4. Fund Management 38 5. International Bullion Exchange 44 6. Fintech Hub 52 7. Insurance 64 8. Global In‐House Centres 72 9. Sustainable Finance 74 10. Ancillary Services 84 11. Aircraft Leasing 88 12. Foreign Universities and Institutions 90 XII International Financial Services Centres Authority XIIIANNUAL REPORT 2022-23 SR. NO. PARTICULARS PAGE NO. TABLE NO. PARTICULARS PAGE NO. 13. Information Technology 94 FUND MANAGEMENT 14. Developmental Activities 98 Table 4.1 No. of FMEs registered as on March 31, 2023 42 D SECTION D: Quasi‐Legislative Functions of the Authority 116 Table 4.2 No. of schemes approved as on March 31, 2023 42 E SECTION E: Performance Assessment 126 INTERNATIONAL BULLION EXCHANGE F SECTION F: Source of Funds and Major areas of Table 5.1 Registered Bullion Market Intermediaries at GIFT IFSC 48 130 Expenditure (FY 2022‐23) INSURANCE G SECTION G: Organisational Matters 132 Table 7.1 Number of IIOs and IIIOs operating in the IFSC 68 SUSTAINABLE FINANCE Table 9.1 Additional requirements related to ESG factors 76 ANCILLARY SERVICES List of Tables Table 10.1 Activity‐wise break up of ancillary services entities as on 85 March 31, 2023 TABLE NO. PARTICULARS PAGE NO. DEVELOPMENTAL ACTIVITIES BANKING Table 14.1 Key outreach and engagement activities of IFSCA during FY Table 1.1 No. of IBUs 14 108 2022‐23 Table 1.2 Total Assets in IBUs in USD Mn 14 QUASI‑LEGISLATIVE FUNCTIONS OF THE AUTHORITY Table 1.3 No. of employees in all IBUs 14 Table D.1 List of Regulations 117 Table 1.4 Outstanding Over the Counter (OTC) Derivative Contracts 16 Table D.2 List of Notifications 119 CAPITAL MARKETS Table D.3 List of Major Circulars/Guidelines 120 Table 3.1 Trading Members in IFSC (as on March 31, 2023) 28 SOURCE OF FUNDS AND MAJOR AREAS OF EXPENDITURE Table 3.2 Clearing Members in IFSC (as on March 31, 2023) 28 (FY 2022‑23) Table 3.3 No. of Contracts and Turnover in Index Futures 30 Table F.1 Sources of Funds for FY 2022‐23 130 Table F.2 Major Areas of Expenditure for FY 2022‐23 130 Table 3.4 No. of Contracts and Premium Turnover in Index Options 30 ORGANISATIONAL MATTERS Table 3.5 Commodity Derivatives Available for Trading on IFSC 31 Exchanges Table G.1 Authority Structure 132 Table 3.6 No. of Contracts and Premium Turnover in Gold derivatives 31 Table G.2 IFSC Authority Meetings held in FY 2022‐23 133 Table 3.7 Currency Derivatives 31 Table G.3 Sanctioned and Actual strength of employees 134 Table 3.8 No. of Contracts and Premium Turnover in Currency Table G.4 Consultants at IFSCA as on March 31, 2023 135 31 Derivatives Table G.5 Training Programmes and Webinars 135 Table 3.9 List of debt issuances in FY 2022‐23 32 Table G.6 Status of RTI applications during FY 2022‐23 136 XIV International Financial Services Centres Authority XVANNUAL REPORT 2022-23 SR. NO. PARTICULARS PAGE NO. TABLE NO. PARTICULARS PAGE NO. 13. Information Technology 94 FUND MANAGEMENT 14. Developmental Activities 98 Table 4.1 No. of FMEs registered as on March 31, 2023 42 D SECTION D: Quasi‐Legislative Functions of the Authority 116 Table 4.2 No. of schemes approved as on March 31, 2023 42 E SECTION E: Performance Assessment 126 INTERNATIONAL BULLION EXCHANGE F SECTION F: Source of Funds and Major areas of Table 5.1 Registered Bullion Market Intermediaries at GIFT IFSC 48 130 Expenditure (FY 2022‐23) INSURANCE G SECTION G: Organisational Matters 132 Table 7.1 Number of IIOs and IIIOs operating in the IFSC 68 SUSTAINABLE FINANCE Table 9.1 Additional requirements related to ESG factors 76 ANCILLARY SERVICES List of Tables Table 10.1 Activity‐wise break up of ancillary services entities as on 85 March 31, 2023 TABLE NO. PARTICULARS PAGE NO. DEVELOPMENTAL ACTIVITIES BANKING Table 14.1 Key outreach and engagement activities of IFSCA during FY Table 1.1 No. of IBUs 14 108 2022‐23 Table 1.2 Total Assets in IBUs in USD Mn 14 QUASI‑LEGISLATIVE FUNCTIONS OF THE AUTHORITY Table 1.3 No. of employees in all IBUs 14 Table D.1 List of Regulations 117 Table 1.4 Outstanding Over the Counter (OTC) Derivative Contracts 16 Table D.2 List of Notifications 119 CAPITAL MARKETS Table D.3 List of Major Circulars/Guidelines 120 Table 3.1 Trading Members in IFSC (as on March 31, 2023) 28 SOURCE OF FUNDS AND MAJOR AREAS OF EXPENDITURE Table 3.2 Clearing Members in IFSC (as on March 31, 2023) 28 (FY 2022‑23) Table 3.3 No. of Contracts and Turnover in Index Futures 30 Table F.1 Sources of Funds for FY 2022‐23 130 Table F.2 Major Areas of Expenditure for FY 2022‐23 130 Table 3.4 No. of Contracts and Premium Turnover in Index Options 30 ORGANISATIONAL MATTERS Table 3.5 Commodity Derivatives Available for Trading on IFSC 31 Exchanges Table G.1 Authority Structure 132 Table 3.6 No. of Contracts and Premium Turnover in Gold derivatives 31 Table G.2 IFSC Authority Meetings held in FY 2022‐23 133 Table 3.7 Currency Derivatives 31 Table G.3 Sanctioned and Actual strength of employees 134 Table 3.8 No. of Contracts and Premium Turnover in Currency Table G.4 Consultants at IFSCA as on March 31, 2023 135 31 Derivatives Table G.5 Training Programmes and Webinars 135 Table 3.9 List of debt issuances in FY 2022‐23 32 Table G.6 Status of RTI applications during FY 2022‐23 136 XIV International Financial Services Centres Authority XVANNUAL REPORT 2022-23 List of Figures List of Boxes FIGURE NO. PARTICULARS PAGE NO. BOXE NO. PARTICULARS PAGE NO. BANKING FINANCE COMPANIES Fig 1.1 Outstanding under various credit products (USD Mn) 14 Box 2.1 Salient features of IFSCA (Finance Company) (Amendment) 19 Regulations, 2022 Fig 1.2 Turnover (Volume of Business) in USD Mn 15 Box 2.2 Salient features of the ‘Framework for Ship Lease’ 20 Fig 1.3 Investment profile in USD Mn 15 FUND MANAGEMENT Fig 1.4 Exposure of IBUs in various countries 16 Box 4.1 Regulatory Framework for Angel Funds in IFSC 39 FINANCE COMPANIES Box 4.2 Regulatory Framework for Distribution of Capital market Fig 2.1 Growth in Finance Companies in IFSC 21 41 Products and Services CAPITAL MARKETS SUSTAINABLE FINANCE Fig 3.1 Year‐wise Turnover of Stock Exchanges in IFSC (in USD Mn) 29 Box 9.1 Salient features of “Framework for Disclosures by Fund Fig 3.2 Contract‐wise Turnover of Stock Exchanges in IFSC (in USD Mn) 30 Management Entities for Environmental, Social or Governance 77 (ESG) Schemes” INTERNATIONAL BULLION EXCHANGE AIRCRAFT LEASING Fig 5.1 Products available for trading on IIBX 46 Box 11.1 Salient features of the ‘Framework for FINTECH HUB 88 Aircraft Lease’ Fig 6.1 Illustrative list of permissible FinTech areas/activities 54 FOREIGN UNIVERSITIES AND INSTITUTIONS Fig 6.2 Illustrative list of allied areas/activities aiding and assisting 55 Box 12.1 Salient Features of IFSCA (Setting Up and Operation of activities in relation to TechFin International Branch Campuses and Offshore Education Centres) 91 Fig 6.3 Vertical spread of FE applicants 56 Regulations, 2022 INSURANCE QUASI‑LEGISLATIVE FUNCTIONS OF THE AUTHORITY Fig 7.1 Classification of IIIOs 68 Box D.1 IFSCA (Anti Money Laundering, Counter‐Terrorist Financing and 123 Fig 7.2 Business underwritten by IIOs 69 Know Your Customer) Guidelines, 2022 Fig 7.3 Business transacted by IIIOs 69 SUSTAINABLE FINANCE Fig 9.1 Volumes of Green, Social, Sustainable and Other Labeled (GSS+) 74 bonds in 2022 Fig 9.2 Cumulative Listing of ESG‐labelled debt securities on IFSC 78 Exchanges (USD Bn) XVI International Financial Services Centres Authority XVIIANNUAL REPORT 2022-23 List of Figures List of Boxes FIGURE NO. PARTICULARS PAGE NO. BOXE NO. PARTICULARS PAGE NO. BANKING FINANCE COMPANIES Fig 1.1 Outstanding under various credit products (USD Mn) 14 Box 2.1 Salient features of IFSCA (Finance Company) (Amendment) 19 Regulations, 2022 Fig 1.2 Turnover (Volume of Business) in USD Mn 15 Box 2.2 Salient features of the ‘Framework for Ship Lease’ 20 Fig 1.3 Investment profile in USD Mn 15 FUND MANAGEMENT Fig 1.4 Exposure of IBUs in various countries 16 Box 4.1 Regulatory Framework for Angel Funds in IFSC 39 FINANCE COMPANIES Box 4.2 Regulatory Framework for Distribution of Capital market Fig 2.1 Growth in Finance Companies in IFSC 21 41 Products and Services CAPITAL MARKETS SUSTAINABLE FINANCE Fig 3.1 Year‐wise Turnover of Stock Exchanges in IFSC (in USD Mn) 29 Box 9.1 Salient features of “Framework for Disclosures by Fund Fig 3.2 Contract‐wise Turnover of Stock Exchanges in IFSC (in USD Mn) 30 Management Entities for Environmental, Social or Governance 77 (ESG) Schemes” INTERNATIONAL BULLION EXCHANGE AIRCRAFT LEASING Fig 5.1 Products available for trading on IIBX 46 Box 11.1 Salient features of the ‘Framework for FINTECH HUB 88 Aircraft Lease’ Fig 6.1 Illustrative list of permissible FinTech areas/activities 54 FOREIGN UNIVERSITIES AND INSTITUTIONS Fig 6.2 Illustrative list of allied areas/activities aiding and assisting 55 Box 12.1 Salient Features of IFSCA (Setting Up and Operation of activities in relation to TechFin International Branch Campuses and Offshore Education Centres) 91 Fig 6.3 Vertical spread of FE applicants 56 Regulations, 2022 INSURANCE QUASI‑LEGISLATIVE FUNCTIONS OF THE AUTHORITY Fig 7.1 Classification of IIIOs 68 Box D.1 IFSCA (Anti Money Laundering, Counter‐Terrorist Financing and 123 Fig 7.2 Business underwritten by IIOs 69 Know Your Customer) Guidelines, 2022 Fig 7.3 Business transacted by IIIOs 69 SUSTAINABLE FINANCE Fig 9.1 Volumes of Green, Social, Sustainable and Other Labeled (GSS+) 74 bonds in 2022 Fig 9.2 Cumulative Listing of ESG‐labelled debt securities on IFSC 78 Exchanges (USD Bn) XVI International Financial Services Centres Authority XVIIANNUAL REPORT 2022-23 List of Images IMAGE NO. PARTICULARS PAGE NO. IMAGE NO. PARTICULARS PAGE NO. CAPITAL MARKETS Image14.5 Visit of Singapore delegation to GIFT IFSC 103 Image 3.1 Listing Ceremony of India Exim Bank’s USD 1 Bn, 10‐year Image14.6 Chairperson, IFSCA presenting momento to Deputy Prime 32 103 Sustainability Bond on March 3, 2023 Minister, Singapore Image 3.2 Shri Injeti Srinivas, Chairperson, IFSCA at the IOSCO MMoU Image14.7 11th India ‐ US Financial Regulatory Dialogue 104 34 Signing Ceremony Image14.8 IFSCA delegates at Nasdaq Market Site, New York 105 Image 3.3 Shri Praveen Trivedi, Executive Director, IFSCA at the opening 34 Image14.9 IFSCA delegates at New York Stock Exchange 105 bell ceremony of IOSCO WIW 2022 Image14.10 Chairperson, IFSCA delivering the keynote address at the 5th Image 3.4 Shri Dipesh Shah, Executive Director, IFSCA participated in the 106 35 ASEAN India Business Summit in Kuala Lumpur, Malaysia closing bell ceremony of IOSCO WIW 2022. Image14.11 Shri Dipesh Shah, Executive Director, IFSCA at Universities FUND MANAGEMENT 107 Australia Conference, 2023 in Canberra Image 4.1 Shri Praveen Trivedi, Executive Director, IFSCA at Fireside Chat 43 Image14.12 Review of GIFT IFSC by Hon’ble Union Minister of Commerce during IVCA Conclave 2023 107 and Industry INTERNATIONAL BULLION EXCHANGE ORGANISATIONAL MATTERS Image 5.1 Visit of Hon’ble Union Minister of Commerce and Industry to 50 Image G.1 Celebration of IDY 2022 at IFSCA 137 vault facility at GIFT IFSC Image G.2 Walkathon organised by IFSCA as part of ‘Har Ghar Tiranga’ Image 5.2 Shri Kamlesh Sharma, General Manager, IFSCA at the 14th 138 51 campaign International Gold Economic Forum Image G.3 ‘Har Ghar Tiranga’ campaign at IFSCA 138 FINTECH HUB Image 6.1 Shri Joseph Joshy, CTO, IFSCA receiving the “Outstanding New Asian Regulatory and Technological Innovation in Financial 62 Services” award on behalf of IFSCA SUSTAINABLE FINANCE Conventions used in this report Image 9.1 Committee of Experts on Sustainable Finance submits Report 79 ` : Rupees (Rs) to Chairperson, IFSCA Lakh : Hundred thousand DEVELOPMENTAL ACTIVITIES Crore : Ten million Image14.1 Digital gallery presentation by Chairperson, IFSCA to the Million (Mn) : Ten lakh 99 Hon'ble Prime Minister of India Billion(Bn) : Thousand million/hundred crore Image14.2 Hon’ble Prime Minister addressing the gathering at GIFT IFSC 99 Differences in total are due to rounding off and sometimes they may not exactly add up to hundred percent. Image14.3 Hon’ble Prime Minister launching various initiatives at GIFT 100 IFSC on July 29, 2022 Image14.4 Hon’ble Prime Minister launching the NSE IFSC‐SGX Connect 102 This report can also be accessed on internet at: https://www.ifsca.gov.in/ XVIII International Financial Services Centres Authority XIXANNUAL REPORT 2022-23 List of Images IMAGE NO. PARTICULARS PAGE NO. IMAGE NO. PARTICULARS PAGE NO. CAPITAL MARKETS Image14.5 Visit of Singapore delegation to GIFT IFSC 103 Image 3.1 Listing Ceremony of India Exim Bank’s USD 1 Bn, 10‐year Image14.6 Chairperson, IFSCA presenting momento to Deputy Prime 32 103 Sustainability Bond on March 3, 2023 Minister, Singapore Image 3.2 Shri Injeti Srinivas, Chairperson, IFSCA at the IOSCO MMoU Image14.7 11th India ‐ US Financial Regulatory Dialogue 104 34 Signing Ceremony Image14.8 IFSCA delegates at Nasdaq Market Site, New York 105 Image 3.3 Shri Praveen Trivedi, Executive Director, IFSCA at the opening 34 Image14.9 IFSCA delegates at New York Stock Exchange 105 bell ceremony of IOSCO WIW 2022 Image14.10 Chairperson, IFSCA delivering the keynote address at the 5th Image 3.4 Shri Dipesh Shah, Executive Director, IFSCA participated in the 106 35 ASEAN India Business Summit in Kuala Lumpur, Malaysia closing bell ceremony of IOSCO WIW 2022. Image14.11 Shri Dipesh Shah, Executive Director, IFSCA at Universities FUND MANAGEMENT 107 Australia Conference, 2023 in Canberra Image 4.1 Shri Praveen Trivedi, Executive Director, IFSCA at Fireside Chat 43 Image14.12 Review of GIFT IFSC by Hon’ble Union Minister of Commerce during IVCA Conclave 2023 107 and Industry INTERNATIONAL BULLION EXCHANGE ORGANISATIONAL MATTERS Image 5.1 Visit of Hon’ble Union Minister of Commerce and Industry to 50 Image G.1 Celebration of IDY 2022 at IFSCA 137 vault facility at GIFT IFSC Image G.2 Walkathon organised by IFSCA as part of ‘Har Ghar Tiranga’ Image 5.2 Shri Kamlesh Sharma, General Manager, IFSCA at the 14th 138 51 campaign International Gold Economic Forum Image G.3 ‘Har Ghar Tiranga’ campaign at IFSCA 138 FINTECH HUB Image 6.1 Shri Joseph Joshy, CTO, IFSCA receiving the “Outstanding New Asian Regulatory and Technological Innovation in Financial 62 Services” award on behalf of IFSCA SUSTAINABLE FINANCE Conventions used in this report Image 9.1 Committee of Experts on Sustainable Finance submits Report 79 ` : Rupees (Rs) to Chairperson, IFSCA Lakh : Hundred thousand DEVELOPMENTAL ACTIVITIES Crore : Ten million Image14.1 Digital gallery presentation by Chairperson, IFSCA to the Million (Mn) : Ten lakh 99 Hon'ble Prime Minister of India Billion(Bn) : Thousand million/hundred crore Image14.2 Hon’ble Prime Minister addressing the gathering at GIFT IFSC 99 Differences in total are due to rounding off and sometimes they may not exactly add up to hundred percent. Image14.3 Hon’ble Prime Minister launching various initiatives at GIFT 100 IFSC on July 29, 2022 Image14.4 Hon’ble Prime Minister launching the NSE IFSC‐SGX Connect 102 This report can also be accessed on internet at: https://www.ifsca.gov.in/ XVIII International Financial Services Centres Authority XIXANNUAL REPORT 2022-23 ABBREVIATIONS FDI Foreign Direct Investment FE FinTech Entity AIF Alternative Investment Fund FME Fund Management Entity ALM Asset/Liability Management FPI Foreign Portfolio Investment AML Anti Money Laundering FU Finance Unit BCP Business Continuity Plan GAO Global Administrative Office BDR Bullion Depository Receipt GDP Gross Domestic Product CDD Customer Due Diligence GIC Global In‐house Centre CDSL Central Depository Services (India) Limited GNPA Gross Non‐Performing Assets CEPA Comprehensive Economic Partnership Agreement GRCTC Global/Regional Corporate Treasury Centre CM Clearing Member HRMS Human Resource Management System COB Conduct of Business IAC International Arbitration Centre CRAR Capital to Risk‐Weighted Assets Ratio IAIS International Association of Insurance Supervisors DB Digital Bank IBC International Branch Campus DEA Department of Economic Affairs IBU IFSC Banking Unit DGFT Directorate General of Foreign Trade DoC Department of Commerce ICC Internal Complaints Committee DoS Department of Space ICEGATE Indian Customs Electronic Data Interchange Gateway DP Depository Participant IDY International Day of Yoga DR Disaster Recovery IFSC International Financial Services Centre DRS Disaster Recovery Site IIBH India International Bullion Holding IFSC Limited EMDE Emerging Market and Developing Economy IIBX India International Bullion Exchange IFSC Limited EME Emerging Market Economy IIDI India International Depository (IFSC) Limited ESG Environmental, Social or Governance IIIO IFSC Insurance Intermediary Office ETF Exchange‐traded Fund IIO IFSC Insurance Office EXIM Bank Export‐Import Bank of India India ICC India International Clearing Corporation (IFSC) Limited FAQs Frequently Asked Questions IoRS Interoperable Regulatory Sandbox FATF Financial Action Task Force IPO Initial Public Offer FC Finance Company IRTG Inter‐Regulatory Technical Group FCFC Freely Convertible Foreign Currency ITFS International Trade Finance Service FCY Foreign Currency LCR Liquidity Coverage Ratio XX International Financial Services Centres Authority XXIANNUAL REPORT 2022-23 ABBREVIATIONS FDI Foreign Direct Investment FE FinTech Entity AIF Alternative Investment Fund FME Fund Management Entity ALM Asset/Liability Management FPI Foreign Portfolio Investment AML Anti Money Laundering FU Finance Unit BCP Business Continuity Plan GAO Global Administrative Office BDR Bullion Depository Receipt GDP Gross Domestic Product CDD Customer Due Diligence GIC Global In‐house Centre CDSL Central Depository Services (India) Limited GNPA Gross Non‐Performing Assets CEPA Comprehensive Economic Partnership Agreement GRCTC Global/Regional Corporate Treasury Centre CM Clearing Member HRMS Human Resource Management System COB Conduct of Business IAC International Arbitration Centre CRAR Capital to Risk‐Weighted Assets Ratio IAIS International Association of Insurance Supervisors DB Digital Bank IBC International Branch Campus DEA Department of Economic Affairs IBU IFSC Banking Unit DGFT Directorate General of Foreign Trade DoC Department of Commerce ICC Internal Complaints Committee DoS Department of Space ICEGATE Indian Customs Electronic Data Interchange Gateway DP Depository Participant IDY International Day of Yoga DR Disaster Recovery IFSC International Financial Services Centre DRS Disaster Recovery Site IIBH India International Bullion Holding IFSC Limited EMDE Emerging Market and Developing Economy IIBX India International Bullion Exchange IFSC Limited EME Emerging Market Economy IIDI India International Depository (IFSC) Limited ESG Environmental, Social or Governance IIIO IFSC Insurance Intermediary Office ETF Exchange‐traded Fund IIO IFSC Insurance Office EXIM Bank Export‐Import Bank of India India ICC India International Clearing Corporation (IFSC) Limited FAQs Frequently Asked Questions IoRS Interoperable Regulatory Sandbox FATF Financial Action Task Force IPO Initial Public Offer FC Finance Company IRTG Inter‐Regulatory Technical Group FCFC Freely Convertible Foreign Currency ITFS International Trade Finance Service FCY Foreign Currency LCR Liquidity Coverage Ratio XX International Financial Services Centres Authority XXIANNUAL REPORT 2022-23 LES Liquidity Enhancement Scheme SCB Scheduled Commercial Bank LPTM Limited Purpose Trading Member SME Small and Medium Enterprise LRS Liberalised Remittance Scheme SOP Standard Operating Procedure MAR Monthly Activity Report TM Trading Member MCA Ministry of Corporate Affairs TMCM Trading and Member Clearing Member MCX Multi Commodity Exchange of India Limited TRQ Tariff Rate Quota MDR Monthly Development Report TSCM Trading cum Self Clearing Member MIIs Market Infrastructure Institutions UAEGD UAE Good Delivery ML Money Laundering USD US Dollars MMoU Multilateral Memorandum of Understanding WPI Wholesale Prince Index MoCA Ministry of Civil Aviation YoY Year‐on‐Year MoF Ministry of Finance MoU Memorandum of Understanding NBFC Non‐Banking Financial Company NDB New Development Bank NIC National Informatics Centre NICCL NSE IFSC Clearing Corporation Limited NIST National Institute of Standards & Technology NLTs Negotiated Large Trades NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OEC Offshore Education Centre PCM Professional Clearing member PMLA Prevention of Money Laundering Act PSU Public Sector Undertaking QJ Qualified Jeweller RBA Risk‐Based Approach RBI Reserve Bank of India RE Regulated Entity SAFAL Ship Acquisition, Financing and Leasing XXII International Financial Services Centres Authority XXIIIANNUAL REPORT 2022-23 LES Liquidity Enhancement Scheme SCB Scheduled Commercial Bank LPTM Limited Purpose Trading Member SME Small and Medium Enterprise LRS Liberalised Remittance Scheme SOP Standard Operating Procedure MAR Monthly Activity Report TM Trading Member MCA Ministry of Corporate Affairs TMCM Trading and Member Clearing Member MCX Multi Commodity Exchange of India Limited TRQ Tariff Rate Quota MDR Monthly Development Report TSCM Trading cum Self Clearing Member MIIs Market Infrastructure Institutions UAEGD UAE Good Delivery ML Money Laundering USD US Dollars MMoU Multilateral Memorandum of Understanding WPI Wholesale Prince Index MoCA Ministry of Civil Aviation YoY Year‐on‐Year MoF Ministry of Finance MoU Memorandum of Understanding NBFC Non‐Banking Financial Company NDB New Development Bank NIC National Informatics Centre NICCL NSE IFSC Clearing Corporation Limited NIST National Institute of Standards & Technology NLTs Negotiated Large Trades NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OEC Offshore Education Centre PCM Professional Clearing member PMLA Prevention of Money Laundering Act PSU Public Sector Undertaking QJ Qualified Jeweller RBA Risk‐Based Approach RBI Reserve Bank of India RE Regulated Entity SAFAL Ship Acquisition, Financing and Leasing XXII International Financial Services Centres Authority XXIIISECTION‑B XXIV International Financial Services Centres Authority 01SECTION‑B XXIV International Financial Services Centres Authority 01ANNUAL REPORT 2022-23 At the close of the year, inflation remained high, and labour markets remained tight in many economies. The International Monetary Fund's World Economic Outlook for baseline forecast (assuming that the recent financial sector stresses are contained) estimates a reduction in global economic growth rate from 3.4 per cent in 2022 to 2.8 per cent in 2023, before rising slowly and settling at 3.0 per cent in 2024. This is the lowest medium‐term forecast in decades, with growth slowdown expected to be more pronounced in advanced economies (from 2.7 per cent in 2022 to 1.3 per cent in 2023) vis‐à‐vis emerging market and developing economies (from 4.0 per cent in 2022 to 3.9 per cent in 2023). 1 The Outlook also estimates that in case of further financial sector stress, global growth could fall to about 2.5 per cent in 2023, with growth of advanced economies dipping below 1 per cent. Driven by falling commodity prices, global headline inflation is estimated to fall from 8.7 per cent in 2022 to 7.0 per cent in 2023 but core inflation is likely to decelerate more slowly. 2 In such a scenario, any headwinds due to renewed geopolitical tensions, persistent or increasing inflationary pressures, interest rate escalations to curb inflation, or the COVID‐19 pandemic rearing its ugly head again, could spell fresh trouble for the global economy. Emerging markets could face further indebtedness. High level of interconnectedness coupled with financial fragmentation due to geopolitical tensions could threaten financial stability adversely affecting liquidity, cost of funds, and consequently profitability. Policymakers have their task cut out and must tread a narrow path in trying to get inflation back to target while maintaining financial stability. They also need to account for the risks posed by geopolitical tensions. Stronger and focused international cooperation has become imperative to enable countries to mobilise resources required to navigate the challenges facing all countries, both developed and developing. Financial Markets Performance Banking Industry As per BIS Quarterly Review of March 2023, with both inflation and policy measures showing signs of easing early in the year, financial markets were buoyed by the expectations of not only a halt in interest rate hike later during the year, but also a reduction in 2024. Credit spreads between various debt securities diminished due to the perception of default risk being lower. In general, risky assets saw gains due to the market perception that risks were on the decline. Easing inflation and resilient growth translated into a decline in bond yields. The depreciation of US dollar helped further asset appreciation in Emerging Market Economies (EMEs). 3 However, with inflation being still high, and labour markets still tight, market sentiments expecting a downward trend in interest rates were out of synchrony with cautious signals relayed by most central banks, who gave no indication that there would be any easing of monetary policy in the short term. 1 World Economic Outlook, April 2023 2 ibid 3 BIS Quarterly Review, March 2023 03 weiveR ni raeY ehT THE YEAR IN REVIEW (I) Global Economic Assessment and Outlook 2021‐22 was the year when the global financial system witnessed a strong rebound after being tested during the COVID‐19 pandemic. The global GDP growth rate in 2021‐22 was 5.9 per cent compared to negative global growth rate of ‐3.1 per cent during 2020‐21. A carry‐forward of this momentum into the year 2022‐23 could have eclipsed the hardships faced by the world during 2020‐21. However, fresh outbreaks of the pandemic in China along with geopolitical tensions precipitated by the Ukraine war and consequential supply chain disruptions led to increased price of commodities and energy. Shrinking global output; obstinately higher‐than‐anticipated inflation; a cost‐of‐living crisis; and tightening financial conditions, all took a heavy toll on the global economy. The year 2023 did usher in some rays of hope, especially with China reopening earlier than expected, easing supply chain bottlenecks, and moderated energy and food prices healing elevated inflation levels. Such trends encouraged both industry and households, boosting demand and economic activity. However, barring food and energy, core inflation remained elevated. Many Central Banks responded with unexpectedly rapid and synchronous monetary policy tightening in a bid to curb high inflation. Market sentiments were assuaged to some extent due to emphatic actions taken by policymakers to contain systemic risks. However, the recent financial sector turmoil, like sudden failures of Silicon Valley Bank and Signature Bank in the United States, and collapse of Credit Suisse, a global systemically important bank in Europe has brought to fore the unintended fallouts of the interplay between tightening of monetary and financial conditions and the buildup in vulnerabilities. What appeared to be isolated events in the US banking sector had significant spill‐over effects on many other banks and financial markets. Therefore, anxiety over whether such events were manifestations of deeper, hidden vulnerabilities that could amplify into a system‐wide crisis, continued to beleaguer the market. 02 International Financial Services Centres AuthorityANNUAL REPORT 2022-23 At the close of the year, inflation remained high, and labour markets remained tight in many economies. The International Monetary Fund's World Economic Outlook for baseline forecast (assuming that the recent financial sector stresses are contained) estimates a reduction in global economic growth rate from 3.4 per cent in 2022 to 2.8 per cent in 2023, before rising slowly and settling at 3.0 per cent in 2024. This is the lowest medium‐term forecast in decades, with growth slowdown expected to be more pronounced in advanced economies (from 2.7 per cent in 2022 to 1.3 per cent in 2023) vis‐à‐vis emerging market and developing economies (from 4.0 per cent in 2022 to 3.9 per cent in 2023). 1 The Outlook also estimates that in case of further financial sector stress, global growth could fall to about 2.5 per cent in 2023, with growth of advanced economies dipping below 1 per cent. Driven by falling commodity prices, global headline inflation is estimated to fall from 8.7 per cent in 2022 to 7.0 per cent in 2023 but core inflation is likely to decelerate more slowly. 2 In such a scenario, any headwinds due to renewed geopolitical tensions, persistent or increasing inflationary pressures, interest rate escalations to curb inflation, or the COVID‐19 pandemic rearing its ugly head again, could spell fresh trouble for the global economy. Emerging markets could face further indebtedness. High level of interconnectedness coupled with financial fragmentation due to geopolitical tensions could threaten financial stability adversely affecting liquidity, cost of funds, and consequently profitability. Policymakers have their task cut out and must tread a narrow path in trying to get inflation back to target while maintaining financial stability. They also need to account for the risks posed by geopolitical tensions. Stronger and focused international cooperation has become imperative to enable countries to mobilise resources required to navigate the challenges facing all countries, both developed and developing. Financial Markets Performance Banking Industry As per BIS Quarterly Review of March 2023, with both inflation and policy measures showing signs of easing early in the year, financial markets were buoyed by the expectations of not only a halt in interest rate hike later during the year, but also a reduction in 2024. Credit spreads between various debt securities diminished due to the perception of default risk being lower. In general, risky assets saw gains due to the market perception that risks were on the decline. Easing inflation and resilient growth translated into a decline in bond yields. The depreciation of US dollar helped further asset appreciation in Emerging Market Economies (EMEs). 3 However, with inflation being still high, and labour markets still tight, market sentiments expecting a downward trend in interest rates were out of synchrony with cautious signals relayed by most central banks, who gave no indication that there would be any easing of monetary policy in the short term. 1 World Economic Outlook, April 2023 2 ibid 3 BIS Quarterly Review, March 2023 03 weiveR ni raeY ehT THE YEAR IN REVIEW (I) Global Economic Assessment and Outlook 2021‐22 was the year when the global financial system witnessed a strong rebound after being tested during the COVID‐19 pandemic. The global GDP growth rate in 2021‐22 was 5.9 per cent compared to negative global growth rate of ‐3.1 per cent during 2020‐21. A carry‐forward of this momentum into the year 2022‐23 could have eclipsed the hardships faced by the world during 2020‐21. However, fresh outbreaks of the pandemic in China along with geopolitical tensions precipitated by the Ukraine war and consequential supply chain disruptions led to increased price of commodities and energy. Shrinking global output; obstinately higher‐than‐anticipated inflation; a cost‐of‐living crisis; and tightening financial conditions, all took a heavy toll on the global economy. The year 2023 did usher in some rays of hope, especially with China reopening earlier than expected, easing supply chain bottlenecks, and moderated energy and food prices healing elevated inflation levels. Such trends encouraged both industry and households, boosting demand and economic activity. However, barring food and energy, core inflation remained elevated. Many Central Banks responded with unexpectedly rapid and synchronous monetary policy tightening in a bid to curb high inflation. Market sentiments were assuaged to some extent due to emphatic actions taken by policymakers to contain systemic risks. However, the recent financial sector turmoil, like sudden failures of Silicon Valley Bank and Signature Bank in the United States, and collapse of Credit Suisse, a global systemically important bank in Europe has brought to fore the unintended fallouts of the interplay between tightening of monetary and financial conditions and the buildup in vulnerabilities. What appeared to be isolated events in the US banking sector had significant spill‐over effects on many other banks and financial markets. Therefore, anxiety over whether such events were manifestations of deeper, hidden vulnerabilities that could amplify into a system‐wide crisis, continued to beleaguer the market. 02 International Financial Services Centres AuthorityANNUAL REPORT 2022-23 In early February 2023, however, market participants were compelled to reassess their Insurance Industry expectations of policy measures in light of empirical evidence. There was a slight appreciation in the US dollar and some reversal of risky asset gains. The future trajectory of the global Insurance industry is expected to be driven by multiple opportunities coupled with novel obstacles. With government aided health and retirement Financial conditions in EMEs followed trends like those in Advance Economies. While schemes facing funding gaps and/or proving to be inadequate, an increasing number of people bond yields declined, equity markets fluctuated in response to US dollar fluctuations. The sudden are realizing that they are personally responsible for their future health and retirement costs. end to zero‐Covid policy in China did buoy its equity market but failed to revive portfolio flows Similarly, the trend of climate related adverse events and cyber risks, indicate that such events into the country significantly. Such flows not only stabilized for most other EMEs but even are likely to increase significantly in future. These developments present a host of opportunities for increased for some. the Insurance industry as more people are seeking stronger protection for their valued In a complete turnaround from the situation in March 2022, global banks' cross‐border claims possessions, life included, given the ever increasing and divergent threats facing humankind. fell by USD1.4 trillion in Q4 2022, pulled back by lower bank credit and a drop in the market value This protection gap has the potential to bring in revenue of as much as USD 1 trillion more, of banks' derivatives and other residual instruments. There was a decline of 4 per cent in dollar with gain of billions in profits. credit to emerging market and developing economies. 4 However, the effects of high inflation, tightening of monetary policies, geo‐political tensions The aggregate market value of the top 25 global banks by market capitalisation too declined in Europe, and the lingering effects of COVID‐19 pose significant challenge to the insurance significantly by 6.7 per cent quarter‐on‐quarter to USD 3 trillion during Q3 2022. However, industry. While the industry has emerged from high inflation situations earlier, the present high inflation and spill‐overs of geopolitical tensions notwithstanding, these top 25 global banks challenge seems more difficult. Insurers have to deal not only with lower demand but also with managed to garner encouraging revenue and total assets growth of 15.5 per cent and 5.8 per cent, higher claims costs. While the downside risk in respect of unit‐linked policies is largely borne respectively during 2022. 5 by policyholders, the possibility of customers migrating to guaranteed income products need to be accounted for. The industry will also have to grapple with the growing competition from Capital Markets InsurTech market. Considering the unfavourable geo‐political environment, insurers will also have to exercise The effects of high inflation coupled with tightening of monetary policies, the Ukraine war, and caution to underwrite political and trade credit insurance risks. These factors will be of major the lingering effects of COVID‐19, were felt in the global stock markets which too witnessed concern especially to trans‐national insurance firms and could lead them to refocus on their home significant decline compared to 2021. As per the data published by the World Federation of markets. Similarly, with climate change induced events and natural catastrophes likely to become Exchanges (WFE) for 2022, market capitalisation of stock markets plummeted by 20 per cent more frequent and severe in future, insurers are faced with greater likelihood of higher claim costs. equating to reduction of more than 25 trillion US dollars in stock markets worldwide. During the same time, value traded slipped by 10 per cent. 6 In such an uncertain scenario, insurers would need to leverage technology and innovate solutions to make their offerings more attractive yet viable. The possibility of public‐private partnerships On the positive side, barring commodity derivatives, volumes of exchange‐traded derivatives to make insurance accessible to the greater mass would also have to be explored. continued to rise, with options witnessing a significant jump, possibly to hedge against market uncertainty. (II) Domestic Economic Assessment and Prospects Global volumes increased about 5 per cent, translating to highest global volumes in the last six years (48.32 Bn trades). The primary market witnessed a decline of about 50 per cent in the Gross Domestic Product number of IPOs resulting in about 65 per cent decline in capital raised through this avenue. Exchange‐traded derivative contracts, including both options and futures saw a jump of about The domestic economy, despite subdued global economic outlook, is poised to outdo the general 34.4 per cent, the highest level in the last six years. Volumes of equity, currency and ETF derivatives trend in FY 2023‐24. Various institutions, including multilateral agencies, predict India as the jumped by 48.4 per cent, 48.2 per cent, and 36.9 per cent respectively, while interest rate fastest‐growing major economy in forthcoming financial year. derivatives volumes increased by 8.5 per cent. Single stock futures, stock index options, stock index According to the World Bank’s April 2023 release, some moderation of growth notwithstanding, futures, currency options, currency futures, commodity options, interest rate futures and ETF the Indian economy has displayed resilience even in the face of challenges prevalent in the global options reached their highest level in volumes in the last six years. On the flip side, commodity environment and is expected to post stronger growth than many of its peer economies. The World derivatives volumes (futures and options) declined by 14.5 per cent. 7 Bank estimates overall growth to be 6.9 per cent for the full year with real GDP growing at 7.7 per cent YoY during the first three quarters of FY 2022‐23. On similar lines, the 4 BIS Statistical Release‐April 2023 Asian Development Bank has projected a domestic GDP growth of 6.4 per cent in FY 2023‐24. 5 Global Data 6 World Federation of Exchanges‐FY 2022 Market Highlight Report 7 ibid 04 International Financial Services Centres Authority 05ANNUAL REPORT 2022-23 In early February 2023, however, market participants were compelled to reassess their Insurance Industry expectations of policy measures in light of empirical evidence. There was a slight appreciation in the US dollar and some reversal of risky asset gains. The future trajectory of the global Insurance industry is expected to be driven by multiple opportunities coupled with novel obstacles. With government aided health and retirement Financial conditions in EMEs followed trends like those in Advance Economies. While schemes facing funding gaps and/or proving to be inadequate, an increasing number of people bond yields declined, equity markets fluctuated in response to US dollar fluctuations. The sudden are realizing that they are personally responsible for their future health and retirement costs. end to zero‐Covid policy in China did buoy its equity market but failed to revive portfolio flows Similarly, the trend of climate related adverse events and cyber risks, indicate that such events into the country significantly. Such flows not only stabilized for most other EMEs but even are likely to increase significantly in future. These developments present a host of opportunities for increased for some. the Insurance industry as more people are seeking stronger protection for their valued In a complete turnaround from the situation in March 2022, global banks' cross‐border claims possessions, life included, given the ever increasing and divergent threats facing humankind. fell by USD1.4 trillion in Q4 2022, pulled back by lower bank credit and a drop in the market value This protection gap has the potential to bring in revenue of as much as USD 1 trillion more, of banks' derivatives and other residual instruments. There was a decline of 4 per cent in dollar with gain of billions in profits. credit to emerging market and developing economies. 4 However, the effects of high inflation, tightening of monetary policies, geo‐political tensions The aggregate market value of the top 25 global banks by market capitalisation too declined in Europe, and the lingering effects of COVID‐19 pose significant challenge to the insurance significantly by 6.7 per cent quarter‐on‐quarter to USD 3 trillion during Q3 2022. However, industry. While the industry has emerged from high inflation situations earlier, the present high inflation and spill‐overs of geopolitical tensions notwithstanding, these top 25 global banks challenge seems more difficult. Insurers have to deal not only with lower demand but also with managed to garner encouraging revenue and total assets growth of 15.5 per cent and 5.8 per cent, higher claims costs. While the downside risk in respect of unit‐linked policies is largely borne respectively during 2022. 5 by policyholders, the possibility of customers migrating to guaranteed income products need to be accounted for. The industry will also have to grapple with the growing competition from Capital Markets InsurTech market. Considering the unfavourable geo‐political environment, insurers will also have to exercise The effects of high inflation coupled with tightening of monetary policies, the Ukraine war, and caution to underwrite political and trade credit insurance risks. These factors will be of major the lingering effects of COVID‐19, were felt in the global stock markets which too witnessed concern especially to trans‐national insurance firms and could lead them to refocus on their home significant decline compared to 2021. As per the data published by the World Federation of markets. Similarly, with climate change induced events and natural catastrophes likely to become Exchanges (WFE) for 2022, market capitalisation of stock markets plummeted by 20 per cent more frequent and severe in future, insurers are faced with greater likelihood of higher claim costs. equating to reduction of more than 25 trillion US dollars in stock markets worldwide. During the same time, value traded slipped by 10 per cent. 6 In such an uncertain scenario, insurers would need to leverage technology and innovate solutions to make their offerings more attractive yet viable. The possibility of public‐private partnerships On the positive side, barring commodity derivatives, volumes of exchange‐traded derivatives to make insurance accessible to the greater mass would also have to be explored. continued to rise, with options witnessing a significant jump, possibly to hedge against market uncertainty. (II) Domestic Economic Assessment and Prospects Global volumes increased about 5 per cent, translating to highest global volumes in the last six years (48.32 Bn trades). The primary market witnessed a decline of about 50 per cent in the Gross Domestic Product number of IPOs resulting in about 65 per cent decline in capital raised through this avenue. Exchange‐traded derivative contracts, including both options and futures saw a jump of about The domestic economy, despite subdued global economic outlook, is poised to outdo the general 34.4 per cent, the highest level in the last six years. Volumes of equity, currency and ETF derivatives trend in FY 2023‐24. Various institutions, including multilateral agencies, predict India as the jumped by 48.4 per cent, 48.2 per cent, and 36.9 per cent respectively, while interest rate fastest‐growing major economy in forthcoming financial year. derivatives volumes increased by 8.5 per cent. Single stock futures, stock index options, stock index According to the World Bank’s April 2023 release, some moderation of growth notwithstanding, futures, currency options, currency futures, commodity options, interest rate futures and ETF the Indian economy has displayed resilience even in the face of challenges prevalent in the global options reached their highest level in volumes in the last six years. On the flip side, commodity environment and is expected to post stronger growth than many of its peer economies. The World derivatives volumes (futures and options) declined by 14.5 per cent. 7 Bank estimates overall growth to be 6.9 per cent for the full year with real GDP growing at 7.7 per cent YoY during the first three quarters of FY 2022‐23. On similar lines, the 4 BIS Statistical Release‐April 2023 Asian Development Bank has projected a domestic GDP growth of 6.4 per cent in FY 2023‐24. 5 Global Data 6 World Federation of Exchanges‐FY 2022 Market Highlight Report 7 ibid 04 International Financial Services Centres Authority 05ANNUAL REPORT 2022-23 Financial Markets The estimates of the World Bank and the Asian Development Bank are also reflected in domestic estimates. The second advance estimates released by the National Statistical Office (NSO) placed India’s real GDP growth at 7.0 per cent in 2022‐23. According to the Economic Survey 2022‐ Banking sector 23, domestic baseline GDP growth in real terms in FY 2024 is estimated to be 6.5 per cent. Over the years, focussed policy measures adopted by the RBI and the Government of India have The Indian growth projections are premised primarily on sound macroeconomic fundamentals, resulted in a healthier banking system balance sheet both in terms of asset quantity and quality. elevated private investment supported by increased Capex and enabling policy measures taken Consequently, the risk absorption capacity of banks has also improved. by the Central Government, increased production catalysed by robust private consumption, Gross Non‐Performing Assets (GNPA) ratio of Scheduled Commercial Banks (SCBs) has declined strengthening balance sheets of corporates and banks, and well‐capitalised public sector banks from 8.2 per cent in March 2020 to a seven year low of 5.0 per cent in September 2022. geared to fuel credit growth. More encouragingly, Net Non‐Performing Assets Ratio (NNPA) has improved to a ten‐year low Inflation of 1.3 per cent. With heightened demand for home loans, retail credit has outperformed an already healthy overall Globally, high inflation proved costly to the economy reeling under the effects of geo‐political strife credit growth of the SCBs. Significantly, catalysed by growing economic activities, non‐food bank in Europe and resurgence of the pandemic in China resulting in supply‐chain disruptions and credit touched 15.3 per cent in December 202211, simultaneously mirroring positive expectations soaring energy and food markets prices. This prompted monetary policy interventions by most for future growth as well. central banks to curb higher‐than‐expected inflation. Compared to FY 2021‐22, NBFCs fared better with improved GNPA and capital position In India, Consumer price inflation (CPI) witnessed a rise till April 2022, peaking at 7.8 per cent, (CRAR of 27.4 per cent). Their focus area was in continuity with that during the previous FY, before plateauing out at around 7.0 per cent by August 2022. Thereafter, it witnessed a decline with industrial sector, retail, services and agriculture remaining their biggest credit recipients. to around 5.7 per cent by December 2022.8 It surged again to 6.4 per cent YoY in February 2023 as In addition, services sector and personal loans also witnessed a robust growth. food inflation rose.9 Financial inclusion has also received due importance with the Government taking committed steps The WPI‐based inflation, which had already begun to rise from the lows during the Covid‐19 to enhance concessional institutional credit, as evidenced by initiatives like Emergency Credit Line pandemic, has further exacerbated during the FY 2022‐23 because of disruption of global supply Guarantee Scheme (ECLGS) and production‐linked incentive scheme to MSMEs. The services chains due to the Russia‐Ukraine conflict. It witnessed double digit growth between April 2021 sector too benefitted by a recovery in credit to NBFCs, commercial real estate and trade sector. and September 2022 and moderated to 1.4 per cent in March 2023 on the back of a fall in international commodity prices and favourable base effects. 10 Capital Markets According to World Bank, although headline inflation is elevated, it is projected to decline to an average of 5.2 per cent in FY 2023‐24, amid easing global commodity prices and some While global capital markets largely suffered the side‐effects of geopolitical tensions, high inflation moderation in domestic demand. and rising interest rates in the FY 2022‐23, domestic capital markets displayed greater resilience during this period. The primary markets saw brisk activity during April to November 2022, with a rise of 37 per cent in the number of firms opting to list on the Stock Exchanges during this period12. In Initial Public Offerings (IPOs), the fund mobilisation has reduced vis‐à‐vis last FY, however, the number of SMEs coming out with public offer and the total amount raised by them has shown a surge13. While the number of issues of debt securities in the primary market rose by 11 per cent during the period, the value of funds raised increased by 5 per cent. Secondary capital market indices of the Nifty 50 and the S&P BSE Sensex fared better than their peers between April and December 2022, despite experiencing volatility in Foreign Portfolio Investment (FPI) flows. Nifty 50 managed a return of 3.7 per cent during the period. The total assets with FPIs increased by 3.4 per cent at the end of November 2022 compared to November 2021, and net FPI flows became positive by end of December 202214. 8 Economic Survey 9 RBI MPC Report, April 2023 11 Economic Survey 2022‐23 10 Office of the Economic Adviser 12 ibid 13 ibid 06 International Financial Services Centres Authority 14 PIB 07ANNUAL REPORT 2022-23 Financial Markets The estimates of the World Bank and the Asian Development Bank are also reflected in domestic estimates. The second advance estimates released by the National Statistical Office (NSO) placed India’s real GDP growth at 7.0 per cent in 2022‐23. According to the Economic Survey 2022‐ Banking sector 23, domestic baseline GDP growth in real terms in FY 2024 is estimated to be 6.5 per cent. Over the years, focussed policy measures adopted by the RBI and the Government of India have The Indian growth projections are premised primarily on sound macroeconomic fundamentals, resulted in a healthier banking system balance sheet both in terms of asset quantity and quality. elevated private investment supported by increased Capex and enabling policy measures taken Consequently, the risk absorption capacity of banks has also improved. by the Central Government, increased production catalysed by robust private consumption, Gross Non‐Performing Assets (GNPA) ratio of Scheduled Commercial Banks (SCBs) has declined strengthening balance sheets of corporates and banks, and well‐capitalised public sector banks from 8.2 per cent in March 2020 to a seven year low of 5.0 per cent in September 2022. geared to fuel credit growth. More encouragingly, Net Non‐Performing Assets Ratio (NNPA) has improved to a ten‐year low Inflation of 1.3 per cent. With heightened demand for home loans, retail credit has outperformed an already healthy overall Globally, high inflation proved costly to the economy reeling under the effects of geo‐political strife credit growth of the SCBs. Significantly, catalysed by growing economic activities, non‐food bank in Europe and resurgence of the pandemic in China resulting in supply‐chain disruptions and credit touched 15.3 per cent in December 202211, simultaneously mirroring positive expectations soaring energy and food markets prices. This prompted monetary policy interventions by most for future growth as well. central banks to curb higher‐than‐expected inflation. Compared to FY 2021‐22, NBFCs fared better with improved GNPA and capital position In India, Consumer price inflation (CPI) witnessed a rise till April 2022, peaking at 7.8 per cent, (CRAR of 27.4 per cent). Their focus area was in continuity with that during the previous FY, before plateauing out at around 7.0 per cent by August 2022. Thereafter, it witnessed a decline with industrial sector, retail, services and agriculture remaining their biggest credit recipients. to around 5.7 per cent by December 2022.8 It surged again to 6.4 per cent YoY in February 2023 as In addition, services sector and personal loans also witnessed a robust growth. food inflation rose.9 Financial inclusion has also received due importance with the Government taking committed steps The WPI‐based inflation, which had already begun to rise from the lows during the Covid‐19 to enhance concessional institutional credit, as evidenced by initiatives like Emergency Credit Line pandemic, has further exacerbated during the FY 2022‐23 because of disruption of global supply Guarantee Scheme (ECLGS) and production‐linked incentive scheme to MSMEs. The services chains due to the Russia‐Ukraine conflict. It witnessed double digit growth between April 2021 sector too benefitted by a recovery in credit to NBFCs, commercial real estate and trade sector. and September 2022 and moderated to 1.4 per cent in March 2023 on the back of a fall in international commodity prices and favourable base effects. 10 Capital Markets According to World Bank, although headline inflation is elevated, it is projected to decline to an average of 5.2 per cent in FY 2023‐24, amid easing global commodity prices and some While global capital markets largely suffered the side‐effects of geopolitical tensions, high inflation moderation in domestic demand. and rising interest rates in the FY 2022‐23, domestic capital markets displayed greater resilience during this period. The primary markets saw brisk activity during April to November 2022, with a rise of 37 per cent in the number of firms opting to list on the Stock Exchanges during this period12. In Initial Public Offerings (IPOs), the fund mobilisation has reduced vis‐à‐vis last FY, however, the number of SMEs coming out with public offer and the total amount raised by them has shown a surge13. While the number of issues of debt securities in the primary market rose by 11 per cent during the period, the value of funds raised increased by 5 per cent. Secondary capital market indices of the Nifty 50 and the S&P BSE Sensex fared better than their peers between April and December 2022, despite experiencing volatility in Foreign Portfolio Investment (FPI) flows. Nifty 50 managed a return of 3.7 per cent during the period. The total assets with FPIs increased by 3.4 per cent at the end of November 2022 compared to November 2021, and net FPI flows became positive by end of December 202214. 8 Economic Survey 9 RBI MPC Report, April 2023 11 Economic Survey 2022‐23 10 Office of the Economic Adviser 12 ibid 13 ibid 06 International Financial Services Centres Authority 14 PIB 07ANNUAL REPORT 2022-23 Insurance Sector External Sector Insurance penetration of both life and non‐life insurance (the ratio of total insurance premiums India’s external sector has been strongly supported by international trade, as evident from an to GDP in a year) in India was 4.2 per cent in 2021‐22 wherein, life insurance penetration all‐time high annual merchandise export of USD 422.0 Bn in FY 2021‐22, though the current FY accounted for 3.2 per cent, almost double than that of the insurance penetration observed witnessed some slowdown due to side effects of deceleration in global trade. in emerging markets and slightly above the global average. However, since most life insurance India’s overall exports (Merchandise and Services combined) in FY 2022‐23 is estimated to exhibit products opted by the insured are linked to savings/investment products, the protection or a growth of 13.84 per cent over FY 2021‐22. As India’s domestic demand has remained steady insurance coverage offered by such products is rather small15. amidst the global slump, overall imports in FY 2022‐23 is estimated to exhibit a growth of 17.38 per In the non‐life insurance segment, the YoY growth in gross direct premium (within and outside cent over FY 2021‐22. Merchandise exports growth for the period FY 2022‐23 remain impressive India) stood at 10.8 per cent in the FY 2021‐22 with health and motor segments being the key at 6.03 per cent (USD 447.46 Bn) as against FY 2021‐22 (USD 422.00 Bn). Services exports remain drivers. This was supported primarily by rising per capita income, product innovations, robust strong and are projected to grow at 26.79 per cent (USD 322.72 Bn) during FY 2022‐23 over FY distribution channels, and rising financial literacy16. Net incurred claims of Non‐Life Insurers stood 2021‐22 (USD 254.53 Bn) .20 at `1.4 lakh crore in FY 2021‐22. In the Life insurance segment, the YoY growth in premium during As per RBI, India’s current account deficit declined from USD 22.2 Bn (2.7 per cent of GDP) in the FY 2021‐22 was 10.2 per cent. Of the total premium in the life insurance segment, 45.5 per cent Q3:2021‐22 to USD 18.2 Bn (2.2 per cent of GDP) in Q3:2022‐23, contributed by a contraction in was received from new business17. Benefit payouts in the life insurance sector during FY2021‐22 merchandise trade deficit combined with robust services and private transfer receipts. Services stood at `5.02 lakh crore, with 8.3 per cent benefits paid out on death claims18. exports reported a growth of 24.5 per cent on a YoY basis on the back of rising exports of software, There has been a sharp increase in insurance density (premium to population/per capita) in India. business and travel services. Net services receipts increased, both sequentially and on a YoY basis. While life insurance density went up from USD 9.1 in 2001‐02 to USD 69 in 2021‐22, non‐life Net FDI inflows at USD 21.7 Bn during April‐December 2022 were lower in comparison with insurance density has gone up from USD 2.4 to USD 22, in the same period. USD 24.8 Bn during April‐December 2021. Portfolio investment recorded a net outflow of As per Swiss Re, India, with an estimated market share of 1.9% in total USD premium volumes, USD 3.5 Bn during April‐December 2022 as compared with a net outflow of USD 1.6 Bn a year ago. is the second largest in all emerging markets. During April‐December 2022, there was a depletion of USD 14.7 Bn from the foreign exchange The year also saw the largest IPO ever in the history of India, with the Central Government diluting reserves (on a Balance of Payment basis).21 its stake in the Life Insurance Corporation (LIC) of India, making it the sixth biggest IPO of 2022 globally. Fiscal Developments The fiscal policy in India has been geared towards providing a safety net to the vulnerable, reviving the economy by boosting demand, and addressing certain domestic supply‐side constraints through public investments and sustained structural reforms. The fiscal deficit of the Union Government, which stood at 9.2 per cent of GDP during FY 2020‐21, has moderated to 6.7 per cent of GDP in FY 2021‐22, with the fiscal target being 6.4 per cent of GDP in FY 2022‐23. This gradual decline in the Union government's fiscal deficit as a per cent of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years.19 15 Economic Survey 2022‐23 16 ibid 17 IRDAI Annual Report 2021‐22 18 ibid 19 Economic Survey 2022‐23 20 PIB 21 RBI 08 International Financial Services Centres Authority 09ANNUAL REPORT 2022-23 Insurance Sector External Sector Insurance penetration of both life and non‐life insurance (the ratio of total insurance premiums India’s external sector has been strongly supported by international trade, as evident from an to GDP in a year) in India was 4.2 per cent in 2021‐22 wherein, life insurance penetration all‐time high annual merchandise export of USD 422.0 Bn in FY 2021‐22, though the current FY accounted for 3.2 per cent, almost double than that of the insurance penetration observed witnessed some slowdown due to side effects of deceleration in global trade. in emerging markets and slightly above the global average. However, since most life insurance India’s overall exports (Merchandise and Services combined) in FY 2022‐23 is estimated to exhibit products opted by the insured are linked to savings/investment products, the protection or a growth of 13.84 per cent over FY 2021‐22. As India’s domestic demand has remained steady insurance coverage offered by such products is rather small15. amidst the global slump, overall imports in FY 2022‐23 is estimated to exhibit a growth of 17.38 per In the non‐life insurance segment, the YoY growth in gross direct premium (within and outside cent over FY 2021‐22. Merchandise exports growth for the period FY 2022‐23 remain impressive India) stood at 10.8 per cent in the FY 2021‐22 with health and motor segments being the key at 6.03 per cent (USD 447.46 Bn) as against FY 2021‐22 (USD 422.00 Bn). Services exports remain drivers. This was supported primarily by rising per capita income, product innovations, robust strong and are projected to grow at 26.79 per cent (USD 322.72 Bn) during FY 2022‐23 over FY distribution channels, and rising financial literacy16. Net incurred claims of Non‐Life Insurers stood 2021‐22 (USD 254.53 Bn) .20 at `1.4 lakh crore in FY 2021‐22. In the Life insurance segment, the YoY growth in premium during As per RBI, India’s current account deficit declined from USD 22.2 Bn (2.7 per cent of GDP) in the FY 2021‐22 was 10.2 per cent. Of the total premium in the life insurance segment, 45.5 per cent Q3:2021‐22 to USD 18.2 Bn (2.2 per cent of GDP) in Q3:2022‐23, contributed by a contraction in was received from new business17. Benefit payouts in the life insurance sector during FY2021‐22 merchandise trade deficit combined with robust services and private transfer receipts. Services stood at `5.02 lakh crore, with 8.3 per cent benefits paid out on death claims18. exports reported a growth of 24.5 per cent on a YoY basis on the back of rising exports of software, There has been a sharp increase in insurance density (premium to population/per capita) in India. business and travel services. Net services receipts increased, both sequentially and on a YoY basis. While life insurance density went up from USD 9.1 in 2001‐02 to USD 69 in 2021‐22, non‐life Net FDI inflows at USD 21.7 Bn during April‐December 2022 were lower in comparison with insurance density has gone up from USD 2.4 to USD 22, in the same period. USD 24.8 Bn during April‐December 2021. Portfolio investment recorded a net outflow of As per Swiss Re, India, with an estimated market share of 1.9% in total USD premium volumes, USD 3.5 Bn during April‐December 2022 as compared with a net outflow of USD 1.6 Bn a year ago. is the second largest in all emerging markets. During April‐December 2022, there was a depletion of USD 14.7 Bn from the foreign exchange The year also saw the largest IPO ever in the history of India, with the Central Government diluting reserves (on a Balance of Payment basis).21 its stake in the Life Insurance Corporation (LIC) of India, making it the sixth biggest IPO of 2022 globally. Fiscal Developments The fiscal policy in India has been geared towards providing a safety net to the vulnerable, reviving the economy by boosting demand, and addressing certain domestic supply‐side constraints through public investments and sustained structural reforms. The fiscal deficit of the Union Government, which stood at 9.2 per cent of GDP during FY 2020‐21, has moderated to 6.7 per cent of GDP in FY 2021‐22, with the fiscal target being 6.4 per cent of GDP in FY 2022‐23. This gradual decline in the Union government's fiscal deficit as a per cent of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years.19 15 Economic Survey 2022‐23 16 ibid 17 IRDAI Annual Report 2021‐22 18 ibid 19 Economic Survey 2022‐23 20 PIB 21 RBI 08 International Financial Services Centres Authority 09SECTION‑C 10 International Financial Services Centres Authority 11SECTION‑C 10 International Financial Services Centres Authority 11gniknaB ANNUAL REPORT 2022-23 IFSCA Banking Handbook The handbook was issued on August 13, 2021, (amended on November 12, 2021) and has come into effect from January 01, 2022. With effect from June 06, 2022, the following major amendments were undertaken in the handbook: i) Provision added in the Licensing module (LIBU) of the General Directions (GEN) for issuance of “In‐principle approval” by the Authority, in certain circumstances, before issuance of full license. ii) A new module named “Raising queries related to Banking” was inserted in the General Directions laying down a structured procedure through which IBUs and other interested parties could raise queries with the Authority and the procedure for dealing with such queries by the Authority. iii) The “Providing credit” (PRCR) module of the Conduct of Business (COB) Directions was BANKING amended to Clarify the applicability of restrictions under the Banking Regulation Act, 1949 to IBUs of Indian and Foreign Banks This section gives a picture of the various measures taken by the Authority towards the regulation iv) Guidance was added to the “Prudential Reporting, Disclosures and Supervision” module of banking and related services and the development of banking ecosystem in IFSC during of the Prudential Directions (PRU) to clarify the requirement about reporting of actual FY 2022‐23. and anticipated breaches. IFSCA (Banking) (Third Amendment) Regulations, 2022 Later in the year, the COB Directions of IFSCA Banking Handbook was amended with effect from July 13, 2022, and a new module for setting up a Global Administrative Office (GAO) was inserted. The IFSCA (Banking) Regulations, 2020, was further amended vide the IFSCA (Banking) (Third Amendment) Regulations, 2022, which was notified on June 30, 2022. Global Administrative Office The major changes/additions under the amended Regulations are as under: i) In order to enable setting up of Global Administrative Offices (GAO), the terms A new category of financial institution, entitled as Global Administrative Office (GAO), was allowed “Global Administrative Office” or “GAO” and “Group entities” were defined by making to be set up by an Indian or foreign bank to undertake management, administration, necessary additions to sub‐Regulation (1) of Regulation 2. and coordination of overseas branches (including IBU) of the Parent Bank and provide “Support services” for banking activities undertaken within and outside IFSC. Unlike an IBU, ii) The definition of a “Parent Bank” in clause (j) of sub‐Regulation (1) of Regulation 2 the GAO shall not undertake banking business in IFSC. A GAO is permitted to be located in IFSC, was substituted with a new definition. but not on the same or contiguous premises as the IBU or the RO, if any, of the applicant bank iii) The definitions of a “Representative Office” (RO) and “Support services” were inserted (unless permitted by the Authority). under sub‐Regulation (1) of Regulation 2. A GAO is permitted to undertake following activities: iv) Sub‐regulation (9) of Regulation 3 was substituted to the effect that a Parent Bank i) Manage, administer, or coordinate the operations of their Parent Bank or any of their may set up its RO or GAO in IFSC under a suitable mechanism, subject to such conditions Group entities either in IFSC or outside IFSC. as may be specified by the Authority. ii) Provide support services to their Parent Bank or any of their Group entities for execution of the permitted activities either in IFSC or outside IFSC . Under the new GAO framework, State Bank of India has set up Global Administrative Office in GIFT IFSC. 12 International Financial Services Centres Authority 13gniknaB ANNUAL REPORT 2022-23 IFSCA Banking Handbook The handbook was issued on August 13, 2021, (amended on November 12, 2021) and has come into effect from January 01, 2022. With effect from June 06, 2022, the following major amendments were undertaken in the handbook: i) Provision added in the Licensing module (LIBU) of the General Directions (GEN) for issuance of “In‐principle approval” by the Authority, in certain circumstances, before issuance of full license. ii) A new module named “Raising queries related to Banking” was inserted in the General Directions laying down a structured procedure through which IBUs and other interested parties could raise queries with the Authority and the procedure for dealing with such queries by the Authority. iii) The “Providing credit” (PRCR) module of the Conduct of Business (COB) Directions was BANKING amended to Clarify the applicability of restrictions under the Banking Regulation Act, 1949 to IBUs of Indian and Foreign Banks This section gives a picture of the various measures taken by the Authority towards the regulation iv) Guidance was added to the “Prudential Reporting, Disclosures and Supervision” module of banking and related services and the development of banking ecosystem in IFSC during of the Prudential Directions (PRU) to clarify the requirement about reporting of actual FY 2022‐23. and anticipated breaches. IFSCA (Banking) (Third Amendment) Regulations, 2022 Later in the year, the COB Directions of IFSCA Banking Handbook was amended with effect from July 13, 2022, and a new module for setting up a Global Administrative Office (GAO) was inserted. The IFSCA (Banking) Regulations, 2020, was further amended vide the IFSCA (Banking) (Third Amendment) Regulations, 2022, which was notified on June 30, 2022. Global Administrative Office The major changes/additions under the amended Regulations are as under: i) In order to enable setting up of Global Administrative Offices (GAO), the terms A new category of financial institution, entitled as Global Administrative Office (GAO), was allowed “Global Administrative Office” or “GAO” and “Group entities” were defined by making to be set up by an Indian or foreign bank to undertake management, administration, necessary additions to sub‐Regulation (1) of Regulation 2. and coordination of overseas branches (including IBU) of the Parent Bank and provide “Support services” for banking activities undertaken within and outside IFSC. Unlike an IBU, ii) The definition of a “Parent Bank” in clause (j) of sub‐Regulation (1) of Regulation 2 the GAO shall not undertake banking business in IFSC. A GAO is permitted to be located in IFSC, was substituted with a new definition. but not on the same or contiguous premises as the IBU or the RO, if any, of the applicant bank iii) The definitions of a “Representative Office” (RO) and “Support services” were inserted (unless permitted by the Authority). under sub‐Regulation (1) of Regulation 2. A GAO is permitted to undertake following activities: iv) Sub‐regulation (9) of Regulation 3 was substituted to the effect that a Parent Bank i) Manage, administer, or coordinate the operations of their Parent Bank or any of their may set up its RO or GAO in IFSC under a suitable mechanism, subject to such conditions Group entities either in IFSC or outside IFSC. as may be specified by the Authority. ii) Provide support services to their Parent Bank or any of their Group entities for execution of the permitted activities either in IFSC or outside IFSC . Under the new GAO framework, State Bank of India has set up Global Administrative Office in GIFT IFSC. 12 International Financial Services Centres Authority 13ANNUAL REPORT 2022-23 Trends and Transactions 2,50,000.0 As on March 31, 2023, 20 IBUs were operational. Further, two IBUs, which have been licensed 2,00,000.0 1,50,000.0 before March 31, 2023 are expected to commence operations during the FY 2023‐24. 1,00,000.0 Table 1.1: No. of IBUs 50,000.0 ‐ Particulars As on Mar 31, 2022 As on Mar 31, 2023 Loan/ECB Trade Others No. of IBUs 15 20 (Guarantee/LC/BA/BC, etc.) (Interbank/interbranch placements, etc.) FY 2021‐22 FY 2022‐23 Table 1.2: Total Assets in IBUs in USD Mn Fig 1.2: Turnover (Volume of Business) in USD Mn Particulars Outstanding as on Mar 31, 2022 Outstanding as on Mar 31, 2023 Total Assets 29,380.82 38,286.41 Volume of business in the IBUs has more than doubled (USD 106.98 Bn during FY21‐22 to USD 258.59 Bn during FY 22‐23) with interbank/interbranch placements contributing the major share Table 1.3: No. of employees in all IBUs of this growth after a few IBUs were designated as treasury hubs for their parent banks. Particulars FY 2021‑22 FY 2022‑23 No. of employees 162 277 1,800.00 1,600.00 Sources of fund raising for IBUs have been interbank and interbranch borrowings, medium 1,400.00 term notes, borrowings from multilateral institutions, retail deposits etc. Credit activities of IBUs 1,200.00 have been largely concentrated in the areas of trade finance and commercial loans. 1,000.00 800.00 Customer Credit of the IFSC Banking ecosystem as on March 31, 2023 stood at USD 23.94 Bn 600.00 and total asset size of IBUs stood at USD 38.28 Bn. 400.00 200.00 ‐ 12,000.00 10,000.00 Treasury Corporate Equity Mutual Funds Others 8,000.00 Bill Bonds/Debentures Shares/preference Shares 6,000.00 4,000.00 as on Mar 31, 2022 as on Mar 31, 2023 2,000.00 Fig 1.3: Investment profile in USD Mn ‐ Trade Commercial Loans to Loans Loans Others Finance Loans Indian against against deposits IBUs were maintaining investment in Treasury bills for compliance with the prudential PSUs LC/LOC by HO /securities requirement of LCR maintenance. However, as per the guidelines, IBUs have been permitted as on Mar 31, 2022 as on Mar 31, 2023 to maintain LCR at their parent bank. The same has resulted in reduction of investments at IBUs in IFSC. Fig 1.1: Outstanding under various credit products (USD Mn) Total customer credit outstanding has increased by 29.47% from USD 18.49 Bn (as on 31.03.2022) to USD 23.94 Bn (as on 31.03.2023). Growth in commercial loans disbursed by the IBUs has been the biggest contributor for this increase in the customer credit outstanding for the IFSC. Increased borrowings by the Indian PSUs from the IBUs in IFSC is another main contributor to this growth. 14 International Financial Services Centres Authority 15ANNUAL REPORT 2022-23 Trends and Transactions 2,50,000.0 As on March 31, 2023, 20 IBUs were operational. Further, two IBUs, which have been licensed 2,00,000.0 1,50,000.0 before March 31, 2023 are expected to commence operations during the FY 2023‐24. 1,00,000.0 Table 1.1: No. of IBUs 50,000.0 ‐ Particulars As on Mar 31, 2022 As on Mar 31, 2023 Loan/ECB Trade Others No. of IBUs 15 20 (Guarantee/LC/BA/BC, etc.) (Interbank/interbranch placements, etc.) FY 2021‐22 FY 2022‐23 Table 1.2: Total Assets in IBUs in USD Mn Fig 1.2: Turnover (Volume of Business) in USD Mn Particulars Outstanding as on Mar 31, 2022 Outstanding as on Mar 31, 2023 Total Assets 29,380.82 38,286.41 Volume of business in the IBUs has more than doubled (USD 106.98 Bn during FY21‐22 to USD 258.59 Bn during FY 22‐23) with interbank/interbranch placements contributing the major share Table 1.3: No. of employees in all IBUs of this growth after a few IBUs were designated as treasury hubs for their parent banks. Particulars FY 2021‑22 FY 2022‑23 No. of employees 162 277 1,800.00 1,600.00 Sources of fund raising for IBUs have been interbank and interbranch borrowings, medium 1,400.00 term notes, borrowings from multilateral institutions, retail deposits etc. Credit activities of IBUs 1,200.00 have been largely concentrated in the areas of trade finance and commercial loans. 1,000.00 800.00 Customer Credit of the IFSC Banking ecosystem as on March 31, 2023 stood at USD 23.94 Bn 600.00 and total asset size of IBUs stood at USD 38.28 Bn. 400.00 200.00 ‐ 12,000.00 10,000.00 Treasury Corporate Equity Mutual Funds Others 8,000.00 Bill Bonds/Debentures Shares/preference Shares 6,000.00 4,000.00 as on Mar 31, 2022 as on Mar 31, 2023 2,000.00 Fig 1.3: Investment profile in USD Mn ‐ Trade Commercial Loans to Loans Loans Others Finance Loans Indian against against deposits IBUs were maintaining investment in Treasury bills for compliance with the prudential PSUs LC/LOC by HO /securities requirement of LCR maintenance. However, as per the guidelines, IBUs have been permitted as on Mar 31, 2022 as on Mar 31, 2023 to maintain LCR at their parent bank. The same has resulted in reduction of investments at IBUs in IFSC. Fig 1.1: Outstanding under various credit products (USD Mn) Total customer credit outstanding has increased by 29.47% from USD 18.49 Bn (as on 31.03.2022) to USD 23.94 Bn (as on 31.03.2023). Growth in commercial loans disbursed by the IBUs has been the biggest contributor for this increase in the customer credit outstanding for the IFSC. Increased borrowings by the Indian PSUs from the IBUs in IFSC is another main contributor to this growth. 14 International Financial Services Centres Authority 15ANNUAL REPORT 2022-23 Table 1.4: Outstanding Over the Counter (OTC) Derivative Contracts Advocacy and Outreach Outstanding as on Outstanding as on Derivative Outstanding (USD Mn) Mar 31, 2022 Mar 31, 2023 Visit to Sibos, 2022 Non‐Deliverable Derivative Contracts (FCY‐INR) 14092.67 (including NDF, Fx‐Swaps and options) Sibos is the global financial services networking event organised by SWIFT. The annual conference 23478.52 and exhibition connects more than 8000 executives from banks, financial institutions and FCY‐FCY forwards 1673.00 3082.44 technology companies from across the globe. FCY‐FCY currency swap 1333.63 957.56 A team of IFSCA officials attended Sibos 2022 held at Amsterdam, Netherlands FCY‐FCY currency option 31.12 606.70 from October 10‐13, 2022. The centrepiece of the visit was a presentation entitled “Opportunities in GIFT IFSC: The financial gateway to India”. Over 40 participants attended the presentation INR Interest rate swap (IRS) (including overnight 25343.29 to know more about the concept of IFSC and the opportunities for their firms. indexed swaps (OIS) 7293.33 Besides the presentation, the team had bilateral interactions with financial institutions across FCY Interest rate swap (IRS) (including overnight 66924.23 various sectors like banking, market infrastructure, financial technology, etc. indexed swaps (OIS)) 44413.40 Others 1171.94 1.62 Policies and programmes for the following year Total 79394.94 111008.51 1) Issuing the framework for setting up a wholly owned subsidiary model for banking business in IFSC including Digital Banks (DBs). DBs are envisaged to issue deposits, offer loans, The outstanding derivative contracts at IFSC have increased by 39.81%. A few IBUs have and offer the full suite of services that the Banking Regulation Act, 1949 empowers them to. commenced their market operations during the financial year whereas a few have increased their However, DBs are principally expected to utilise internet and other similar online channels derivative trading portfolio based on their business strategies resulting in the overall increase in to offer their services instead of physical branches. the derivative contracts outstanding at IBUs as on 31.03.2023. 2) Further amendments to the Banking Handbook for permitting activities like issuance of Offshore Derivative Instruments on equities and corporate bonds, provision of Acquisition Finance by IBUs of foreign banks, etc. 3.18% 10.04% 3) The Authority has created a separate Division of Payment and Settlement Systems 4.00% under the Department of Banking Regulation and Development to look into the matters concerning authorisation, prescribing policies, and framing guidelines for regulating and 5.79% supervising all the payment and settlement systems and payment service providers in IFSC. India 8.24% The Division plans to issue the Payment and Settlement Systems Regulations and United States of America 68.75% the Payment Services Regulations and create the necessary framework thereunder United Kingdom for licensing/authorisation of payments related systems and fintechs to be registered Singapore United Arab Emirates in IFSC as a payment system and/or service provider. Others Fig 1.4: Exposure of IBUs in various countries IBUs have highest exposure to entities from India (68.75%) followed by USA (8.24%) and United Kingdom (5.79%). Top five countries constitute 89.96% of the exposure of the IBUs. 16 International Financial Services Centres Authority 17ANNUAL REPORT 2022-23 Table 1.4: Outstanding Over the Counter (OTC) Derivative Contracts Advocacy and Outreach Outstanding as on Outstanding as on Derivative Outstanding (USD Mn) Mar 31, 2022 Mar 31, 2023 Visit to Sibos, 2022 Non‐Deliverable Derivative Contracts (FCY‐INR) 14092.67 (including NDF, Fx‐Swaps and options) Sibos is the global financial services networking event organised by SWIFT. The annual conference 23478.52 and exhibition connects more than 8000 executives from banks, financial institutions and FCY‐FCY forwards 1673.00 3082.44 technology companies from across the globe. FCY‐FCY currency swap 1333.63 957.56 A team of IFSCA officials attended Sibos 2022 held at Amsterdam, Netherlands FCY‐FCY currency option 31.12 606.70 from October 10‐13, 2022. The centrepiece of the visit was a presentation entitled “Opportunities in GIFT IFSC: The financial gateway to India”. Over 40 participants attended the presentation INR Interest rate swap (IRS) (including overnight 25343.29 to know more about the concept of IFSC and the opportunities for their firms. indexed swaps (OIS) 7293.33 Besides the presentation, the team had bilateral interactions with financial institutions across FCY Interest rate swap (IRS) (including overnight 66924.23 various sectors like banking, market infrastructure, financial technology, etc. indexed swaps (OIS)) 44413.40 Others 1171.94 1.62 Policies and programmes for the following year Total 79394.94 111008.51 1) Issuing the framework for setting up a wholly owned subsidiary model for banking business in IFSC including Digital Banks (DBs). DBs are envisaged to issue deposits, offer loans, The outstanding derivative contracts at IFSC have increased by 39.81%. A few IBUs have and offer the full suite of services that the Banking Regulation Act, 1949 empowers them to. commenced their market operations during the financial year whereas a few have increased their However, DBs are principally expected to utilise internet and other similar online channels derivative trading portfolio based on their business strategies resulting in the overall increase in to offer their services instead of physical branches. the derivative contracts outstanding at IBUs as on 31.03.2023. 2) Further amendments to the Banking Handbook for permitting activities like issuance of Offshore Derivative Instruments on equities and corporate bonds, provision of Acquisition Finance by IBUs of foreign banks, etc. 3.18% 10.04% 3) The Authority has created a separate Division of Payment and Settlement Systems 4.00% under the Department of Banking Regulation and Development to look into the matters concerning authorisation, prescribing policies, and framing guidelines for regulating and 5.79% supervising all the payment and settlement systems and payment service providers in IFSC. India 8.24% The Division plans to issue the Payment and Settlement Systems Regulations and United States of America 68.75% the Payment Services Regulations and create the necessary framework thereunder United Kingdom for licensing/authorisation of payments related systems and fintechs to be registered Singapore United Arab Emirates in IFSC as a payment system and/or service provider. Others Fig 1.4: Exposure of IBUs in various countries IBUs have highest exposure to entities from India (68.75%) followed by USA (8.24%) and United Kingdom (5.79%). Top five countries constitute 89.96% of the exposure of the IBUs. 16 International Financial Services Centres Authority 17Finance Companies/Units (FCs/FUs) play a crucial role in providing non‐banking financial intermediary services in the IFSC. These entities are permitted to carry out activities that are similar to those authorised for IBUs, with the exception of raising public deposits. This allows FCs/FUs to complement the services provided by IBUs in the realm of financial services. They are regulated by the IFSCA (Finance Company) Regulations, 2021 (FC Regulations) which outlines specific prudential, corporate governance and minimum owned fund requirements among others for FCs/FUs. The primary intent of the regulations was to provide the entities to undertake non‐banking business as well as to bring entities which were not covered under any specific regulation under the regulatory net. Accordingly, the FC Regulations adopted a combination of entity based and activity‐based approach, wherein permissible activities were classified into core, non‐core and specialised activities. Entities intending to undertake these activities were subject to different levels of prudential, corporate governance, capital requirements and other norms. Subsequently, as the regulatory landscape evolved in the IFSC, a need was felt to ease/simplify the FC Regulations. Accordingly, IFSCA (Finance Company) (Amendment) Regulations, 2022, were issued on July 1, 2022. seinapmoC ecnaniF ANNUAL REPORT 2022-23 Box 2.1: Salient features of IFSCA (Finance Company) (Amendment) Regulations, 2022 i) Reclassification of permissible activities In the modified regulations, given the nature of the activities and the applicability of regulations, the erstwhile specialised activities have been included in core activities. ii) Registration requirements for FC/FU An explanation was added for the purpose of clarity, wherein an entity that has obtained a certificate of registration or authorisation for a specific activity under another framework or regulations, issued or notified by the Authority, shall not be required to seek a fresh registration under the regulations for carrying out the same activity. FINANCE COMPANIES iii) Branch Route for GRCTC Global/Regional Corporate Treasury Centres are generally set up by large conglomerates. The entity needs to consolidate its operations so as to gain advantage of funds held at multiple jurisdictions. Further, based on the industry feedback it was felt that such entities would like to take advantage of its parent’s balance sheet. Hence, GRCTC, though being a core activity, was enabled to be set up in the branch form. iv) Capital Inclusivity The concept of capital inclusivity has been introduced for entities undertaking a combination of core and/or non‐core activities in line with the principle adopted in other IFSCA regulations. Accordingly, an entity carrying out multiple permissible activities under the FC regulations will have to maintain the higher of the minimum owned funds/net worth as prescribed for each individual activity. v) Permit investments by FC/FU undertaking non‑core activities It permitted FCs/FUs to undertake investment activities for the purpose of liquidity and balance sheet management as part of its normal business operations, even if undertaking non‐core activities. 18 International Financial Services Centres Authority 19Finance Companies/Units (FCs/FUs) play a crucial role in providing non‐banking financial intermediary services in the IFSC. These entities are permitted to carry out activities that are similar to those authorised for IBUs, with the exception of raising public deposits. This allows FCs/FUs to complement the services provided by IBUs in the realm of financial services. They are regulated by the IFSCA (Finance Company) Regulations, 2021 (FC Regulations) which outlines specific prudential, corporate governance and minimum owned fund requirements among others for FCs/FUs. The primary intent of the regulations was to provide the entities to undertake non‐banking business as well as to bring entities which were not covered under any specific regulation under the regulatory net. Accordingly, the FC Regulations adopted a combination of entity based and activity‐based approach, wherein permissible activities were classified into core, non‐core and specialised activities. Entities intending to undertake these activities were subject to different levels of prudential, corporate governance, capital requirements and other norms. Subsequently, as the regulatory landscape evolved in the IFSC, a need was felt to ease/simplify the FC Regulations. Accordingly, IFSCA (Finance Company) (Amendment) Regulations, 2022, were issued on July 1, 2022. seinapmoC ecnaniF ANNUAL REPORT 2022-23 Box 2.1: Salient features of IFSCA (Finance Company) (Amendment) Regulations, 2022 i) Reclassification of permissible activities In the modified regulations, given the nature of the activities and the applicability of regulations, the erstwhile specialised activities have been included in core activities. ii) Registration requirements for FC/FU An explanation was added for the purpose of clarity, wherein an entity that has obtained a certificate of registration or authorisation for a specific activity under another framework or regulations, issued or notified by the Authority, shall not be required to seek a fresh registration under the regulations for carrying out the same activity. FINANCE COMPANIES iii) Branch Route for GRCTC Global/Regional Corporate Treasury Centres are generally set up by large conglomerates. The entity needs to consolidate its operations so as to gain advantage of funds held at multiple jurisdictions. Further, based on the industry feedback it was felt that such entities would like to take advantage of its parent’s balance sheet. Hence, GRCTC, though being a core activity, was enabled to be set up in the branch form. iv) Capital Inclusivity The concept of capital inclusivity has been introduced for entities undertaking a combination of core and/or non‐core activities in line with the principle adopted in other IFSCA regulations. Accordingly, an entity carrying out multiple permissible activities under the FC regulations will have to maintain the higher of the minimum owned funds/net worth as prescribed for each individual activity. v) Permit investments by FC/FU undertaking non‑core activities It permitted FCs/FUs to undertake investment activities for the purpose of liquidity and balance sheet management as part of its normal business operations, even if undertaking non‐core activities. 18 International Financial Services Centres Authority 19ANNUAL REPORT 2022-23 Aircraft Leasing Sustainable and Sustainability Linked Lending A revised framework for Aircraft Leasing was issued by the Authority on May 18, 2022. The The ‘Guidance Framework for Sustainable and Sustainability linked lending by Financial Framework enabled leasing of ‘Aircraft Ground Support Equipment’ in the IFSC. It also specified Institutions’ was issued on April 26, 2022. According to the framework, IBUs and FCs/FUs regulatory requirements for undertaking financial lease and/or hybrid of operating and financial in the IFSC are required to develop a Board‐approved policy, aligned with international lease of aircrafts and Aircraft Ground Support Equipment. Further, it broadened the scope of principles/frameworks, for green/social/sustainable/sustainability‐linked lending providing asset management support services so as to extend it to assets leased by the entity or by by March 31, 2023. Further, from April 1, 2023, IBUs and FCs/FUs that engage in lending its wholly owned subsidiary without the need for separate authorisation. as a permitted activity are required to direct at least five per cent of their gross loans and advances towards green/social/sustainable/sustainability‐linked sectors/facilities. Ship Leasing ITFS Platforms The ‘Framework for Ship Lease’ was issued by the Authority on August 16, 2022. It is based on The Authority has issued the Framework for setting up of ‘International Trade Financing Services the suggestions of the Ship Acquisition, Financing and Leasing (SAFAL) committee report Platform (ITFS) for providing trade finance services at IFSC on July 9, 2021. The ITFS platforms are published on October 28, 2021, and the subsequent notification dated January 10, 2022, enabling the first of its kind regulated platforms which provide trade finance services digitally to ship lease as a financial product in IFSC. This Framework was amended in March 22, 2023, based exporters/importers across the globe at competitive prices via a bidding mechanism. The trade on feedback received from the industry. financing services include import factoring, export factoring, reverse factoring, forfaiting, insurance/credit guarantee among others. Box 2.2: Salient features of the ‘Framework for Ship Lease’ Trends and Transactions i ) The Framework enables an entity to become a Ship Lessor in IFSC by registering itself The IFSC has been attracting an increasing number of entities interested in setting up Finance as an FC/FU. This enables the entity to undertake operating lease, financial lease, Companies (FCs) for various activities, including lending, factoring & forfaiting, leasing and/or a hybrid of operating and financial lease of ships and/or ocean vessels of aircrafts, ships among others. This interest is not limited to national entities but also includes including engines of ships and ocean vessels. large public sector undertakings and international entities. ii) A broad definition is adopted for the purpose of identifying an ‘ocean vessel’, which In FY 2022‐23, Certificate of Registration has been granted to 13 FCs for undertaking aircraft is aligned with the SAFAL report recommendations, and includes ships (i.e. any operating lease, two FCs for undertaking ship leasing, and four entities to commence their live watercraft, used or capable of being used in navigation by its own propulsion, in, testing in the regulatory sandbox. Further, provisional registration has been granted to two entities above or under the water), boats, sailing vessels, fishing vessels, submersibles, to set up as FCs for undertaking core activities in IFSC. The following figure outlines the growth in semi‐submersibles, hydrofoils, amphibious craft, Mobile offshore drilling units, the Finance Companies (including Aircraft lease, Ship lease, ITFS entities) registered in IFSC: inland vessels, and coasting vessel among others but excludes fishing or sailing crafts. iii) In addition to leasing activities, a ship lessor in IFSC can also provide asset management support services for assets owned or leased by the entity or any of 35 its group entities in IFSC. Further, in order to enlarge the shipping ecosystem in IFSC, 30 25 30 the Framework also enables voyage charter contracts, contracts of affreightments, 20 employment in shipping pools, and other legal commercial transactions related to 15 the employment of ships. 10 iv) Ship lessors in IFSC are required to maintain a minimum owned fund of USD 0.2 mn 5 9 0 for undertaking operating leases and USD 3 mn for financial leases and/or a hybrid of operating and financial leases. FY 2021‐22 FY 2022‐23 v) All ship lessors must comply with KYC, AML, and corporate governance requirements as set out in the FC Regulations, regardless of the type of lease they undertake. Fig 2.1: Growth in Finance Companies in IFSC 20 International Financial Services Centres Authority 21ANNUAL REPORT 2022-23 Aircraft Leasing Sustainable and Sustainability Linked Lending A revised framework for Aircraft Leasing was issued by the Authority on May 18, 2022. The The ‘Guidance Framework for Sustainable and Sustainability linked lending by Financial Framework enabled leasing of ‘Aircraft Ground Support Equipment’ in the IFSC. It also specified Institutions’ was issued on April 26, 2022. According to the framework, IBUs and FCs/FUs regulatory requirements for undertaking financial lease and/or hybrid of operating and financial in the IFSC are required to develop a Board‐approved policy, aligned with international lease of aircrafts and Aircraft Ground Support Equipment. Further, it broadened the scope of principles/frameworks, for green/social/sustainable/sustainability‐linked lending providing asset management support services so as to extend it to assets leased by the entity or by by March 31, 2023. Further, from April 1, 2023, IBUs and FCs/FUs that engage in lending its wholly owned subsidiary without the need for separate authorisation. as a permitted activity are required to direct at least five per cent of their gross loans and advances towards green/social/sustainable/sustainability‐linked sectors/facilities. Ship Leasing ITFS Platforms The ‘Framework for Ship Lease’ was issued by the Authority on August 16, 2022. It is based on The Authority has issued the Framework for setting up of ‘International Trade Financing Services the suggestions of the Ship Acquisition, Financing and Leasing (SAFAL) committee report Platform (ITFS) for providing trade finance services at IFSC on July 9, 2021. The ITFS platforms are published on October 28, 2021, and the subsequent notification dated January 10, 2022, enabling the first of its kind regulated platforms which provide trade finance services digitally to ship lease as a financial product in IFSC. This Framework was amended in March 22, 2023, based exporters/importers across the globe at competitive prices via a bidding mechanism. The trade on feedback received from the industry. financing services include import factoring, export factoring, reverse factoring, forfaiting, insurance/credit guarantee among others. Box 2.2: Salient features of the ‘Framework for Ship Lease’ Trends and Transactions i ) The Framework enables an entity to become a Ship Lessor in IFSC by registering itself The IFSC has been attracting an increasing number of entities interested in setting up Finance as an FC/FU. This enables the entity to undertake operating lease, financial lease, Companies (FCs) for various activities, including lending, factoring & forfaiting, leasing and/or a hybrid of operating and financial lease of ships and/or ocean vessels of aircrafts, ships among others. This interest is not limited to national entities but also includes including engines of ships and ocean vessels. large public sector undertakings and international entities. ii) A broad definition is adopted for the purpose of identifying an ‘ocean vessel’, which In FY 2022‐23, Certificate of Registration has been granted to 13 FCs for undertaking aircraft is aligned with the SAFAL report recommendations, and includes ships (i.e. any operating lease, two FCs for undertaking ship leasing, and four entities to commence their live watercraft, used or capable of being used in navigation by its own propulsion, in, testing in the regulatory sandbox. Further, provisional registration has been granted to two entities above or under the water), boats, sailing vessels, fishing vessels, submersibles, to set up as FCs for undertaking core activities in IFSC. The following figure outlines the growth in semi‐submersibles, hydrofoils, amphibious craft, Mobile offshore drilling units, the Finance Companies (including Aircraft lease, Ship lease, ITFS entities) registered in IFSC: inland vessels, and coasting vessel among others but excludes fishing or sailing crafts. iii) In addition to leasing activities, a ship lessor in IFSC can also provide asset management support services for assets owned or leased by the entity or any of 35 its group entities in IFSC. Further, in order to enlarge the shipping ecosystem in IFSC, 30 25 30 the Framework also enables voyage charter contracts, contracts of affreightments, 20 employment in shipping pools, and other legal commercial transactions related to 15 the employment of ships. 10 iv) Ship lessors in IFSC are required to maintain a minimum owned fund of USD 0.2 mn 5 9 0 for undertaking operating leases and USD 3 mn for financial leases and/or a hybrid of operating and financial leases. FY 2021‐22 FY 2022‐23 v) All ship lessors must comply with KYC, AML, and corporate governance requirements as set out in the FC Regulations, regardless of the type of lease they undertake. Fig 2.1: Growth in Finance Companies in IFSC 20 International Financial Services Centres Authority 21ANNUAL REPORT 2022-23 Policies and programmes for the following year In addition to above, IFSCA has granted in‐principle approval to two entities to set up as a finance company. i) Enabling lease of ‘Aviation training simulation devices’ in IFSC: Similar to the Advocacy and Outreach enablement made for the lease of Ground Support Equipment in IFSC, the Authority intends to enable the lease of aviation simulation training devices to develop the aviation Roadshows in collaboration with IFSCA leasing and training ecosystem in IFSC. These devices include full flight simulators and flight training devices among others. In the FY 2022‐23, the Authority had granted registration to four ITFS entities for operating in the ii) Enabling Ship broking in IFSC: Enabling ship broking services is aimed to facilitate the IFSC, namely Kredx Ventures IFSC Pvt. Ltd, Vayana IFSC Pvt. Ltd, RXIL Global IFSC Pvt. Ltd. permissible activities of ship lessors in IFSC. Ship operating and financial lease activities and Mynd IFSC Pvt. Ltd for undertaking live transactions under the regulatory sandbox. are already permitted in IFSC under the ‘Framework for Ship Lease’, and the addition To generate awareness and promote the platforms, the entities held roadshows in Delhi‐NCR, of ship broking services would facilitate the creation of a complete ecosystem for Ahmedabad, Chennai and Mumbai respectively, in collaboration with IFSCA and export promotion the shipping industry. councils (EPCs) located in and around these regions. These regions were chosen in order to achieve iii) Sharing of manpower or office space or both among group entities by Aircraft lessors widespread coverage. in IFSC: The Ministry of Commerce and Industry vide Gazette notification dated February During the roadshows the ITFS entities showcased the features, and demonstrated the 23, 2023, had inserted rule 21B in the SEZ Rules, 2006. This rule enables aircraft leasing functionality of their respective ITFS platforms. The events were attended by exporters, importers unit in IFSC to utilise the office space or manpower or both of another unit in IFSC for the and financiers among others. These participants were also provided with an overview of the ITFS purpose of aircraft leasing, with the approval of the Authority. Pursuant to the above Framework issued by the Authority. Subsequently, panel discussions took place, featuring notification, the Authority intends to issue guidelines specifying the conditions and the distinguished panelists including representatives from the IFSCA, industry and the EPCs. The process by which an FC/FU undertaking Aircraft Lease in IFSC may avail this facility. panel discussed topics such as strengthening India’s export sector, role of evolving regulatory iv) Framework for Holding Company in IFSC: This framework would provide companies, framework for aiding exports among others. particularly aircraft and ship lessors, with a clear understanding of how to manage their The roadshows highlighted the potential of ITFS platforms in digitising the trade finance investments and subsidiaries through their holding company in IFSC, thus enabling ease ecosystem. The significance of these platforms in India's goal of achieving a 5 trillion USD economy of doing business. was also underscored. It was emphasised that achieving this target would require nearly 1 trillion v) Guidelines on change of management by FC/FU in IFSC: The Authority intends to issue USD in exports. Given that MSMEs contribute around 40% of India's exports, the role of the ITFS these guidelines to outline the conditions and reporting requirements that FCs/FUs need platform is vital as it enables MSMEs to access finance from global financiers at competitive rates to adhere to for effecting any change in management beyond the threshold of 20 per cent through a transparent bidding mechanism. Recognising the potential of ITFS platforms of total share capital or of business decisions under an agreement which results in in revolutionising export services, IFSCA shared its vision to position these platforms akin to a change of control. Further, the guidelines would enable the Authority in carrying out due Unified Payments Interface (UPI) for export services in India. diligence of the new management and promote transparency and accountability in Considering the substantial participation and keen interest exhibited by participants on the ITFS the financial sector. platform during the roadshows, IFSCA intends to collaborate with the ITFS entities to host similar vi) Handbook on FC/FU: The Authority also intends to issue FC/FU Handbook by the end of roadshows in Southeast Asian region in the near future. the FY 2023‐24. The handbook aims to consolidate all the existing regulations and provide detailed directions on the conduct of business, prudential guidelines, and other general guidelines to FCs/FUs. vii) Exploring the possibility of Aviation simulation training institutes to be set up in IFSC: The Authority intends to explore the possibility of enabling aviation simulation training institutes to set up in IFSC with a view to reduce the cost of aviation training and enable Indian pilots to train locally. 22 International Financial Services Centres Authority 23ANNUAL REPORT 2022-23 Policies and programmes for the following year In addition to above, IFSCA has granted in‐principle approval to two entities to set up as a finance company. i) Enabling lease of ‘Aviation training simulation devices’ in IFSC: Similar to the Advocacy and Outreach enablement made for the lease of Ground Support Equipment in IFSC, the Authority intends to enable the lease of aviation simulation training devices to develop the aviation Roadshows in collaboration with IFSCA leasing and training ecosystem in IFSC. These devices include full flight simulators and flight training devices among others. In the FY 2022‐23, the Authority had granted registration to four ITFS entities for operating in the ii) Enabling Ship broking in IFSC: Enabling ship broking services is aimed to facilitate the IFSC, namely Kredx Ventures IFSC Pvt. Ltd, Vayana IFSC Pvt. Ltd, RXIL Global IFSC Pvt. Ltd. permissible activities of ship lessors in IFSC. Ship operating and financial lease activities and Mynd IFSC Pvt. Ltd for undertaking live transactions under the regulatory sandbox. are already permitted in IFSC under the ‘Framework for Ship Lease’, and the addition To generate awareness and promote the platforms, the entities held roadshows in Delhi‐NCR, of ship broking services would facilitate the creation of a complete ecosystem for Ahmedabad, Chennai and Mumbai respectively, in collaboration with IFSCA and export promotion the shipping industry. councils (EPCs) located in and around these regions. These regions were chosen in order to achieve iii) Sharing of manpower or office space or both among group entities by Aircraft lessors widespread coverage. in IFSC: The Ministry of Commerce and Industry vide Gazette notification dated February During the roadshows the ITFS entities showcased the features, and demonstrated the 23, 2023, had inserted rule 21B in the SEZ Rules, 2006. This rule enables aircraft leasing functionality of their respective ITFS platforms. The events were attended by exporters, importers unit in IFSC to utilise the office space or manpower or both of another unit in IFSC for the and financiers among others. These participants were also provided with an overview of the ITFS purpose of aircraft leasing, with the approval of the Authority. Pursuant to the above Framework issued by the Authority. Subsequently, panel discussions took place, featuring notification, the Authority intends to issue guidelines specifying the conditions and the distinguished panelists including representatives from the IFSCA, industry and the EPCs. The process by which an FC/FU undertaking Aircraft Lease in IFSC may avail this facility. panel discussed topics such as strengthening India’s export sector, role of evolving regulatory iv) Framework for Holding Company in IFSC: This framework would provide companies, framework for aiding exports among others. particularly aircraft and ship lessors, with a clear understanding of how to manage their The roadshows highlighted the potential of ITFS platforms in digitising the trade finance investments and subsidiaries through their holding company in IFSC, thus enabling ease ecosystem. The significance of these platforms in India's goal of achieving a 5 trillion USD economy of doing business. was also underscored. It was emphasised that achieving this target would require nearly 1 trillion v) Guidelines on change of management by FC/FU in IFSC: The Authority intends to issue USD in exports. Given that MSMEs contribute around 40% of India's exports, the role of the ITFS these guidelines to outline the conditions and reporting requirements that FCs/FUs need platform is vital as it enables MSMEs to access finance from global financiers at competitive rates to adhere to for effecting any change in management beyond the threshold of 20 per cent through a transparent bidding mechanism. Recognising the potential of ITFS platforms of total share capital or of business decisions under an agreement which results in in revolutionising export services, IFSCA shared its vision to position these platforms akin to a change of control. Further, the guidelines would enable the Authority in carrying out due Unified Payments Interface (UPI) for export services in India. diligence of the new management and promote transparency and accountability in Considering the substantial participation and keen interest exhibited by participants on the ITFS the financial sector. platform during the roadshows, IFSCA intends to collaborate with the ITFS entities to host similar vi) Handbook on FC/FU: The Authority also intends to issue FC/FU Handbook by the end of roadshows in Southeast Asian region in the near future. the FY 2023‐24. The handbook aims to consolidate all the existing regulations and provide detailed directions on the conduct of business, prudential guidelines, and other general guidelines to FCs/FUs. vii) Exploring the possibility of Aviation simulation training institutes to be set up in IFSC: The Authority intends to explore the possibility of enabling aviation simulation training institutes to set up in IFSC with a view to reduce the cost of aviation training and enable Indian pilots to train locally. 22 International Financial Services Centres Authority 23stekraM latipaC ANNUAL REPORT 2022-23 Market Infrastructure Institutions The stock exchanges, clearing corporations and depositories (collectively referred as market infrastructure institutions) are the most important institutions in the capital markets and they provide the necessary infrastructure for listing, trading, clearing and settlement of securities. These market infrastructure institutions (MIIs) are therefore critical institutions for the overall development and regulation of the capital markets in the IFSC. Stock Exchanges As on March 31, 2023, there are two international stock exchanges operational in IFSC namely, India International Exchange (IFSC) Limited (India INX) and NSE IFSC Limited (NSE IFSC) and one bullion exchange, India International Bullion Exchange (IFSC) Limited (IIBX). CAPITAL MARKETS During the year, the Authority renewed the annual recognition to NSE IFSC for the period May 29, 2022 to May 28, 2023 and India INX for the period December 29, 2022 to The role of capital market is to mobilise savings, facilitate investment, manage risk, allocate capital December 28, 2023. efficiently to support economic growth and development. The capital market serves as a crucial Clearing Corporations bridge between savers and investors. There are several types of securities in capital market such as equity shares, debt instruments, convertible securities, units of funds, derivatives, etc. As on March 31, 2023, there are two Clearing Corporations operational in IFSC namely, The capital market in IFSC has the potential to be the gateway to channelise flow of foreign capital India International Clearing Corporation (IFSC) Limited (India ICC) and NSE IFSC Clearing into India through various means, including fund management and raising of capital through Corporation Limited (NICCL). The Authority renewed the annual recognition to NICCL for listing of securities on IFSC exchanges. the period May 29, 2022 to May 28, 2023 and India ICC for the period December 29, 2022 to The funds set up in IFSC can pool capital from foreign investors and NRIs for investments into December 28, 2023. various products in securities markets in India. Further, the fund ecosystem in IFSC can also Depository contribute towards attracting foreign investments in certain sectors such as start‐ups, SMEs, green and sustainable financing, real estate projects, infrastructure investments, etc. As on March 31, 2023, India International Depository (IFSC) Limited (IIDI) is the sole depository The Indian corporates (including banks, CPSEs, etc.) can also raise capital through listing functional in IFSC which acts as the record keeper for securities including Bullion Depository of foreign currency bonds and/ or masala bonds on the stock exchanges in IFSC. Receipts. Since October 2020, IFSCA has notified the following regulations relating to securities market Circulars/Guidelines activities in the IFSC: Market Access through Authorised Persons appointed in India a) IFSCA (Market Infrastructure Institutions) Regulations, 2021 b) IFSCA (Issuance and Listing of Securities) Regulations, 2021 In October 2020, the Authority had permitted registered broker dealers of the stock exchanges to c) IFSCA (Capital Market Intermediaries) Regulations, 2021 provide market access to investors through Authorized Persons based in foreign jurisdictions. However, based on the representations from market participants, with a view to expand the depth d) IFSCA (Fund Management) Regulations, 2022 and reach of the capital markets in IFSC and enable access to resident Indian investors through The Authority aims to benchmark regulations with the best practices in other jurisdictions and Liberalized Remittance Scheme (LRS) route, the Authority, vide circular issued in April 2022, to facilitate ease of doing business in IFSC. permitted the broker dealers to appoint Authorized Persons in India. 24 International Financial Services Centres Authority 25stekraM latipaC ANNUAL REPORT 2022-23 Market Infrastructure Institutions The stock exchanges, clearing corporations and depositories (collectively referred as market infrastructure institutions) are the most important institutions in the capital markets and they provide the necessary infrastructure for listing, trading, clearing and settlement of securities. These market infrastructure institutions (MIIs) are therefore critical institutions for the overall development and regulation of the capital markets in the IFSC. Stock Exchanges As on March 31, 2023, there are two international stock exchanges operational in IFSC namely, India International Exchange (IFSC) Limited (India INX) and NSE IFSC Limited (NSE IFSC) and one bullion exchange, India International Bullion Exchange (IFSC) Limited (IIBX). CAPITAL MARKETS During the year, the Authority renewed the annual recognition to NSE IFSC for the period May 29, 2022 to May 28, 2023 and India INX for the period December 29, 2022 to The role of capital market is to mobilise savings, facilitate investment, manage risk, allocate capital December 28, 2023. efficiently to support economic growth and development. The capital market serves as a crucial Clearing Corporations bridge between savers and investors. There are several types of securities in capital market such as equity shares, debt instruments, convertible securities, units of funds, derivatives, etc. As on March 31, 2023, there are two Clearing Corporations operational in IFSC namely, The capital market in IFSC has the potential to be the gateway to channelise flow of foreign capital India International Clearing Corporation (IFSC) Limited (India ICC) and NSE IFSC Clearing into India through various means, including fund management and raising of capital through Corporation Limited (NICCL). The Authority renewed the annual recognition to NICCL for listing of securities on IFSC exchanges. the period May 29, 2022 to May 28, 2023 and India ICC for the period December 29, 2022 to The funds set up in IFSC can pool capital from foreign investors and NRIs for investments into December 28, 2023. various products in securities markets in India. Further, the fund ecosystem in IFSC can also Depository contribute towards attracting foreign investments in certain sectors such as start‐ups, SMEs, green and sustainable financing, real estate projects, infrastructure investments, etc. As on March 31, 2023, India International Depository (IFSC) Limited (IIDI) is the sole depository The Indian corporates (including banks, CPSEs, etc.) can also raise capital through listing functional in IFSC which acts as the record keeper for securities including Bullion Depository of foreign currency bonds and/ or masala bonds on the stock exchanges in IFSC. Receipts. Since October 2020, IFSCA has notified the following regulations relating to securities market Circulars/Guidelines activities in the IFSC: Market Access through Authorised Persons appointed in India a) IFSCA (Market Infrastructure Institutions) Regulations, 2021 b) IFSCA (Issuance and Listing of Securities) Regulations, 2021 In October 2020, the Authority had permitted registered broker dealers of the stock exchanges to c) IFSCA (Capital Market Intermediaries) Regulations, 2021 provide market access to investors through Authorized Persons based in foreign jurisdictions. However, based on the representations from market participants, with a view to expand the depth d) IFSCA (Fund Management) Regulations, 2022 and reach of the capital markets in IFSC and enable access to resident Indian investors through The Authority aims to benchmark regulations with the best practices in other jurisdictions and Liberalized Remittance Scheme (LRS) route, the Authority, vide circular issued in April 2022, to facilitate ease of doing business in IFSC. permitted the broker dealers to appoint Authorized Persons in India. 24 International Financial Services Centres Authority 25ANNUAL REPORT 2022-23 Amendment to Liquidity Enhancement Scheme Refund of security deposit to broker dealers on surrender of membership The Authority issued the guidelines for Liquidity Enhancement Scheme (LES) in IFSC in March 2022. Based on the representations received from stock exchanges in IFSC, the Authority In case of surrender of registration of broker dealers, the stock exchanges have been mandated amended these LES guidelines in September 2022, granting the authority to the governing board to release security deposit of the broker dealer after twelve months from the date of approval of stock exchanges for annual approval of the scheme. Further, to maintain liquidity, stock of surrender application by the Authority (if the broker dealer is engaged in trading on behalf of exchanges have been permitted to introduce LES on any security even beyond a period of five years. clients). Committees at Market Infrastructure Institutions in IFSC However, in the case of broker dealers engaged only in proprietary trading for the last three years prior to the date of application of surrender, stock exchanges must refund security deposit after six The Authority vide circular dated June 28, 2022, mandated the MIIs to constitute the following months from the date of approval of surrender application by the Authority. committees: Monthly Development Report and the Monthly Activity Report (a) Functional Committees, comprising: Stock exchanges in IFSC have to submit the Monthly Development Report (MDR) and the Monthly i) Member Selection Committee Activity Report (MAR) on a monthly basis. The Authority vide circular dated December 14, 2022, ii) Investor Grievance Redressal Committee revised the format as per the applicable requirements in IFSC. Stock exchanges are required iii) Nomination and Remuneration Committee to submit the MAR and MDR in the revised format within 10 days from the close of each month (b) Oversight Committees, comprising: from January 2023 onwards. i) Standing Committee on Technology NSE IFSC ‑ SGX Connect ii) Advisory Committee iii) Audit Committee The NSE IFSC‐SGX Connect was launched on July 29, 2022, by the Hon’ble Prime Minister of India. iv) Regulatory Oversight Committee During the launch, Hon’ble Prime Minister highlighted role of IFSCA, “IFSCA will not only become v) Risk Management Committee an enabler but will also support innovation and will also act as a catalyst for growth The Authority also specified the functions and detailed composition of the above mentioned opportunities. This is being started today through the launch of NSE IFSC‑ SGX Connect in Committees. GIFT City.” Guidelines for Business Continuity Plan and Disaster Recovery The Connect aims to bring together international and IFSC participants to create a bigger liquidity Site for MIIs pool for Nifty products in GIFT IFSC. SGX has set up a subsidiary SGX India Connect IFSC Private Limited (SGX‐ICI) in GIFT IFSC to act as a pass‐through entity for orders routed through SGX. As part of the operational risk management, MIIs in IFSC have been mandated to put in place SGX‐ICI is registered as a trading and self clearing member with the Authority. Business Continuity Plan (BCP) and Disaster Recovery Site (DRS) to maintain data and All the Negotiated Large Trades (NLTs) in SGX Nifty derivatives are currently being reported to transaction integrity. Apart from DRS, all MIIs need to have a Near Site (NS) to ensure zero data loss. NSE IFSC via the Connect. NLTs represent approximately 15 per cent of the total Nifty derivatives MIIs have also been advised to prepare BCP‐DR policy approved by the governing board of MIIs volume on SGX. which inter‑alia should include: A joint press release by NSE IFSC and SGX, with respect to full scale operation of the Connect, • Broad scenarios that would be defined as a disaster for an MII. highlighted that the migration of trading of the NIFTY futures contracts from SGX to NSE IFSC • Standard operating procedure to be followed in the event of a disaster. is targeted by the end of second quarter of 2023. • Escalation hierarchy within the MII to handle the disaster. • Clear and comprehensive communication protocols and procedures for both internal and external communications from the time of incident till resumption of operations of the MII. • Documentation policy on record keeping pertaining to DR drills. 26 International Financial Services Centres Authority 27ANNUAL REPORT 2022-23 Amendment to Liquidity Enhancement Scheme Refund of security deposit to broker dealers on surrender of membership The Authority issued the guidelines for Liquidity Enhancement Scheme (LES) in IFSC in March 2022. Based on the representations received from stock exchanges in IFSC, the Authority In case of surrender of registration of broker dealers, the stock exchanges have been mandated amended these LES guidelines in September 2022, granting the authority to the governing board to release security deposit of the broker dealer after twelve months from the date of approval of stock exchanges for annual approval of the scheme. Further, to maintain liquidity, stock of surrender application by the Authority (if the broker dealer is engaged in trading on behalf of exchanges have been permitted to introduce LES on any security even beyond a period of five years. clients). Committees at Market Infrastructure Institutions in IFSC However, in the case of broker dealers engaged only in proprietary trading for the last three years prior to the date of application of surrender, stock exchanges must refund security deposit after six The Authority vide circular dated June 28, 2022, mandated the MIIs to constitute the following months from the date of approval of surrender application by the Authority. committees: Monthly Development Report and the Monthly Activity Report (a) Functional Committees, comprising: Stock exchanges in IFSC have to submit the Monthly Development Report (MDR) and the Monthly i) Member Selection Committee Activity Report (MAR) on a monthly basis. The Authority vide circular dated December 14, 2022, ii) Investor Grievance Redressal Committee revised the format as per the applicable requirements in IFSC. Stock exchanges are required iii) Nomination and Remuneration Committee to submit the MAR and MDR in the revised format within 10 days from the close of each month (b) Oversight Committees, comprising: from January 2023 onwards. i) Standing Committee on Technology NSE IFSC ‑ SGX Connect ii) Advisory Committee iii) Audit Committee The NSE IFSC‐SGX Connect was launched on July 29, 2022, by the Hon’ble Prime Minister of India. iv) Regulatory Oversight Committee During the launch, Hon’ble Prime Minister highlighted role of IFSCA, “IFSCA will not only become v) Risk Management Committee an enabler but will also support innovation and will also act as a catalyst for growth The Authority also specified the functions and detailed composition of the above mentioned opportunities. This is being started today through the launch of NSE IFSC‑ SGX Connect in Committees. GIFT City.” Guidelines for Business Continuity Plan and Disaster Recovery The Connect aims to bring together international and IFSC participants to create a bigger liquidity Site for MIIs pool for Nifty products in GIFT IFSC. SGX has set up a subsidiary SGX India Connect IFSC Private Limited (SGX‐ICI) in GIFT IFSC to act as a pass‐through entity for orders routed through SGX. As part of the operational risk management, MIIs in IFSC have been mandated to put in place SGX‐ICI is registered as a trading and self clearing member with the Authority. Business Continuity Plan (BCP) and Disaster Recovery Site (DRS) to maintain data and All the Negotiated Large Trades (NLTs) in SGX Nifty derivatives are currently being reported to transaction integrity. Apart from DRS, all MIIs need to have a Near Site (NS) to ensure zero data loss. NSE IFSC via the Connect. NLTs represent approximately 15 per cent of the total Nifty derivatives MIIs have also been advised to prepare BCP‐DR policy approved by the governing board of MIIs volume on SGX. which inter‑alia should include: A joint press release by NSE IFSC and SGX, with respect to full scale operation of the Connect, • Broad scenarios that would be defined as a disaster for an MII. highlighted that the migration of trading of the NIFTY futures contracts from SGX to NSE IFSC • Standard operating procedure to be followed in the event of a disaster. is targeted by the end of second quarter of 2023. • Escalation hierarchy within the MII to handle the disaster. • Clear and comprehensive communication protocols and procedures for both internal and external communications from the time of incident till resumption of operations of the MII. • Documentation policy on record keeping pertaining to DR drills. 26 International Financial Services Centres Authority 27ANNUAL REPORT 2022-23 Capital Market Intermediaries Debenture Trustees To create an overall ecosystem for smooth functioning of capital market, IFSCA has enabled A debenture trustee is a trustee appointed in respect of any issue of debentures. It acts as a liaison the regulatory framework for various categories of capital market intermediaries in the IFSC between the issuer company and debenture holders for the purpose of securing the interest of such as broker dealers, clearing members, depository participants, custodians, investment the debenture holders, by holding the secured property on behalf of the issuer company. bankers, debenture trustees, investment advisors, etc. As on March 31, 2023, there are three debenture trustees registered with the Authority, out of which two entities have been granted registration during FY 2022‐23. Trading Members Investment Advisers Broker dealers/Trading members are entities which execute trades on their own account as well as on behalf of their clients on the recognized stock exchanges in IFSC. An investment adviser is a person, who for consideration, is engaged in the business of providing investment advice to clients relating to investments in securities or investment products. Table 3.1: Trading Members in IFSC (as on March 31, 2023) As on March 31, 2023, there are six investment advisers registered with the Authority, out of which Stock Exchanges No. of Trading Members one entity has been granted registration during FY 2022‐23. India INX 58 Investment Bankers NSE IFSC 57 Source: India INX and NSE IFSC The Authority vide circular dated December 3, 2021, permitted a banking unit licensed by the Authority to undertake investment banking activities in IFSC, subject to the conditions Clearing Members mentioned in the circular. As on March 31, 2023, there is one IBU authorized to undertake investment banking activities in the IFSC. A clearing member is an intermediary that is responsible for clearing and settlement of all deals executed by a broker dealer/trading member. Trends and Transactions Table 3.2: Clearing Members in IFSC (as on March 31, 2023) Turnover on Stock Exchanges Clearing No. of Self‑Clearing No. of Trading Cum No. of Professional Corporation members Clearing members Clearing Members The turnover (including value of premium in case of options) on the stock exchanges in India ICC 5 9 2 IFSC increased to USD 447 Bn during FY 2022‐23 compared to USD 219 Bn of FY 2021‐22, NICCL 7 9 2 increasing by approximately 104 per cent. Source: India ICC and NICCL 5,00,000 Depository Participants 4,50,000 4,00,000 A Depository Participant (DP) is a participant of a recognized depository and acts 3,50,000 as an intermediary between the depository and the investor. As on March 31, 2023, there are 3,00,000 eight DPs registered with the Authority out of which four entities were granted registration 2,50,000 during FY 2022‐23. 2,00,000 1,50,000 Custodians 1,00,000 50,000 ‐ A custodian is a specialized financial institution that carries on the business of providing custodial services in relation to financial products which include safekeeping of such financial products and 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 providing services incidental thereto. As on March 31, 2023, there are five custodians registered India INX NSE IFSC Total with the Authority out of which one entity has been granted registration during FY 2022‐23. Fig 3.1: Year‑wise Turnover of Stock Exchanges in IFSC (in USD Mn) 28 International Financial Services Centres Authority 29ANNUAL REPORT 2022-23 Capital Market Intermediaries Debenture Trustees To create an overall ecosystem for smooth functioning of capital market, IFSCA has enabled A debenture trustee is a trustee appointed in respect of any issue of debentures. It acts as a liaison the regulatory framework for various categories of capital market intermediaries in the IFSC between the issuer company and debenture holders for the purpose of securing the interest of such as broker dealers, clearing members, depository participants, custodians, investment the debenture holders, by holding the secured property on behalf of the issuer company. bankers, debenture trustees, investment advisors, etc. As on March 31, 2023, there are three debenture trustees registered with the Authority, out of which two entities have been granted registration during FY 2022‐23. Trading Members Investment Advisers Broker dealers/Trading members are entities which execute trades on their own account as well as on behalf of their clients on the recognized stock exchanges in IFSC. An investment adviser is a person, who for consideration, is engaged in the business of providing investment advice to clients relating to investments in securities or investment products. Table 3.1: Trading Members in IFSC (as on March 31, 2023) As on March 31, 2023, there are six investment advisers registered with the Authority, out of which Stock Exchanges No. of Trading Members one entity has been granted registration during FY 2022‐23. India INX 58 Investment Bankers NSE IFSC 57 Source: India INX and NSE IFSC The Authority vide circular dated December 3, 2021, permitted a banking unit licensed by the Authority to undertake investment banking activities in IFSC, subject to the conditions Clearing Members mentioned in the circular. As on March 31, 2023, there is one IBU authorized to undertake investment banking activities in the IFSC. A clearing member is an intermediary that is responsible for clearing and settlement of all deals executed by a broker dealer/trading member. Trends and Transactions Table 3.2: Clearing Members in IFSC (as on March 31, 2023) Turnover on Stock Exchanges Clearing No. of Self‑Clearing No. of Trading Cum No. of Professional Corporation members Clearing members Clearing Members The turnover (including value of premium in case of options) on the stock exchanges in India ICC 5 9 2 IFSC increased to USD 447 Bn during FY 2022‐23 compared to USD 219 Bn of FY 2021‐22, NICCL 7 9 2 increasing by approximately 104 per cent. Source: India ICC and NICCL 5,00,000 Depository Participants 4,50,000 4,00,000 A Depository Participant (DP) is a participant of a recognized depository and acts 3,50,000 as an intermediary between the depository and the investor. As on March 31, 2023, there are 3,00,000 eight DPs registered with the Authority out of which four entities were granted registration 2,50,000 during FY 2022‐23. 2,00,000 1,50,000 Custodians 1,00,000 50,000 ‐ A custodian is a specialized financial institution that carries on the business of providing custodial services in relation to financial products which include safekeeping of such financial products and 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 providing services incidental thereto. As on March 31, 2023, there are five custodians registered India INX NSE IFSC Total with the Authority out of which one entity has been granted registration during FY 2022‐23. Fig 3.1: Year‑wise Turnover of Stock Exchanges in IFSC (in USD Mn) 28 International Financial Services Centres Authority 29ANNUAL REPORT 2022-23 Commodity Derivatives 4,50,000 There are various commodity derivatives available for trading on the recognized stock exchanges 4,00,000 as mentioned in the table below: 3,50,000 3,00,000 Table 3.5: Commodity Derivatives available for trading on IFSC Exchanges 2,50,000 Precious Metals Gold, Silver 2,00,000 1,50,000 Base Metals Copper, Aluminium, Lead, Nickel, Zinc 1,00,000 Energy Brent Crude Oil 50,000 ‐ The turnover in gold derivatives has increased by 16 per cent in the FY 2022‐23 as compared to COMMODITY FUTURES CURRENCY FUTURES INDEX FUTURES INDEX OPTIONS FY 2021‐22 while the number of contracts has increased by 10 per cent during the same period. FY 2021‐22 FY 2022‐23 Table 3.6: No. of Contracts and premium turnover in Gold derivatives Fig 3.2: Contract‑wise Turnover of Stock Exchanges in IFSC (in USD Mn) No. of Contracts Premium Turnover (USD Mn) Financial Year Derivatives available for trading on IFSC Exchanges India INX NSE IFSC India INX NSE IFSC 2021‐22 445,898 57,199 26,195 1,005 Index Derivatives 2022‐23 552,439 ‐ 31,632 ‐ The most popular index derivatives on India INX are S&P BSE SENSEX & S&P BSE SENSEX 50. NSE IFSC offers trading in Futures and Options contracts on four Indices which are, Currency Derivatives NIFTY 50 Index, NIFTY BANK Index, NIFTY FINANCIAL Services Index and NIFTY IT Index. There are various currency derivatives available for trading on the recognized stock exchanges Index Futures: Turnover in index futures grew by 124 per cent in FY 2022‐23 compared to as mentioned in the table below: FY 2021‐22. During the same period, the number of contracts grew by 94 per cent. Table 3.7: Currency Derivatives Table 3.3: No. of Contracts and Turnover in Index Futures Global Currency Derivatives EUR‐USD, GBP‐USD, JPY‐USD, CHF‐USD, AUD‐USD No. of Contracts Turnover (USD Mn) Rupee Derivatives INR‐USD, USD‐INR Financial Year India INX NSE IFSC India INX NSE IFSC The turnover in currency derivatives has decreased in the financial year 2022‐23 as shown below: 2021‐22 5,515,681 2,488,692 96,461 83,707 2022‐23 8,161,501 7,397,074 148,374 254,965 Table 3.8: No. of Contracts and Premium Turnover in Currency Derivatives Source: India INX and NSE IFSC No. of Contracts Premium Turnover (USD Mn) Index Options: Turnover in index options grew by 33 per cent in FY 2022‐23 compared to Financial Year FY 2021‐22. During the same period, the number of contracts traded grew by 16 per cent. India INX NSE IFSC India INX NSE IFSC Table 3.4: No. of Contracts and Premium Turnover in Index Options 2021‐22 215,886 67,114 2,899 1,722 2022‐23 133,711 26,007 1,662 645 No. of Contracts Premium Turnover (USD Mn) Financial Year Overall, the turnover at the stock exchanges across all products in IFSC has increased by India INX NSE IFSC India INX NSE IFSC 104 per cent in FY 2022‐23 from FY 2021‐22. 2021‐22 145,295,033 4,793,400 7,121 310 2022‐23 173,297,387 724,776 9,695 188 Source: India INX and NSE IFSC 30 International Financial Services Centres Authority 31ANNUAL REPORT 2022-23 Commodity Derivatives 4,50,000 There are various commodity derivatives available for trading on the recognized stock exchanges 4,00,000 as mentioned in the table below: 3,50,000 3,00,000 Table 3.5: Commodity Derivatives available for trading on IFSC Exchanges 2,50,000 Precious Metals Gold, Silver 2,00,000 1,50,000 Base Metals Copper, Aluminium, Lead, Nickel, Zinc 1,00,000 Energy Brent Crude Oil 50,000 ‐ The turnover in gold derivatives has increased by 16 per cent in the FY 2022‐23 as compared to COMMODITY FUTURES CURRENCY FUTURES INDEX FUTURES INDEX OPTIONS FY 2021‐22 while the number of contracts has increased by 10 per cent during the same period. FY 2021‐22 FY 2022‐23 Table 3.6: No. of Contracts and premium turnover in Gold derivatives Fig 3.2: Contract‑wise Turnover of Stock Exchanges in IFSC (in USD Mn) No. of Contracts Premium Turnover (USD Mn) Financial Year Derivatives available for trading on IFSC Exchanges India INX NSE IFSC India INX NSE IFSC 2021‐22 445,898 57,199 26,195 1,005 Index Derivatives 2022‐23 552,439 ‐ 31,632 ‐ The most popular index derivatives on India INX are S&P BSE SENSEX & S&P BSE SENSEX 50. NSE IFSC offers trading in Futures and Options contracts on four Indices which are, Currency Derivatives NIFTY 50 Index, NIFTY BANK Index, NIFTY FINANCIAL Services Index and NIFTY IT Index. There are various currency derivatives available for trading on the recognized stock exchanges Index Futures: Turnover in index futures grew by 124 per cent in FY 2022‐23 compared to as mentioned in the table below: FY 2021‐22. During the same period, the number of contracts grew by 94 per cent. Table 3.7: Currency Derivatives Table 3.3: No. of Contracts and Turnover in Index Futures Global Currency Derivatives EUR‐USD, GBP‐USD, JPY‐USD, CHF‐USD, AUD‐USD No. of Contracts Turnover (USD Mn) Rupee Derivatives INR‐USD, USD‐INR Financial Year India INX NSE IFSC India INX NSE IFSC The turnover in currency derivatives has decreased in the financial year 2022‐23 as shown below: 2021‐22 5,515,681 2,488,692 96,461 83,707 2022‐23 8,161,501 7,397,074 148,374 254,965 Table 3.8: No. of Contracts and Premium Turnover in Currency Derivatives Source: India INX and NSE IFSC No. of Contracts Premium Turnover (USD Mn) Index Options: Turnover in index options grew by 33 per cent in FY 2022‐23 compared to Financial Year FY 2021‐22. During the same period, the number of contracts traded grew by 16 per cent. India INX NSE IFSC India INX NSE IFSC Table 3.4: No. of Contracts and Premium Turnover in Index Options 2021‐22 215,886 67,114 2,899 1,722 2022‐23 133,711 26,007 1,662 645 No. of Contracts Premium Turnover (USD Mn) Financial Year Overall, the turnover at the stock exchanges across all products in IFSC has increased by India INX NSE IFSC India INX NSE IFSC 104 per cent in FY 2022‐23 from FY 2021‐22. 2021‐22 145,295,033 4,793,400 7,121 310 2022‐23 173,297,387 724,776 9,695 188 Source: India INX and NSE IFSC 30 International Financial Services Centres Authority 31ANNUAL REPORT 2022-23 Listing of Debt Securities Advocacy and Outreach As on March 31, 2023, the cumulative listing of all debt securities on the recognised stock IOSCO Annual Meeting 2022 exchanges in the IFSC is USD 50.6 Bn. During FY 2022‐23, around USD 5.36 Bn of debt securities IFSCA is an associate member of IOSCO with effect from December 2020. As member of IOSCO, have been listed on the stock exchanges in IFSC, out of which primary listings are of USD 1.9 Bn. the IFSCA delegation participated in the various meetings/ events of the IOSCO Annual Meeting 2022 held in Marrakech, Morocco during October 17‐19, 2022. IFSCA held bilateral meetings on the sidelines of the IOSCO Annual meeting with regulators of several jurisdictions, including Singapore, Hong Kong, Abu Dhabi Global Markets, Dubai International Financial Centre and Mauritius. The purpose of the meeting was to discuss developments at their respective jurisdictions and potential areas for collaborations between the regulators. IOSCO MMoU IFSCA has become a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU) on August 3, 2022. Image 3.1: Listing Ceremony of India Exim Bank’s USD 1 Bn, 10‑year Sustainability Bond on March 3, 2023. The MMoU represents a common understanding among its signatories of how they should consult, cooperate, and exchange information for the purpose of regulatory enforcement regarding Table 3.9: List of debt issuances in FY 2022‑23 securities markets. S. Debt Securities Listed Name of Issuer The MMoU provides securities regulators with the tools for combating cross‐border fraud and No. (USD Mn) misconduct that can weaken global markets and undermine investor confidence. It also sets out 1 ICICI Bank 1,950 specific requirements regarding the confidentiality of the information exchanged and ensures that 2 Power Finance Corporation Limited 300 no domestic banking secrecy laws, blocking laws or regulations will prevent securities regulators 3 Power Finance Corporation Limited (Green Bond) 400 from sharing this information with their counterparts in other jurisdictions. 4 REC Limited 300 The MMOU would enhance cross‐border enforcement and cross‐border connect of the Authority 5 REC Limited (Green Bond) 450 with other foreign jurisdictions. IFSCA will now be able to exchange information with 6 Cholamandalam Investment and Finance Company 56 the regulators of securities markets of more than 125 jurisdictions for enforcement and ensuring 7 India EXIM Bank 1,000 compliance with the securities laws. Further, the MMOU will also play an important role in implementing various cross‐border initiatives of IFSCA. 8 HDFC Bank 750 9 Shriram Finance 150 IFSCA participated in the MMoU signing ceremony held during the IOSCO Annual Meeting at Total 5,356 Marrakech in October 2022. 32 International Financial Services Centres Authority 33ANNUAL REPORT 2022-23 Listing of Debt Securities Advocacy and Outreach As on March 31, 2023, the cumulative listing of all debt securities on the recognised stock IOSCO Annual Meeting 2022 exchanges in the IFSC is USD 50.6 Bn. During FY 2022‐23, around USD 5.36 Bn of debt securities IFSCA is an associate member of IOSCO with effect from December 2020. As member of IOSCO, have been listed on the stock exchanges in IFSC, out of which primary listings are of USD 1.9 Bn. the IFSCA delegation participated in the various meetings/ events of the IOSCO Annual Meeting 2022 held in Marrakech, Morocco during October 17‐19, 2022. IFSCA held bilateral meetings on the sidelines of the IOSCO Annual meeting with regulators of several jurisdictions, including Singapore, Hong Kong, Abu Dhabi Global Markets, Dubai International Financial Centre and Mauritius. The purpose of the meeting was to discuss developments at their respective jurisdictions and potential areas for collaborations between the regulators. IOSCO MMoU IFSCA has become a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU) on August 3, 2022. Image 3.1: Listing Ceremony of India Exim Bank’s USD 1 Bn, 10‑year Sustainability Bond on March 3, 2023. The MMoU represents a common understanding among its signatories of how they should consult, cooperate, and exchange information for the purpose of regulatory enforcement regarding Table 3.9: List of debt issuances in FY 2022‑23 securities markets. S. Debt Securities Listed Name of Issuer The MMoU provides securities regulators with the tools for combating cross‐border fraud and No. (USD Mn) misconduct that can weaken global markets and undermine investor confidence. It also sets out 1 ICICI Bank 1,950 specific requirements regarding the confidentiality of the information exchanged and ensures that 2 Power Finance Corporation Limited 300 no domestic banking secrecy laws, blocking laws or regulations will prevent securities regulators 3 Power Finance Corporation Limited (Green Bond) 400 from sharing this information with their counterparts in other jurisdictions. 4 REC Limited 300 The MMOU would enhance cross‐border enforcement and cross‐border connect of the Authority 5 REC Limited (Green Bond) 450 with other foreign jurisdictions. IFSCA will now be able to exchange information with 6 Cholamandalam Investment and Finance Company 56 the regulators of securities markets of more than 125 jurisdictions for enforcement and ensuring 7 India EXIM Bank 1,000 compliance with the securities laws. Further, the MMOU will also play an important role in implementing various cross‐border initiatives of IFSCA. 8 HDFC Bank 750 9 Shriram Finance 150 IFSCA participated in the MMoU signing ceremony held during the IOSCO Annual Meeting at Total 5,356 Marrakech in October 2022. 32 International Financial Services Centres Authority 33ANNUAL REPORT 2022-23 b) Webinar in coordination with India INX: India INX conducted a webinar on October 11, 2022, on the subject “Opportunities for Indian Investors in Global Stocks in GIFT IFSC.” The representatives from IFSCA and India INX participated in the webinar. During the webinar, the various measures taken by IFSCA for development and regulation of capital market ecosystem in the IFSC were highlighted. c) Virtual Round Table Conference: NSE IFSC organised a virtual round table conference on October 12, 2022 on the subject “Role of International Financial Centres in Sustainable Investing.” The panel consisted of representatives from IFSCA, educational institutes and the financial services industry. During the course of discussion, the importance of robust and internationally recognized ESG standards and disclosures in the scaling of sustainable finance was highlighted. The discussions included topics such as carbon markets, social bonds, impact funds, role of philanthropic money in supplementing commercial capital, capacity building etc. d) Closing Bell Ceremony: Executive Director, IFSCA participated in the closing bell ringing Image 3.2: Shri Injeti Srinivas, Chairperson, IFSCA at the IOSCO MMoU Signing Ceremony ceremony to mark the closure of the IOSCO World Investor Week 2022. On this occasion, IOSCO World Investor Week 2022 Executive Director, IFSCA highlighted the various opportunities and the initiatives taken by IFSCA towards developing GIFT IFSC as a global hub of sustainable finance. He also encouraged World Investor Week (WIW), 2022 is a week‐long global campaign promoted by IOSCO to raise the various stakeholders to incorporate an element of ESG across various verticals in the awareness about the importance of investor education and protection and to highlight various financial system. initiatives of securities regulators. As a member of IOSCO, IFSCA celebrated the World Investor Week 2022 on the theme related to sustainable finance and investor resilience during the week starting from October 10, 2022. The two stock exchanges in GIFT IFSC, namely India INX and NSE IFSC, actively took part in the celebrations. A series of events and activities were organized as part of the celebrations that included opening bell ringing ceremony, webinar, virtual conference, capacity building workshop, social media campaign, sustainability pledge campaign and closing bell ceremony. Details about some of the key events are as follows: a) Opening Bell Ringing Ceremony: Executive Director, IFSCA and MD & CEO, India INX rang the opening bell at India INX, on October 10, 2022, to commence the celebration of IOSCO World Image 3.4: Shri Dipesh Shah, Executive Director, IFSCA Investor Week 2022. participated in the closing bell ceremony of IOSCO WIW 2022. IOSCO Asia‐Pacific Regional Committee (APRC) Meeting APRC is one of the four regional committees constituted by IOSCO to focus on regional issues relating to securities regulation in the Asia‐Pacific region. The IFSCA Delegation participated in the IOSCO APRC Meeting held in Bangladesh during February 22‐23, 2023. IOSCO Training Programs IFSCA participated in various training programmes organized by IOSCO for capacity building of Image 3.3: Shri Praveen Trivedi, Executive Director, IFSCA officers involved in development and regulation of securities markets, including cyber resilience, at the opening bell ceremony of IOSCO WIW 2022 sustainable finance, fintech, use of technology in enforcement, market infrastructures, etc. 34 International Financial Services Centres Authority 35ANNUAL REPORT 2022-23 b) Webinar in coordination with India INX: India INX conducted a webinar on October 11, 2022, on the subject “Opportunities for Indian Investors in Global Stocks in GIFT IFSC.” The representatives from IFSCA and India INX participated in the webinar. During the webinar, the various measures taken by IFSCA for development and regulation of capital market ecosystem in the IFSC were highlighted. c) Virtual Round Table Conference: NSE IFSC organised a virtual round table conference on October 12, 2022 on the subject “Role of International Financial Centres in Sustainable Investing.” The panel consisted of representatives from IFSCA, educational institutes and the financial services industry. During the course of discussion, the importance of robust and internationally recognized ESG standards and disclosures in the scaling of sustainable finance was highlighted. The discussions included topics such as carbon markets, social bonds, impact funds, role of philanthropic money in supplementing commercial capital, capacity building etc. d) Closing Bell Ceremony: Executive Director, IFSCA participated in the closing bell ringing Image 3.2: Shri Injeti Srinivas, Chairperson, IFSCA at the IOSCO MMoU Signing Ceremony ceremony to mark the closure of the IOSCO World Investor Week 2022. On this occasion, IOSCO World Investor Week 2022 Executive Director, IFSCA highlighted the various opportunities and the initiatives taken by IFSCA towards developing GIFT IFSC as a global hub of sustainable finance. He also encouraged World Investor Week (WIW), 2022 is a week‐long global campaign promoted by IOSCO to raise the various stakeholders to incorporate an element of ESG across various verticals in the awareness about the importance of investor education and protection and to highlight various financial system. initiatives of securities regulators. As a member of IOSCO, IFSCA celebrated the World Investor Week 2022 on the theme related to sustainable finance and investor resilience during the week starting from October 10, 2022. The two stock exchanges in GIFT IFSC, namely India INX and NSE IFSC, actively took part in the celebrations. A series of events and activities were organized as part of the celebrations that included opening bell ringing ceremony, webinar, virtual conference, capacity building workshop, social media campaign, sustainability pledge campaign and closing bell ceremony. Details about some of the key events are as follows: a) Opening Bell Ringing Ceremony: Executive Director, IFSCA and MD & CEO, India INX rang the opening bell at India INX, on October 10, 2022, to commence the celebration of IOSCO World Image 3.4: Shri Dipesh Shah, Executive Director, IFSCA Investor Week 2022. participated in the closing bell ceremony of IOSCO WIW 2022. IOSCO Asia‐Pacific Regional Committee (APRC) Meeting APRC is one of the four regional committees constituted by IOSCO to focus on regional issues relating to securities regulation in the Asia‐Pacific region. The IFSCA Delegation participated in the IOSCO APRC Meeting held in Bangladesh during February 22‐23, 2023. IOSCO Training Programs IFSCA participated in various training programmes organized by IOSCO for capacity building of Image 3.3: Shri Praveen Trivedi, Executive Director, IFSCA officers involved in development and regulation of securities markets, including cyber resilience, at the opening bell ceremony of IOSCO WIW 2022 sustainable finance, fintech, use of technology in enforcement, market infrastructures, etc. 34 International Financial Services Centres Authority 35ANNUAL REPORT 2022-23 Research: Working papers, Research reports, Assessment & Prospects Issuance of share capital of IFSC companies in freely convertible foreign currency MCA constituted a Working Group to examine and make recommendations on necessary amendments in Companies Act 2013 (CA‐13), rules made thereunder and Accounting Standards, for enabling IFSC companies to issue their share capital in freely convertible foreign currency (FCFC). The key recommendations are as under: a) The capital structure of the IFSC companies may be enabled in FCFC, to begin with, in USD. This can be facilitated by amending CA‐13. b) The IFSC companies should prepare and maintain their books of accounts and present financial statements in the same foreign currency. The same foreign currency should also be used as the currency of disclosures for various filings under CA‐13. c) The submission of various forms by IFSC companies may be enabled in freely convertible foreign currency in online system (E‐portal system of MCA). d) There are several references of INR in CA‐13 and the Rules issued thereunder with respect to fees, penalties, and fine related provisions. The Working Group observed that there may not be any need to amend such provisions and accordingly, recommended that these provisions can continue in INR. e) The applicability of certain provisions of CA‐13 depends on certain thresholds/limits which have been defined in the Act and Rules made thereunder and such thresholds are denominated in INR terms. The Group recommends that while thresholds/limits in CA‐13 and Rules may continue to be in INR, there is a need to have a general provision requiring conversion of FCFC to INR for IFSC companies, for the purposes of reckoning these thresholds. f) Considering the difficulty to develop forms in multiple currencies; to begin with, most used currency internationally, i.e., the USD may be taken as base currency for reporting by IFSC companies. g) The existing IFSC companies may convert their share capital from INR to USD by shareholders’ approval of the capital restructuring plan through special resolution, followed by intimation to IFSCA and then filing the same with Registrar of Companies , without going through the rigour of section 61 of CA‐13. MCA may come out with necessary legal framework in this regard. h) The transition of these IFSC companies may be kept optional. However, no existing IFSC Company may be permitted to issue any further share capital (including rights, bonus, etc.) without converting their share capital into FCFC. 36 International Financial Services Centres Authority 37ANNUAL REPORT 2022-23 Research: Working papers, Research reports, Assessment & Prospects Issuance of share capital of IFSC companies in freely convertible foreign currency MCA constituted a Working Group to examine and make recommendations on necessary amendments in Companies Act 2013 (CA‐13), rules made thereunder and Accounting Standards, for enabling IFSC companies to issue their share capital in freely convertible foreign currency (FCFC). The key recommendations are as under: a) The capital structure of the IFSC companies may be enabled in FCFC, to begin with, in USD. This can be facilitated by amending CA‐13. b) The IFSC companies should prepare and maintain their books of accounts and present financial statements in the same foreign currency. The same foreign currency should also be used as the currency of disclosures for various filings under CA‐13. c) The submission of various forms by IFSC companies may be enabled in freely convertible foreign currency in online system (E‐portal system of MCA). d) There are several references of INR in CA‐13 and the Rules issued thereunder with respect to fees, penalties, and fine related provisions. The Working Group observed that there may not be any need to amend such provisions and accordingly, recommended that these provisions can continue in INR. e) The applicability of certain provisions of CA‐13 depends on certain thresholds/limits which have been defined in the Act and Rules made thereunder and such thresholds are denominated in INR terms. The Group recommends that while thresholds/limits in CA‐13 and Rules may continue to be in INR, there is a need to have a general provision requiring conversion of FCFC to INR for IFSC companies, for the purposes of reckoning these thresholds. f) Considering the difficulty to develop forms in multiple currencies; to begin with, most used currency internationally, i.e., the USD may be taken as base currency for reporting by IFSC companies. g) The existing IFSC companies may convert their share capital from INR to USD by shareholders’ approval of the capital restructuring plan through special resolution, followed by intimation to IFSCA and then filing the same with Registrar of Companies , without going through the rigour of section 61 of CA‐13. MCA may come out with necessary legal framework in this regard. h) The transition of these IFSC companies may be kept optional. However, no existing IFSC Company may be permitted to issue any further share capital (including rights, bonus, etc.) without converting their share capital into FCFC. 36 International Financial Services Centres Authority 37tnemeganaM dnuF ANNUAL REPORT 2022-23 The three registration categories for FMEs, based on the risk potential of the activities permitted, also determine the regulatory requirements applicable to them. The detailed eligibility and regulatory requirements for FMEs, Retail Schemes, Non‐Retail Schemes, Venture Capital Schemes, Portfolio Management Services, and Investment Trusts have been prescribed under the regulations. Policy Developments during the year 1) Framework for Angel Funds in IFSC Angel Funds bridge the gap between start‐ups and angel investors, who are instrumental in providing mentorship, and resources to the start‐ups. In recognition of the same, FUND MANAGEMENT the Authority has issued a framework for Angel Funds vide circular dated July 1, 2022, under the IFSCA (Fund Management) Regulations, 2022. With a view to develop GIFT IFSC as a preferred jurisdiction for global fund management industry, the Authority notified the Fund Management Regulations in April 2022. The regulations, based Box 4.1: Regulatory Framework for Angel Funds in IFSC on global best practices, facilitate innovation and promote ease of doing business in IFSC. Earlier, pooling of global capital for investments into India was predominantly set up through With a view to further supplement the fund management ecosystem in IFSC and promote funds in overseas financial jurisdictions. Now, with an enabling regulatory framework in place, investments in start‐ups, a separate framework for Angel Funds was instituted in July 2022 supported by a competitive tax regime and the benefit of lower cost of operations, under IFSCA (Fund Management) Regulations, 2022. the GIFT IFSC has rapidly emerged as a preferred jurisdiction for pooling of global capital. The Angel Funds are positioned to bridge the gap between early‐stage start‐ups and angel investors and provide the investors a professionally managed route to create a diversified The IFSCA (Fund Management) Regulations, 2022 portfolio of start‐up investments, where the investors continue to have discretion over their investment decisions. The regulations provide for unified registration to the Fund Management Entities (FMEs) and permit them to undertake a host of fund management activities. The regulations provide for An FME in IFSC will be able to launch an Angel Fund by filing a placement memorandum registration of FMEs under three categories: with the Authority under a Green Channel, i.e., the schemes can open for subscription by investors immediately upon filing of the placement memorandum with the IFSCA. These i) Registered FME (Retail) funds are required to accept investments from accredited investors or from investors who Under this category, FMEs can cater to retail investors as well as non‐retail investors are willing to commit at least USD 40,000 over 5 years. The Angel Funds in IFSC are by offering a wide array of fund management related products and services, such as retail permitted to invest in start‐ups as well as other regulated angel schemes in IFSC, India or schemes (including Exchange Traded Funds), non‐retail schemes (Alternative Investment foreign jurisdictions upon receiving consent from the desirous investors. Funds), Venture Capital Schemes, Portfolio Management Services, etc. ii) Registered FME (Non‐Retail) This category is meant for FMEs which intend to manage funds or provide Portfolio 2) Norms for Disclosures by FMEs for Environmental, Social or Management Services to accredited investors or to investors investing at least USD 150,000. Accordingly, the eligibility requirements for this category are less onerous as compared to Governance (ESG) Schemes Registered FME (Retail). As fund management industry is expected to play a crucial role in the growth of ESG driven iii) Authorised FME investments in IFSC, detailed norms for disclosures by the FMEs for various ESG‐driven A special category with light‐touch registration is accorded to such FMEs that intend to invest schemes launched by them, were specified on January 18, 2023. This measure is expected to only in unlisted securities of start‐ups through a Venture Capital Scheme, and cater exclusively to accredited investors or to investors investing at least USD 250,000. 38 International Financial Services Centres Authority 39tnemeganaM dnuF ANNUAL REPORT 2022-23 The three registration categories for FMEs, based on the risk potential of the activities permitted, also determine the regulatory requirements applicable to them. The detailed eligibility and regulatory requirements for FMEs, Retail Schemes, Non‐Retail Schemes, Venture Capital Schemes, Portfolio Management Services, and Investment Trusts have been prescribed under the regulations. Policy Developments during the year 1) Framework for Angel Funds in IFSC Angel Funds bridge the gap between start‐ups and angel investors, who are instrumental in providing mentorship, and resources to the start‐ups. In recognition of the same, FUND MANAGEMENT the Authority has issued a framework for Angel Funds vide circular dated July 1, 2022, under the IFSCA (Fund Management) Regulations, 2022. With a view to develop GIFT IFSC as a preferred jurisdiction for global fund management industry, the Authority notified the Fund Management Regulations in April 2022. The regulations, based Box 4.1: Regulatory Framework for Angel Funds in IFSC on global best practices, facilitate innovation and promote ease of doing business in IFSC. Earlier, pooling of global capital for investments into India was predominantly set up through With a view to further supplement the fund management ecosystem in IFSC and promote funds in overseas financial jurisdictions. Now, with an enabling regulatory framework in place, investments in start‐ups, a separate framework for Angel Funds was instituted in July 2022 supported by a competitive tax regime and the benefit of lower cost of operations, under IFSCA (Fund Management) Regulations, 2022. the GIFT IFSC has rapidly emerged as a preferred jurisdiction for pooling of global capital. The Angel Funds are positioned to bridge the gap between early‐stage start‐ups and angel investors and provide the investors a professionally managed route to create a diversified The IFSCA (Fund Management) Regulations, 2022 portfolio of start‐up investments, where the investors continue to have discretion over their investment decisions. The regulations provide for unified registration to the Fund Management Entities (FMEs) and permit them to undertake a host of fund management activities. The regulations provide for An FME in IFSC will be able to launch an Angel Fund by filing a placement memorandum registration of FMEs under three categories: with the Authority under a Green Channel, i.e., the schemes can open for subscription by investors immediately upon filing of the placement memorandum with the IFSCA. These i) Registered FME (Retail) funds are required to accept investments from accredited investors or from investors who Under this category, FMEs can cater to retail investors as well as non‐retail investors are willing to commit at least USD 40,000 over 5 years. The Angel Funds in IFSC are by offering a wide array of fund management related products and services, such as retail permitted to invest in start‐ups as well as other regulated angel schemes in IFSC, India or schemes (including Exchange Traded Funds), non‐retail schemes (Alternative Investment foreign jurisdictions upon receiving consent from the desirous investors. Funds), Venture Capital Schemes, Portfolio Management Services, etc. ii) Registered FME (Non‐Retail) This category is meant for FMEs which intend to manage funds or provide Portfolio 2) Norms for Disclosures by FMEs for Environmental, Social or Management Services to accredited investors or to investors investing at least USD 150,000. Accordingly, the eligibility requirements for this category are less onerous as compared to Governance (ESG) Schemes Registered FME (Retail). As fund management industry is expected to play a crucial role in the growth of ESG driven iii) Authorised FME investments in IFSC, detailed norms for disclosures by the FMEs for various ESG‐driven A special category with light‐touch registration is accorded to such FMEs that intend to invest schemes launched by them, were specified on January 18, 2023. This measure is expected to only in unlisted securities of start‐ups through a Venture Capital Scheme, and cater exclusively to accredited investors or to investors investing at least USD 250,000. 38 International Financial Services Centres Authority 39ANNUAL REPORT 2022-23 promote consistency, comparability and reliability in disclosures concerning ESG schemes and 6) Norms for handling of client funds by FMEs providing ensure that ESG schemes in IFSC are true to their label. Further, norms have also been Portfolio Management Services prescribed for ongoing monitoring and performance evaluation of the ESG Schemes. The disclosure norms are principle‐based and are largely aligned with international best practices. The IFSCA (Fund Management) Regulations, 2022 provide for Portfolio Management Services Moreover, in order to set regulatory expectations, the Authority has also provided detailed in IFSC and permit Registered FMEs (Retail and Non‐Retail) to offer these services to their guidance notes and illustrations. clients. The FMEs providing Portfolio Management Services in IFSC are permitted to accept client funds in a dedicated bank account in a Banking Unit in IFSC. This flexibility offers 3) Compendium of Frequently Asked Questions published on operational convenience to the FME as it is required to manage only a single bank account for the Authority’s Website all investments and maintain the records thereof. However, this provision deterred certain type of potential clients from availing Portfolio Management Services of FMEs. Therefore, As a measure to ease the process of setting up of investment funds in IFSC, a compendium an amendment to this provision has been approved by the Authority in its meeting held of Frequently Asked Questions (FAQs) has been published on the Authority’s website on in March 2023. December 9, 2022, for dissemination of information to the market participants, especially those who are at the initial stages of setting up their operations in IFSC. The compendium 7) Framework for Distribution of Capital Market Products and comprises of 141 FAQs, which have been structured under 11 sections and provide details Services regarding salient aspects of the IFSCA (Fund Management) Regulations, 2022 and various circulars issued thereunder. The Authority, in furtherance of its mandate to develop and regulate financial products, financial services and financial institutions in the IFSC, has issued a regulatory framework for 4) Facilitating Sovereign Wealth Funds to set up FMEs in GIFT distribution of capital market products and services under IFSCA (Capital Market IFSC Intermediaries) Regulations, 2021 vide circular dated December 21, 2022. Sovereign Wealth Funds by their very nature represent the interest of a State and benefit Box 4.2: Regulatory Framework for Distribution of Capital market a country’s economy and its citizens. In order to facilitate such funds to set up their FMEs Products and Services in GIFT IFSC for management of their own assets, a clarification was issued to remove certain difficulties in contributing capital (initial and ongoing) faced by such funds, given their unique Distributors play a crucial role of connecting the providers of capital market products nature and mandate. and services with the buyers of these products and services. The importance of distribution function is even more pronounced in the investment funds industry as world 5) Facilitating setting up of Family Investment Funds in GIFT over fund managers generally utilise the services of third‐party distributors to market their products and services to a wider clientele. IFSC Therefore, with a view to further expand the fund management ecosystem and facilitate Family offices have been rapidly emerging as a preferred vehicle for wealthy families a new set of activities within IFSC, a regulatory framework for distribution activities to manage and preserve their wealth. World over, family offices have also become important has been specified under IFSCA (Capital Market Intermediaries) Regulations, 2021. pools of capital for investments in start‐ups. Accordingly, a framework to facilitate Once registered with the Authority, these distributors are permitted to undertake global self‐managed investment fund of a family office was enshrined in the IFSCA (Fund distribution from IFSC and offer their services to clients in various jurisdictions. Management) Regulations, 2022. In furtherance of its endeavour to position GIFT IFSC as the preferred jurisdiction for pooling of such wealth, certain clarifications concerning Further, in order to protect the interest of clients of the distributors, the framework also participation by family‐controlled entities, sharing of economic interest with employees, provides for a detailed code of conduct including an advertisement code and other setting up of additional pooling vehicles, declaration by family members, etc., were issued obligations as applicable to a distributor. It also identifies the responsibilities of issuers to remove difficulties faced by the family offices in setting up their operations in GIFT IFSC. and service providers in IFSC which avail the services of distributors to market their products and services. 40 International Financial Services Centres Authority 41ANNUAL REPORT 2022-23 promote consistency, comparability and reliability in disclosures concerning ESG schemes and 6) Norms for handling of client funds by FMEs providing ensure that ESG schemes in IFSC are true to their label. Further, norms have also been Portfolio Management Services prescribed for ongoing monitoring and performance evaluation of the ESG Schemes. The disclosure norms are principle‐based and are largely aligned with international best practices. The IFSCA (Fund Management) Regulations, 2022 provide for Portfolio Management Services Moreover, in order to set regulatory expectations, the Authority has also provided detailed in IFSC and permit Registered FMEs (Retail and Non‐Retail) to offer these services to their guidance notes and illustrations. clients. The FMEs providing Portfolio Management Services in IFSC are permitted to accept client funds in a dedicated bank account in a Banking Unit in IFSC. This flexibility offers 3) Compendium of Frequently Asked Questions published on operational convenience to the FME as it is required to manage only a single bank account for the Authority’s Website all investments and maintain the records thereof. However, this provision deterred certain type of potential clients from availing Portfolio Management Services of FMEs. Therefore, As a measure to ease the process of setting up of investment funds in IFSC, a compendium an amendment to this provision has been approved by the Authority in its meeting held of Frequently Asked Questions (FAQs) has been published on the Authority’s website on in March 2023. December 9, 2022, for dissemination of information to the market participants, especially those who are at the initial stages of setting up their operations in IFSC. The compendium 7) Framework for Distribution of Capital Market Products and comprises of 141 FAQs, which have been structured under 11 sections and provide details Services regarding salient aspects of the IFSCA (Fund Management) Regulations, 2022 and various circulars issued thereunder. The Authority, in furtherance of its mandate to develop and regulate financial products, financial services and financial institutions in the IFSC, has issued a regulatory framework for 4) Facilitating Sovereign Wealth Funds to set up FMEs in GIFT distribution of capital market products and services under IFSCA (Capital Market IFSC Intermediaries) Regulations, 2021 vide circular dated December 21, 2022. Sovereign Wealth Funds by their very nature represent the interest of a State and benefit Box 4.2: Regulatory Framework for Distribution of Capital market a country’s economy and its citizens. In order to facilitate such funds to set up their FMEs Products and Services in GIFT IFSC for management of their own assets, a clarification was issued to remove certain difficulties in contributing capital (initial and ongoing) faced by such funds, given their unique Distributors play a crucial role of connecting the providers of capital market products nature and mandate. and services with the buyers of these products and services. The importance of distribution function is even more pronounced in the investment funds industry as world 5) Facilitating setting up of Family Investment Funds in GIFT over fund managers generally utilise the services of third‐party distributors to market their products and services to a wider clientele. IFSC Therefore, with a view to further expand the fund management ecosystem and facilitate Family offices have been rapidly emerging as a preferred vehicle for wealthy families a new set of activities within IFSC, a regulatory framework for distribution activities to manage and preserve their wealth. World over, family offices have also become important has been specified under IFSCA (Capital Market Intermediaries) Regulations, 2021. pools of capital for investments in start‐ups. Accordingly, a framework to facilitate Once registered with the Authority, these distributors are permitted to undertake global self‐managed investment fund of a family office was enshrined in the IFSCA (Fund distribution from IFSC and offer their services to clients in various jurisdictions. Management) Regulations, 2022. In furtherance of its endeavour to position GIFT IFSC as the preferred jurisdiction for pooling of such wealth, certain clarifications concerning Further, in order to protect the interest of clients of the distributors, the framework also participation by family‐controlled entities, sharing of economic interest with employees, provides for a detailed code of conduct including an advertisement code and other setting up of additional pooling vehicles, declaration by family members, etc., were issued obligations as applicable to a distributor. It also identifies the responsibilities of issuers to remove difficulties faced by the family offices in setting up their operations in GIFT IFSC. and service providers in IFSC which avail the services of distributors to market their products and services. 40 International Financial Services Centres Authority 41ANNUAL REPORT 2022-23 Trends and Transactions Advocacy and Outreach Fund Management As on March 31, 2023, there are 65 FMEs registered with the Authority, wherein the largest number of registrations have been observed in the Registered FME (Non‐Retail) category. These FMEs have collectively raised commitments in excess of USD 13 Bn across different types of schemes permitted under the IFSCA (Fund Management) Regulations, 2022. Table 4.1: No. of FMEs registered as on March 31, 2023 Particulars Numbers Image 4.1: Shri Praveen Trivedi, Executive Director, IFSCA No. of Registered FME (Retail) 4 at Fireside Chat during IVCA Conclave 2023 No. of Registered FME (Non‑Retail) 57 IFSCA delegation participated in the IVCA Conclave 2023, and gave an overview on opportunities No. of Authorised FME 4 for Funds in GIFT IFSC, highlighting various measures under its Fund Management Regulations Total Number of FMEs 65 towards ease of doing business, facilitating innovations and promoting transparency. Table 4.2: No. of schemes approved as on March 31, 2023 No. of Schemes Commitments Raised Particulars Registered (In USD Mn) Venture Capital Schemes 3 260.75 of which, Angel Schemes 2 60.75 Restricted Schemes 47 12,974.2 Category I & II AIFs 24 10,607 Category III AIFs 23 2367.2 Total Schemes in IFSC 50 13,234.95 Portfolio Management Services The IFSCA (Fund Management) Regulations, 2022 provide that FMEs which are registered under the categories of Registered (Retail) and Registered (Non‐Retail) may also provide Portfolio Management Services. There are 9 such FMEs which provide these services in IFSC and manage assets worth USD 413.39 Mn. 42 International Financial Services Centres Authority 43ANNUAL REPORT 2022-23 Trends and Transactions Advocacy and Outreach Fund Management As on March 31, 2023, there are 65 FMEs registered with the Authority, wherein the largest number of registrations have been observed in the Registered FME (Non‐Retail) category. These FMEs have collectively raised commitments in excess of USD 13 Bn across different types of schemes permitted under the IFSCA (Fund Management) Regulations, 2022. Table 4.1: No. of FMEs registered as on March 31, 2023 Particulars Numbers Image 4.1: Shri Praveen Trivedi, Executive Director, IFSCA No. of Registered FME (Retail) 4 at Fireside Chat during IVCA Conclave 2023 No. of Registered FME (Non‑Retail) 57 IFSCA delegation participated in the IVCA Conclave 2023, and gave an overview on opportunities No. of Authorised FME 4 for Funds in GIFT IFSC, highlighting various measures under its Fund Management Regulations Total Number of FMEs 65 towards ease of doing business, facilitating innovations and promoting transparency. Table 4.2: No. of schemes approved as on March 31, 2023 No. of Schemes Commitments Raised Particulars Registered (In USD Mn) Venture Capital Schemes 3 260.75 of which, Angel Schemes 2 60.75 Restricted Schemes 47 12,974.2 Category I & II AIFs 24 10,607 Category III AIFs 23 2367.2 Total Schemes in IFSC 50 13,234.95 Portfolio Management Services The IFSCA (Fund Management) Regulations, 2022 provide that FMEs which are registered under the categories of Registered (Retail) and Registered (Non‐Retail) may also provide Portfolio Management Services. There are 9 such FMEs which provide these services in IFSC and manage assets worth USD 413.39 Mn. 42 International Financial Services Centres Authority 43egnahcxE noilluB lanoitanretnI ANNUAL REPORT 2022-23 Gold imports in India in FY 2022‐23 were USD 35.01 Bn. As per the Gold Demand Trends report by the World Gold Council (WGC), for the year 2022, Indian gold demand remained robust compared with longer term pre‐pandemic levels. Demand of gold in the jewellery sector for the year 2022 was 600 tonnes which was in line with the annual average over the 10‐year period preceding COVID‐19 pandemic, despite high and rising local gold prices. The investment in Bars and Coins in the year 2022 was 173 tonnes.23 India International Bullion Exchange NITI Aayog report titled ‘Transforming India’s Gold Market’ (February 2018) recommended, among other things, setting up a bullion exchange in GIFT IFSC that can be an additional option in the choice of venue for trade for global market participants and become the primary intermediary for all gold imports and exports of India. The exchange can create a vibrant INTERNATIONAL BULLION EXCHANGE marketplace that helps in price discovery, with potential for India to become the price setter in the global gold market. The Hon’ble Union Finance Minister, in her budget speech in 2020, announced the setting up of an International Bullion Exchange at IFSC. The schematic of the current Bullion Ecosystem in IFSC is “India is a very big market in the field of gold and silver today. But, should that be as below: the only identity of India? The identity of India should also be that of a market maker. IIBX is an important step in this direction. This will help our players in the Consortium Partners: India INX, India ICC, NSE, MCX, CDSL, NSDL gold industry, especially jewellers to expand, paving the way for new opportunities for them. They will be able to buy bullion directly, in a transparent manner, and will also be able to participate in international price discovery. In IIBH addition, IIBX will also provide opportunities to trade in gold directly through the exchange. As the gold trading market becomes organized, the demand for gold in India will also impact and determine the gold prices." IIBX IIDI ‑ Hon’ble Prime Minister, Shri Narendra Modi, at the launch of IIBX Bullion Exchange Bullion Depository Bullion Clearing Corporation Role of IIBX Gold is one of the most essential metals in the precious metals industry. It is bought by a diverse set of consumers and investors across the globe. The major demand sectors for gold include jewellery, investment, central bank reserves and technology. Gold jewellery represents the largest source Provides transparent electronic trading platform for Bullion trade in IFSC of annual demand for gold. Although this trend has declined over recent decades, it still accounts for around 50 per cent of total global gold demand.22 Over the years, gold has been recognised as Democratic pricing mechanism a reliable, tangible, and long‐term store of value, making it an attractive avenue for the Central Banks to hold it as a medium of reserves. Gold also has a wide spectrum of application in the Direct access to Qualified Jeweller to import gold technology industry, majorly in the electronics sector. India is one of the world’s largest gold bar and coin markets. The gold industry is an integral part of the Indian economy with its demand being driven by the country’s rising prosperity. The country’s Greater integration with other segments of financial markets culture places a high value on gold, which is regarded as a symbol of wealth, prestige and is an important part of numerous rituals. Greater business opportunities 22 World Gold Council 23 World Gold Council‐Gold Demand Trends Report 44 International Financial Services Centres Authority 45egnahcxE noilluB lanoitanretnI ANNUAL REPORT 2022-23 Gold imports in India in FY 2022‐23 were USD 35.01 Bn. As per the Gold Demand Trends report by the World Gold Council (WGC), for the year 2022, Indian gold demand remained robust compared with longer term pre‐pandemic levels. Demand of gold in the jewellery sector for the year 2022 was 600 tonnes which was in line with the annual average over the 10‐year period preceding COVID‐19 pandemic, despite high and rising local gold prices. The investment in Bars and Coins in the year 2022 was 173 tonnes.23 India International Bullion Exchange NITI Aayog report titled ‘Transforming India’s Gold Market’ (February 2018) recommended, among other things, setting up a bullion exchange in GIFT IFSC that can be an additional option in the choice of venue for trade for global market participants and become the primary intermediary for all gold imports and exports of India. The exchange can create a vibrant INTERNATIONAL BULLION EXCHANGE marketplace that helps in price discovery, with potential for India to become the price setter in the global gold market. The Hon’ble Union Finance Minister, in her budget speech in 2020, announced the setting up of an International Bullion Exchange at IFSC. The schematic of the current Bullion Ecosystem in IFSC is “India is a very big market in the field of gold and silver today. But, should that be as below: the only identity of India? The identity of India should also be that of a market maker. IIBX is an important step in this direction. This will help our players in the Consortium Partners: India INX, India ICC, NSE, MCX, CDSL, NSDL gold industry, especially jewellers to expand, paving the way for new opportunities for them. They will be able to buy bullion directly, in a transparent manner, and will also be able to participate in international price discovery. In IIBH addition, IIBX will also provide opportunities to trade in gold directly through the exchange. As the gold trading market becomes organized, the demand for gold in India will also impact and determine the gold prices." IIBX IIDI ‑ Hon’ble Prime Minister, Shri Narendra Modi, at the launch of IIBX Bullion Exchange Bullion Depository Bullion Clearing Corporation Role of IIBX Gold is one of the most essential metals in the precious metals industry. It is bought by a diverse set of consumers and investors across the globe. The major demand sectors for gold include jewellery, investment, central bank reserves and technology. Gold jewellery represents the largest source Provides transparent electronic trading platform for Bullion trade in IFSC of annual demand for gold. Although this trend has declined over recent decades, it still accounts for around 50 per cent of total global gold demand.22 Over the years, gold has been recognised as Democratic pricing mechanism a reliable, tangible, and long‐term store of value, making it an attractive avenue for the Central Banks to hold it as a medium of reserves. Gold also has a wide spectrum of application in the Direct access to Qualified Jeweller to import gold technology industry, majorly in the electronics sector. India is one of the world’s largest gold bar and coin markets. The gold industry is an integral part of the Indian economy with its demand being driven by the country’s rising prosperity. The country’s Greater integration with other segments of financial markets culture places a high value on gold, which is regarded as a symbol of wealth, prestige and is an important part of numerous rituals. Greater business opportunities 22 World Gold Council 23 World Gold Council‐Gold Demand Trends Report 44 International Financial Services Centres Authority 45ANNUAL REPORT 2022-23 The abovementioned UAEGD Gold 995 purity and UAEGD Gold 999 purity products have also been Provides access to international markets extended to Tariff Rate Quota (TRQ) holders for the purpose of imports under India‐UAE CEPA. Suitable and adequate safeguards have been put in place to ensure that the conditions, such as Price influencer in the international market the requirement of Certificate of Origin from UAE’s Ministry of Economy, specified under the India‐UAE CEPA are complied with by the sellers and the buyers. Only TRQ holders can import Provides world class vaulting facility in IFSC as per the pre‐approved quota allotted by the DGFT. Structure Launch of India International Bullion Exchange Exchange and Clearing Corporation India International Bullion Exchange (IIBX) has been formed with the intent of developing India as a vibrant gold trading hub, for the national and international market. The idea behind IIBX is India International Bullion Exchange IFSC Limited (IIBX) is registered with the Authority as to develop a transparent Exchange model to determine the price of various precious metals within a Bullion Exchange & Clearing Corporation. The role of IIBX is to provide trading platform that the country, thus making India a price setter rather than a price taker. Towards this step, IIBX offers trading in products related to bullion. As a Clearing Corporation, IIBX is responsible has been operationalised. for clearing and settlement of all the trades. The trial run for IIBX commenced on April 18, 2022. IIBX was formally launched by the Depository Hon’ble Prime Minister of India on July 29, 2022. Highlighting the importance of IIBX, he stated, "Today India is one of the largest economies of the world. Therefore, in the future when our economy IIDI (previously known as CDSL IFSC Ltd) has been designated as Bullion Depository. IIDI will be much bigger than it is today, we have to prepare for it now as it is bound to grow. For this, we is responsible for the issuance of the Bullion Depository Receipt (BDR) in electronic form for need institutions that can cater to our present and future roles in the global economy. India trading on the Bullion Exchange. It is also responsible for ensuring that the vault manager has International Bullion Exchange ‑ IIBX is a step in this direction." the systems, mechanism, and related IT infrastructure to provide encrypted transmission of information to the bullion depository and system‐based reconciliation of data between During the Financial Year 2022‐23, a total of 411 kgs of gold was imported through IIBX with a total the vault manager and bullion depository. value of USD 22,465,529. Products on IIBX Vaulting Infrastructure The vaulting infrastructure in IFSC aims to cater to the expected growth of the bullion trading Gold 1Kg capacity in the years to come. Accordingly, the Authority has granted registration to three Vault Purity 995 Managers, of which two registrations have been granted in financial year 2022‐23. The total LBMA approved suppliers vaulting capacity of the vault managers is 420 MT of gold and 2200 MT of silver. Gold 100 gm Bullion Market Intermediaries Purity 999 LBMA approved suppliers The Trading Members (TMs) and Clearing Members (CMs) from the existing stock exchanges Spot T+0 at IFSC are eligible to be grandfathered as members of the Bullion Exchange and Bullion Gold 1 Kg Clearing Corporation (IIBX). Purity 995 The number of entities registered as Bullion Market Intermediaries in the capacity of Bullion UAE Good Delivery approved suppliers Trading member (Bullion TM), Bullion Trading and Clearing member (Bullion TMCM), Bullion Trading cum Self Clearing Member (Bullion TSCM) and Bullion Professional Clearing member Gold 100 gm (Bullion PCM) as on March 31, 2023, are given in the table below. Purity 999 UAE Good Delivery approved suppliers Fig 5.1: Products available for trading on IIBX 46 International Financial Services Centres Authority 47ANNUAL REPORT 2022-23 The abovementioned UAEGD Gold 995 purity and UAEGD Gold 999 purity products have also been Provides access to international markets extended to Tariff Rate Quota (TRQ) holders for the purpose of imports under India‐UAE CEPA. Suitable and adequate safeguards have been put in place to ensure that the conditions, such as Price influencer in the international market the requirement of Certificate of Origin from UAE’s Ministry of Economy, specified under the India‐UAE CEPA are complied with by the sellers and the buyers. Only TRQ holders can import Provides world class vaulting facility in IFSC as per the pre‐approved quota allotted by the DGFT. Structure Launch of India International Bullion Exchange Exchange and Clearing Corporation India International Bullion Exchange (IIBX) has been formed with the intent of developing India as a vibrant gold trading hub, for the national and international market. The idea behind IIBX is India International Bullion Exchange IFSC Limited (IIBX) is registered with the Authority as to develop a transparent Exchange model to determine the price of various precious metals within a Bullion Exchange & Clearing Corporation. The role of IIBX is to provide trading platform that the country, thus making India a price setter rather than a price taker. Towards this step, IIBX offers trading in products related to bullion. As a Clearing Corporation, IIBX is responsible has been operationalised. for clearing and settlement of all the trades. The trial run for IIBX commenced on April 18, 2022. IIBX was formally launched by the Depository Hon’ble Prime Minister of India on July 29, 2022. Highlighting the importance of IIBX, he stated, "Today India is one of the largest economies of the world. Therefore, in the future when our economy IIDI (previously known as CDSL IFSC Ltd) has been designated as Bullion Depository. IIDI will be much bigger than it is today, we have to prepare for it now as it is bound to grow. For this, we is responsible for the issuance of the Bullion Depository Receipt (BDR) in electronic form for need institutions that can cater to our present and future roles in the global economy. India trading on the Bullion Exchange. It is also responsible for ensuring that the vault manager has International Bullion Exchange ‑ IIBX is a step in this direction." the systems, mechanism, and related IT infrastructure to provide encrypted transmission of information to the bullion depository and system‐based reconciliation of data between During the Financial Year 2022‐23, a total of 411 kgs of gold was imported through IIBX with a total the vault manager and bullion depository. value of USD 22,465,529. Products on IIBX Vaulting Infrastructure The vaulting infrastructure in IFSC aims to cater to the expected growth of the bullion trading Gold 1Kg capacity in the years to come. Accordingly, the Authority has granted registration to three Vault Purity 995 Managers, of which two registrations have been granted in financial year 2022‐23. The total LBMA approved suppliers vaulting capacity of the vault managers is 420 MT of gold and 2200 MT of silver. Gold 100 gm Bullion Market Intermediaries Purity 999 LBMA approved suppliers The Trading Members (TMs) and Clearing Members (CMs) from the existing stock exchanges Spot T+0 at IFSC are eligible to be grandfathered as members of the Bullion Exchange and Bullion Gold 1 Kg Clearing Corporation (IIBX). Purity 995 The number of entities registered as Bullion Market Intermediaries in the capacity of Bullion UAE Good Delivery approved suppliers Trading member (Bullion TM), Bullion Trading and Clearing member (Bullion TMCM), Bullion Trading cum Self Clearing Member (Bullion TSCM) and Bullion Professional Clearing member Gold 100 gm (Bullion PCM) as on March 31, 2023, are given in the table below. Purity 999 UAE Good Delivery approved suppliers Fig 5.1: Products available for trading on IIBX 46 International Financial Services Centres Authority 47ANNUAL REPORT 2022-23 Table 5.1: Registered Bullion Market Intermediaries at GIFT IFSC v) Monthly Development Report for the Bullion Exchange in IFSC Bullion TM Bullion TCM Bullion TSCM Bullion PCM The circular provided the format for the Monthly Development Report of the Bullion Exchange in IFSC, which shall be submitted in the prescribed format, within 10 days from 4 5 1 2 the close of each month, to the Authority. The names and details of these entities are updated on the website of the Authority from vi) Tariff Rate Quota (TRQ) holders under the India‐UAE CEPA to be time to time. deemed as Qualified Jewellers for import of UAEGD Gold through IIBX Qualified Jewellers The circular enabled all the holders of TRQ allotted by DGFT to be eligible to apply for being notified as ‘Qualified Jewellers’ by the Authority, for the purposes of import of gold under The Directorate General of Foreign Trade vide Notification No. 49/2015‐2020 dated January 5, the India‐UAE CEPA. Accordingly, all such holders of TRQ, not otherwise eligible or notified 2022, has among other things, specified that import of gold under ITC(HS) Codes 71081200 as QJs by the Authority, would be considered for notification as QJs under a separately and 71189000, shall be permitted by Qualified Jewellers (QJs), notified by IFSCA, through IIBX. created category ‘Qualified Jeweller‐ TRQ’ (‘QJ‐TRQ’) Accordingly, notification of QJs is being done as ‐ Limited Purpose Trading Members (LPTM) vii) Bullion Trading Members and Clearing Members in IFSC and Clients, for the purpose of import of gold into India through IIBX. 84 QJs have been notified by the Authority as on March 31, 2023. The circular extended the initial six month period (from the date of operationalization of IIBX) for maintaining the Net Worth and Base Minimum Capital specified in the paragraph 3 Circulars/Guidelines issued by the Authority and 4 of the IFSCA Circular F.No. 329/IFSCA/Bullion MIIs/2021 dated September 17, 2021 , by an additional period of six months i.e., till July 28, 2023. i) Clarification on investment in BDR on IIBX through the LRS route viii) Net worth requirements for a Bullion Exchange and a Bullion Clearing The circular clarified that the resident individuals, as referred to in the RBI circular on Corporation LRS dated February 16, 2021, are not permitted to transact/invest in BDR on IIBX through the LRS route. The circular prescribed increase in the net worth requirement of the Bullion Exchange and Bullion Clearing Corporation in a gradual manner. This was done to ensure that the net ii) Standard Operating Procedure for Qualified Jewellers importing gold worth of Bullion Exchange and Bullion Clearing Corporation is sufficient to accommodate through IIBX the technological advancements in trading platforms and, the nature and expected growth The circular provided the detailed process to be followed for notification as a QJ along with of its business including the leveraged products it may offer, and to ensure that its net worth the process of import of gold by a QJ through IIBX. adequately captures the risk it faces. iii) ‘Qualified Suppliers’ for supply of bullion on IIBX ix) Guidelines for execution of block deals on the Bullion Exchange The circular enabled eligible overseas supplier entities to participate on IIBX as Qualified The circular permitted the Bullion Exchange to provide a separate window to facilitate Suppliers, including through a remote access mode, for the limited purpose of ‘selling’, the execution of large trades, with a minimum quantity of 100 kgs of gold. The circular also without having to set up an establishment, office, or a unit ‐ as a branch or subsidiary at IFSC. provided the framework for block deals permitting only non‐individual participants to execute block deals. iv) Guidelines for Business Continuity Plan (BCP) and Disaster Recovery Notifications/Circulars issued by other agencies (DR) for MIIs The circular provided a framework for the BCP and DRS for the MIIs in the IFSC. The circular i) The Customs Notification No. 22/2022 dated April 30, 2022 and Notification No. 43/2022 outlined the guidelines for the following: dated July 20, 2022 and DGFT Public Notice No. 06/2015‐2020 dated May 1, 2022 and Public Notice No. 23/2015‐2020 dated August 29, 2022 enabled the QJs, notified by the • Configuration of DRS/Near Site with Primary Data Centre Authority, to import gold (under Tariff head‐ 7108) directly through IIBX, under the India‐ • Disaster Recovery Drills/Testing UAE CEPA, in addition to the import by nominated agencies/nominated banks and other eligible entities. • BCP – DR Policy Document 48 International Financial Services Centres Authority 49ANNUAL REPORT 2022-23 Table 5.1: Registered Bullion Market Intermediaries at GIFT IFSC v) Monthly Development Report for the Bullion Exchange in IFSC Bullion TM Bullion TCM Bullion TSCM Bullion PCM The circular provided the format for the Monthly Development Report of the Bullion Exchange in IFSC, which shall be submitted in the prescribed format, within 10 days from 4 5 1 2 the close of each month, to the Authority. The names and details of these entities are updated on the website of the Authority from vi) Tariff Rate Quota (TRQ) holders under the India‐UAE CEPA to be time to time. deemed as Qualified Jewellers for import of UAEGD Gold through IIBX Qualified Jewellers The circular enabled all the holders of TRQ allotted by DGFT to be eligible to apply for being notified as ‘Qualified Jewellers’ by the Authority, for the purposes of import of gold under The Directorate General of Foreign Trade vide Notification No. 49/2015‐2020 dated January 5, the India‐UAE CEPA. Accordingly, all such holders of TRQ, not otherwise eligible or notified 2022, has among other things, specified that import of gold under ITC(HS) Codes 71081200 as QJs by the Authority, would be considered for notification as QJs under a separately and 71189000, shall be permitted by Qualified Jewellers (QJs), notified by IFSCA, through IIBX. created category ‘Qualified Jeweller‐ TRQ’ (‘QJ‐TRQ’) Accordingly, notification of QJs is being done as ‐ Limited Purpose Trading Members (LPTM) vii) Bullion Trading Members and Clearing Members in IFSC and Clients, for the purpose of import of gold into India through IIBX. 84 QJs have been notified by the Authority as on March 31, 2023. The circular extended the initial six month period (from the date of operationalization of IIBX) for maintaining the Net Worth and Base Minimum Capital specified in the paragraph 3 Circulars/Guidelines issued by the Authority and 4 of the IFSCA Circular F.No. 329/IFSCA/Bullion MIIs/2021 dated September 17, 2021 , by an additional period of six months i.e., till July 28, 2023. i) Clarification on investment in BDR on IIBX through the LRS route viii) Net worth requirements for a Bullion Exchange and a Bullion Clearing The circular clarified that the resident individuals, as referred to in the RBI circular on Corporation LRS dated February 16, 2021, are not permitted to transact/invest in BDR on IIBX through the LRS route. The circular prescribed increase in the net worth requirement of the Bullion Exchange and Bullion Clearing Corporation in a gradual manner. This was done to ensure that the net ii) Standard Operating Procedure for Qualified Jewellers importing gold worth of Bullion Exchange and Bullion Clearing Corporation is sufficient to accommodate through IIBX the technological advancements in trading platforms and, the nature and expected growth The circular provided the detailed process to be followed for notification as a QJ along with of its business including the leveraged products it may offer, and to ensure that its net worth the process of import of gold by a QJ through IIBX. adequately captures the risk it faces. iii) ‘Qualified Suppliers’ for supply of bullion on IIBX ix) Guidelines for execution of block deals on the Bullion Exchange The circular enabled eligible overseas supplier entities to participate on IIBX as Qualified The circular permitted the Bullion Exchange to provide a separate window to facilitate Suppliers, including through a remote access mode, for the limited purpose of ‘selling’, the execution of large trades, with a minimum quantity of 100 kgs of gold. The circular also without having to set up an establishment, office, or a unit ‐ as a branch or subsidiary at IFSC. provided the framework for block deals permitting only non‐individual participants to execute block deals. iv) Guidelines for Business Continuity Plan (BCP) and Disaster Recovery Notifications/Circulars issued by other agencies (DR) for MIIs The circular provided a framework for the BCP and DRS for the MIIs in the IFSC. The circular i) The Customs Notification No. 22/2022 dated April 30, 2022 and Notification No. 43/2022 outlined the guidelines for the following: dated July 20, 2022 and DGFT Public Notice No. 06/2015‐2020 dated May 1, 2022 and Public Notice No. 23/2015‐2020 dated August 29, 2022 enabled the QJs, notified by the • Configuration of DRS/Near Site with Primary Data Centre Authority, to import gold (under Tariff head‐ 7108) directly through IIBX, under the India‐ • Disaster Recovery Drills/Testing UAE CEPA, in addition to the import by nominated agencies/nominated banks and other eligible entities. • BCP – DR Policy Document 48 International Financial Services Centres Authority 49ANNUAL REPORT 2022-23 Advocacy and Outreach ii) Department of Commerce issued notification K‐43014(19)/1/2018‐SEZ dated July 6, 2022 to insert Rule 19A in the SEZ Rules, 2006 which extended the remit of IFSCA to the vaulting The various outreach programs were undertaken by IFSCA towards the growth and development facilities in other SEZs by making them a deemed IFSC unit for storing bullion for creating of bullion ecosystem in IFSC. These include participation in global and national conferences BDRs for trading on IIBX. such as: iii) Department of Commerce (DoC) vide OM J‐16/3/2007‐SEZ‐Vol V dated November 1, 2022, • India Gold Conference, Chennai, in July 2022 designated GIFT SEZ as an additional site for the purpose of initiating the pilot testing for implementation of Indian Customs Electronic Data Interchange Gateway (ICEGATE). • Global Precious Metals Conference, Lisbon, in October 2022 Subsequently, IFSCA actively collaborated with DG(Systems), DoC and SEZ DC for the • Dubai Precious Metal Conference, Dubai, in November 2022 successful testing of ICEGATE in GIFT SEZ. Further, outreach programmes were conducted at Kolkata, Hyderabad, Jaipur, Chennai, etc., for QJs, iv) RBI circular dated May 25, 2022, provided guidelines on import of gold by QJs notified by prospective QJs, TRQ holders, exporters and trading members. During these programmes, current the Authority. RBI gave directions to the Authorised Dealer Category‐1 banks to allow the developments about the precious metals ecosystem at GIFT IFSC and the advantages of importing Qualified Jewellers to remit advance payments for eleven days for import of Gold through gold through IIBX were highlighted. IIBX in compliance to the extant Foreign Trade Policy and regulations issued under IFSCA Act. v) RBI Circular dated June 7, 2022, allowed the branches of Indian banks operating in GIFT IFSC to act as a Professional Clearing Member of IIBX after seeking a No Objection Certificate from the RBI. vi) RBI Circular dated December 12, 2022, permitted eligible entities to hedge their exposure to price risk of gold on recognised exchanges in the IFSC. Visit of Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal to GIFT IFSC Union Minister of Commerce and Industry, Shri Piyush Goyal, reviewed the functioning of GIFT IFSC. He held interactions with IIBX to understand issues with respect to trading of Gold, operationalising the gold spot exchange and reducing the cost of gold metal loans for jewellery Image 5.2: Shri Kamlesh Sharma, General Manager, IFSCA at the 14th International Gold exporters through GIFT IFSC. He urged representatives of jewellery sector to discover competitive Economic Forum prices for gold through IIBX, and explained how India‐UAE CEPA is a huge window of opportunity Policies and programmes for the following year for them. • Operationalisation of import of gold through IIBX for the TRQ holders as notified by the DGFT. • Operationalising the IFSC vaulting centres at other locations within Special Economic Zones or Free Trade Warehousing Zones across India. • Enabling Indian IBUs to operate as trading members on IIBX. • Enabling gold leasing/gold metal loans through IIBX. • Trading of Silver on IIBX. • Introduction of derivatives of various metals and commodities on IIBX. Image 5.1: Visit of Hon’ble Union Minister of Commerce and Industry to Vault facility at GIFT IFSC 50 International Financial Services Centres Authority 51ANNUAL REPORT 2022-23 Advocacy and Outreach ii) Department of Commerce issued notification K‐43014(19)/1/2018‐SEZ dated July 6, 2022 to insert Rule 19A in the SEZ Rules, 2006 which extended the remit of IFSCA to the vaulting The various outreach programs were undertaken by IFSCA towards the growth and development facilities in other SEZs by making them a deemed IFSC unit for storing bullion for creating of bullion ecosystem in IFSC. These include participation in global and national conferences BDRs for trading on IIBX. such as: iii) Department of Commerce (DoC) vide OM J‐16/3/2007‐SEZ‐Vol V dated November 1, 2022, • India Gold Conference, Chennai, in July 2022 designated GIFT SEZ as an additional site for the purpose of initiating the pilot testing for implementation of Indian Customs Electronic Data Interchange Gateway (ICEGATE). • Global Precious Metals Conference, Lisbon, in October 2022 Subsequently, IFSCA actively collaborated with DG(Systems), DoC and SEZ DC for the • Dubai Precious Metal Conference, Dubai, in November 2022 successful testing of ICEGATE in GIFT SEZ. Further, outreach programmes were conducted at Kolkata, Hyderabad, Jaipur, Chennai, etc., for QJs, iv) RBI circular dated May 25, 2022, provided guidelines on import of gold by QJs notified by prospective QJs, TRQ holders, exporters and trading members. During these programmes, current the Authority. RBI gave directions to the Authorised Dealer Category‐1 banks to allow the developments about the precious metals ecosystem at GIFT IFSC and the advantages of importing Qualified Jewellers to remit advance payments for eleven days for import of Gold through gold through IIBX were highlighted. IIBX in compliance to the extant Foreign Trade Policy and regulations issued under IFSCA Act. v) RBI Circular dated June 7, 2022, allowed the branches of Indian banks operating in GIFT IFSC to act as a Professional Clearing Member of IIBX after seeking a No Objection Certificate from the RBI. vi) RBI Circular dated December 12, 2022, permitted eligible entities to hedge their exposure to price risk of gold on recognised exchanges in the IFSC. Visit of Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal to GIFT IFSC Union Minister of Commerce and Industry, Shri Piyush Goyal, reviewed the functioning of GIFT IFSC. He held interactions with IIBX to understand issues with respect to trading of Gold, operationalising the gold spot exchange and reducing the cost of gold metal loans for jewellery Image 5.2: Shri Kamlesh Sharma, General Manager, IFSCA at the 14th International Gold exporters through GIFT IFSC. He urged representatives of jewellery sector to discover competitive Economic Forum prices for gold through IIBX, and explained how India‐UAE CEPA is a huge window of opportunity Policies and programmes for the following year for them. • Operationalisation of import of gold through IIBX for the TRQ holders as notified by the DGFT. • Operationalising the IFSC vaulting centres at other locations within Special Economic Zones or Free Trade Warehousing Zones across India. • Enabling Indian IBUs to operate as trading members on IIBX. • Enabling gold leasing/gold metal loans through IIBX. • Trading of Silver on IIBX. • Introduction of derivatives of various metals and commodities on IIBX. Image 5.1: Visit of Hon’ble Union Minister of Commerce and Industry to Vault facility at GIFT IFSC 50 International Financial Services Centres Authority 51buH hcetniF ANNUAL REPORT 2022-23 Summary of the FinTech entity framework of IFSCA i) Applicability: The FE Framework is applicable to all eligible domestic and foreign entities. It recognises both FinTechs and TechFins. FinTechs are categorised as entities providing a financial technology solution which results in new business models, applications, process or products in financial services regulated by the Authority whereas TechFins are entities that provide an advanced or emerging technology solution in allied areas/activities which aid and assist activities in relation to financial products, financial services and financial institutions. ii) Authorisation: It enables eligible technology companies, having a deployable advanced/ innovative technology solution which aids and assists activities in relation to financial products, financial services, financial institutions, to obtain Authorisation from IFSCA without entering Sandbox. FINTECH HUB The Applicant (Domestic or Foreign from FATF compliant jurisdiction) must have: i. a deployable solution/working product; and ii. a revenue earning track record in at least one of the last three financial years. “In the 21st century, finance and technology are intertwined with each other. And iii) Limited Use Authorisation (Sandbox): IFSCA provides different categories of sandboxes when it comes to technology, science and software, India also has an edge and to develop and test fintech ideas or solutions in IFSCs. IFSCA also provides Overseas Regulatory experience. Today, 40 percent share in the whole world in real time digital Referral mechanism/FinTech Bridge to the eligible applicants as per the provisions of MoU payments belongs to India alone. Today we are the leaders in this. This power of or collaboration between IFSCA and corresponding overseas financial sector regulator. India in the field of FinTech is attracting the whole world. Therefore, I expect An applicant who is yet to complete the development of the product or has completed a ‘Proof all of you to aim for new innovations in FinTech. GIFT IFSC emerges as FinTech's of Concept’ and would like to conduct live testing may be considered as eligible for Sandbox. global laboratory.” Categories of Sandboxes ‑ Hon’ble Prime Minister, Shri Narendra Modi • IFSCA FinTech Regulatory Sandbox: The entities, fulfilling the eligibility criteria according to the framework, which exhibit genuine innovation and need for live testing on real customers/investors, had carried out limited prior testing, and provide direct benefit In the Union Budget 2021‐22, the Hon’ble Union Minister of Finance of India, Smt. Nirmala Sitharaman to users with proper risk management strategy, adequate test readiness and deployment announced that the government would support the development of a “World‐Class FinTech Hub” at plan post testing, can apply to Regulatory Sandbox. GIFT IFSC. • IFSCA FinTech Innovation Sandbox: The entities fulfilling the eligibility criteria The Authority, in line with this vision, developed a strategy to create visibility and mindshare according to the framework may be permitted to access the IFSCA Innovation Sandbox among FinTechs globally and develop progressive regulatory frameworks, incentives and other where in FinTechs can test their solutions in isolation from the live market. The applicant levers towards enabling a robust FinTech Ecosystem. shall be eligible to apply for IFSCA Fintech Regulatory Sandbox after the successful exit from the FinTech Innovation Sandbox. Framework for FinTech Entity • Interoperable Regulatory Sandbox (IoRS): Foreign FinTechs seeking entry to India shall To augment the FinTech Ecosystem at GIFT IFSC, a circular providing for a unique ‘FinTech Entity be considered for IoRS provided that the entity must have a financial technology (FE) Regulatory Framework’ for FinTechs and TechFins was issued on April 27, 2022. product/service whose business models/activities/features fall within the ambit of more This regulatory framework is designed to promote and regulate fintech activities in IFSC. than one domestic financial sector regulator. Considering the importance of financial technology solutions in promoting innovation in financial services market in IFSC, the framework provides for Authorization/Limited‐use Authorization of FinTechs in IFSC. 52 International Financial Services Centres Authority 53buH hcetniF ANNUAL REPORT 2022-23 Summary of the FinTech entity framework of IFSCA i) Applicability: The FE Framework is applicable to all eligible domestic and foreign entities. It recognises both FinTechs and TechFins. FinTechs are categorised as entities providing a financial technology solution which results in new business models, applications, process or products in financial services regulated by the Authority whereas TechFins are entities that provide an advanced or emerging technology solution in allied areas/activities which aid and assist activities in relation to financial products, financial services and financial institutions. ii) Authorisation: It enables eligible technology companies, having a deployable advanced/ innovative technology solution which aids and assists activities in relation to financial products, financial services, financial institutions, to obtain Authorisation from IFSCA without entering Sandbox. FINTECH HUB The Applicant (Domestic or Foreign from FATF compliant jurisdiction) must have: i. a deployable solution/working product; and ii. a revenue earning track record in at least one of the last three financial years. “In the 21st century, finance and technology are intertwined with each other. And iii) Limited Use Authorisation (Sandbox): IFSCA provides different categories of sandboxes when it comes to technology, science and software, India also has an edge and to develop and test fintech ideas or solutions in IFSCs. IFSCA also provides Overseas Regulatory experience. Today, 40 percent share in the whole world in real time digital Referral mechanism/FinTech Bridge to the eligible applicants as per the provisions of MoU payments belongs to India alone. Today we are the leaders in this. This power of or collaboration between IFSCA and corresponding overseas financial sector regulator. India in the field of FinTech is attracting the whole world. Therefore, I expect An applicant who is yet to complete the development of the product or has completed a ‘Proof all of you to aim for new innovations in FinTech. GIFT IFSC emerges as FinTech's of Concept’ and would like to conduct live testing may be considered as eligible for Sandbox. global laboratory.” Categories of Sandboxes ‑ Hon’ble Prime Minister, Shri Narendra Modi • IFSCA FinTech Regulatory Sandbox: The entities, fulfilling the eligibility criteria according to the framework, which exhibit genuine innovation and need for live testing on real customers/investors, had carried out limited prior testing, and provide direct benefit In the Union Budget 2021‐22, the Hon’ble Union Minister of Finance of India, Smt. Nirmala Sitharaman to users with proper risk management strategy, adequate test readiness and deployment announced that the government would support the development of a “World‐Class FinTech Hub” at plan post testing, can apply to Regulatory Sandbox. GIFT IFSC. • IFSCA FinTech Innovation Sandbox: The entities fulfilling the eligibility criteria The Authority, in line with this vision, developed a strategy to create visibility and mindshare according to the framework may be permitted to access the IFSCA Innovation Sandbox among FinTechs globally and develop progressive regulatory frameworks, incentives and other where in FinTechs can test their solutions in isolation from the live market. The applicant levers towards enabling a robust FinTech Ecosystem. shall be eligible to apply for IFSCA Fintech Regulatory Sandbox after the successful exit from the FinTech Innovation Sandbox. Framework for FinTech Entity • Interoperable Regulatory Sandbox (IoRS): Foreign FinTechs seeking entry to India shall To augment the FinTech Ecosystem at GIFT IFSC, a circular providing for a unique ‘FinTech Entity be considered for IoRS provided that the entity must have a financial technology (FE) Regulatory Framework’ for FinTechs and TechFins was issued on April 27, 2022. product/service whose business models/activities/features fall within the ambit of more This regulatory framework is designed to promote and regulate fintech activities in IFSC. than one domestic financial sector regulator. Considering the importance of financial technology solutions in promoting innovation in financial services market in IFSC, the framework provides for Authorization/Limited‐use Authorization of FinTechs in IFSC. 52 International Financial Services Centres Authority 53ANNUAL REPORT 2022-23 iv) Permissible Activities b) An illustrative list of allied areas/activities aiding and assisting activities in relation to financial product, financial services, and financial institutions (TechFin) is given below: a) An illustrative list of permissible FinTech areas/activities linked to financial services and allied areas/activities aiding and assisting activities in relation to financial product, financial services and financial institutions regulated by IFSCA is given in the figure below: Agri Tech Accelerators Climate/Green Regulatory Defence Tech /Sustainable Tech Tech Capital Markets Banking Sector and Fund Insurance sector Management Space Tech Supervisory Technology Technology solution solution aiding Tech Remittance and supporting Digital Trade Finance Crowd funding Insur Tech Banking payments Innovative Digital lending Personal finance technologies for Solutions/services insurance life cycle for BFSI domain leveraging Digital innovation Buy Now Pay Later Wealth Tech for global health insurance cover Innovation in Crowd Lending Robo Advisory commercial Solution/Services for BFSI Domain Leveraging insurance Artificial Intelligence/Machine Learning Digital platform for Big Data settlement of Biometrics balances between Digital Bank Sustainable Finance Chatbots insurance companies (Neo Banking/ products Cyber security Challenger bank) Digital Identity/KYC/AML/CFT Open insurance Distributed Ledger Technology Fraud detection/prevention Internet of Things (IoT) Embedded Open banking Longevity Finance insurance Metaverse including Augmented Reality and/or Virtual Reality Alternate trading platforms Quantum Tech Web 3.0 Bank Cyber insurance Fig 6.2: Illustrative list of allied areas/activities aiding and assisting activities in relation to TechFin Fig 6.1: Illustrative list of permissible FinTech areas/activities 54 International Financial Services Centres Authority 55ANNUAL REPORT 2022-23 iv) Permissible Activities b) An illustrative list of allied areas/activities aiding and assisting activities in relation to financial product, financial services, and financial institutions (TechFin) is given below: a) An illustrative list of permissible FinTech areas/activities linked to financial services and allied areas/activities aiding and assisting activities in relation to financial product, financial services and financial institutions regulated by IFSCA is given in the figure below: Agri Tech Accelerators Climate/Green Regulatory Defence Tech /Sustainable Tech Tech Capital Markets Banking Sector and Fund Insurance sector Management Space Tech Supervisory Technology Technology solution solution aiding Tech Remittance and supporting Digital Trade Finance Crowd funding Insur Tech Banking payments Innovative Digital lending Personal finance technologies for Solutions/services insurance life cycle for BFSI domain leveraging Digital innovation Buy Now Pay Later Wealth Tech for global health insurance cover Innovation in Crowd Lending Robo Advisory commercial Solution/Services for BFSI Domain Leveraging insurance Artificial Intelligence/Machine Learning Digital platform for Big Data settlement of Biometrics balances between Digital Bank Sustainable Finance Chatbots insurance companies (Neo Banking/ products Cyber security Challenger bank) Digital Identity/KYC/AML/CFT Open insurance Distributed Ledger Technology Fraud detection/prevention Internet of Things (IoT) Embedded Open banking Longevity Finance insurance Metaverse including Augmented Reality and/or Virtual Reality Alternate trading platforms Quantum Tech Web 3.0 Bank Cyber insurance Fig 6.2: Illustrative list of allied areas/activities aiding and assisting activities in relation to TechFin Fig 6.1: Illustrative list of permissible FinTech areas/activities 54 International Financial Services Centres Authority 55ANNUAL REPORT 2022-23 IFSCA FinTech Incentive Scheme, 2022 v) The framework encourages the idea of “Fail Fast” and promotes emerging technology areas. It establishes a strong foundation to facilitate a world class FinTech Hub in GIFT IFSC. To promote the establishment of a world class FinTech Hub in IFSC, comparable with those located The first five FinTech Entity Authorizations under the FE framework were granted on July 29, 2022. in advanced international financial centres, IFSCA FinTech Incentive Scheme, 2022 was notified on February 4, 2022 making the Authority the first Indian financial sector regulator to formulate an The Authority received a total of 66 applications from across 12 jurisdictions (India, USA, Sweden, incentive scheme and provide financial support to fintech activities/entities in the form of specific France, Mauritius, Singapore, Australia, UK, Taiwan, Switzerland, Netherlands, and Canada) under grant(s). the FE framework, and 31 regulatory approvals were granted in FY 2022‐23. The guidelines for implementation of the scheme were issued on September 12, 2022. The following six types of Grants are provided under the scheme: 1. FinTech Start‐up Grant 2. Proof of Concept Grant 3. Sandbox Grant 19% 4. Green FinTech Grant 5. Listing Support Grant 9% 6. Grant for Accelerators/Cohorts On October 14, 2022, the Authority constituted an Evaluation Committee (EC) chaired by Prof. 63% 9% Joshy Jacob of IIM Ahmedabad for evaluating and recommending suitable applications for Banking consideration under IFSCA FinTech Incentive Scheme, 2022. The Committee comprises of four Capital Market Insurance international members from Belgium, Israel, Switzerland, and the UK with wide experience TechFin in developing and strengthening FinTech ecosystems across the globe. Five applications have been recommended for grants amounting to a total of `1.1 Crores by the Evaluation Committee under the Scheme in FY 2022‐23. Interoperable Regulatory Sandbox The Inter‐Regulatory Technical Group (IRTG) on FinTech was constituted under the aegis of the Fig 6.3: Vertical spread of FE applicants Sub‐Committee of the Financial Stability and Development Council (FSDC‐SC) for inter‐regulatory co‐ordination among the financial sector regulators on FinTech related issues. The group, in addition to the members from financial sector regulators, has representation from the DEA, Ministry of Finance and the Ministry of Electronics and Information Technology. The terms of reference of the IRTG on FinTech included discussion on issues relating to hybrid products/services falling under the regulatory ambit of different financial sector regulators viz. RBI, SEBI, IRDAI, IFSCA and PFRDA, for admission into the regulatory sandbox and framing of standard operating procedure (SOP) for IoRS for hybrid products/services. In order to facilitate testing of innovative products/services falling within the regulatory ambit of more than one financial sector regulator, an SOP for IoRS was prepared by the IRTG on FinTech. Financial products/service providers whose business models/activities/features fall within the remit of more than one financial sector regulator, shall be considered for testing under IoRS. To obviate the need of innovators to engage with different regulators regarding their hybrid product, this common window was made available. 56 International Financial Services Centres Authority 57ANNUAL REPORT 2022-23 IFSCA FinTech Incentive Scheme, 2022 v) The framework encourages the idea of “Fail Fast” and promotes emerging technology areas. It establishes a strong foundation to facilitate a world class FinTech Hub in GIFT IFSC. To promote the establishment of a world class FinTech Hub in IFSC, comparable with those located The first five FinTech Entity Authorizations under the FE framework were granted on July 29, 2022. in advanced international financial centres, IFSCA FinTech Incentive Scheme, 2022 was notified on February 4, 2022 making the Authority the first Indian financial sector regulator to formulate an The Authority received a total of 66 applications from across 12 jurisdictions (India, USA, Sweden, incentive scheme and provide financial support to fintech activities/entities in the form of specific France, Mauritius, Singapore, Australia, UK, Taiwan, Switzerland, Netherlands, and Canada) under grant(s). the FE framework, and 31 regulatory approvals were granted in FY 2022‐23. The guidelines for implementation of the scheme were issued on September 12, 2022. The following six types of Grants are provided under the scheme: 1. FinTech Start‐up Grant 2. Proof of Concept Grant 3. Sandbox Grant 19% 4. Green FinTech Grant 5. Listing Support Grant 9% 6. Grant for Accelerators/Cohorts On October 14, 2022, the Authority constituted an Evaluation Committee (EC) chaired by Prof. 63% 9% Joshy Jacob of IIM Ahmedabad for evaluating and recommending suitable applications for Banking consideration under IFSCA FinTech Incentive Scheme, 2022. The Committee comprises of four Capital Market Insurance international members from Belgium, Israel, Switzerland, and the UK with wide experience TechFin in developing and strengthening FinTech ecosystems across the globe. Five applications have been recommended for grants amounting to a total of `1.1 Crores by the Evaluation Committee under the Scheme in FY 2022‐23. Interoperable Regulatory Sandbox The Inter‐Regulatory Technical Group (IRTG) on FinTech was constituted under the aegis of the Fig 6.3: Vertical spread of FE applicants Sub‐Committee of the Financial Stability and Development Council (FSDC‐SC) for inter‐regulatory co‐ordination among the financial sector regulators on FinTech related issues. The group, in addition to the members from financial sector regulators, has representation from the DEA, Ministry of Finance and the Ministry of Electronics and Information Technology. The terms of reference of the IRTG on FinTech included discussion on issues relating to hybrid products/services falling under the regulatory ambit of different financial sector regulators viz. RBI, SEBI, IRDAI, IFSCA and PFRDA, for admission into the regulatory sandbox and framing of standard operating procedure (SOP) for IoRS for hybrid products/services. In order to facilitate testing of innovative products/services falling within the regulatory ambit of more than one financial sector regulator, an SOP for IoRS was prepared by the IRTG on FinTech. Financial products/service providers whose business models/activities/features fall within the remit of more than one financial sector regulator, shall be considered for testing under IoRS. To obviate the need of innovators to engage with different regulators regarding their hybrid product, this common window was made available. 56 International Financial Services Centres Authority 57ANNUAL REPORT 2022-23 As per the SOP, the applications from Indian FinTechs having global ambition and foreign FinTechs seeking entry into India, shall be referred to the Authority, for taking forward the proposals, as the Authority will be the Principal Regulator for all such applications. Tier 1 Tier 2 Tier 3 IFSCA as the Principal Regulator for all such Referral of Application to Global Applications from applications. Applications from Innovator Regulatory Regulatory Foreign FinTechs Indian FinTechs having Businesses Sandboxes of Sandbox seeking entry into India Regulatory Sandbox global ambition between IFSCA IFSCA and MAS Framework of IFSCA to be and MAS Applicable. Cross‑border use cases will involve joint discussions Advocacy and Outreach with Business Innovator MoU with Gujarat Venture Finance Limited An MoU was exchanged between IFSCA and Gujarat Venture Finance Limited on April 7, 2022, This would be implemented via a “tiered” approach which includes a referral mechanism (Tier‐1) to boost the FinTech ecosystem in GIFT IFSC. followed by an application to the IFSCA regulatory sandbox and/or MAS regulatory sandbox (Tier‐2), and subsequently, if permitted, cross‐border testing within the regulatory sandboxes MoU with Department of Space of IFSCA and MAS respectively. The Authority and MAS will promote novel use cases that require global collaboration and suitable An MoU was exchanged between IFSCA and ISRO in the presence of the Hon’ble Prime Minister on use cases may be considered for Global Regulatory Sandbox (Tier‐3). Further, wherever July 29, 2022, to explore possibilities of convergence between FinTech and SpaceTech. As part appropriate, relevant participants from other jurisdictions may be invited for participating in the of the MoU, Department of Space (DoS) may provide subject matter experts to help in the technical sandbox. evaluation of FinTechs or TechFins and may provide handholding and guidance to SpaceTechs authorized as FinTech Entity by the Authority in areas related to space related datasets. MoUs with FinTech Hubs Under the MoU, IFSCA and DoS agreed to collaborate to facilitate development of the emerging space economy including lunar economy, space tourism, and other convergent areas with the MoUs were signed with the following domestic FinTech hubs and bodies to augment the FinTech financial sector. ecosystem at GIFT IFSC: i) T‐Hub foundation ‐ October 21, 2022 FinTech Co‐operation Agreement between IFSCA and MAS ii) Karnataka Digital Economy Mission (KDEM) ‐ December 17, 2022 A FinTech Cooperation Agreement between MAS and IFSCA was signed on September 18, 2022, iii) IIMK LIVE ‐ March 27, 2023 in the presence of Mr Lawrence Wong (Hon’ble Deputy Prime Minister, Minister for Finance and An MoU was also signed with the Israel FinTech Center based in Tel Aviv, Israel on February 15, Deputy Chairman of MAS). 2023, to boost the FinTech ecosystem in India and Israel. The ‘FinTech Co‐operation Agreement’ aims to promote cross‐border collaboration in financial services through the IFSCA regulatory sandbox and the MAS regulatory sandbox to encourage I‐Sprint’22 experimentation of innovative financial products or services, including potential cross border testing with industry players from both India and Singapore. In continuation to I‐Sprint’ 21, Global Hackathons (named I‐Sprints’22) were conducted in partnership with various organizations to promote innovation. A total of three Sprints (Sprint 5, 6 and 7) were held in which 229 applications were received as on March 31, 2023. 58 International Financial Services Centres Authority 59ANNUAL REPORT 2022-23 As per the SOP, the applications from Indian FinTechs having global ambition and foreign FinTechs seeking entry into India, shall be referred to the Authority, for taking forward the proposals, as the Authority will be the Principal Regulator for all such applications. Tier 1 Tier 2 Tier 3 IFSCA as the Principal Regulator for all such Referral of Application to Global Applications from applications. Applications from Innovator Regulatory Regulatory Foreign FinTechs Indian FinTechs having Businesses Sandboxes of Sandbox seeking entry into India Regulatory Sandbox global ambition between IFSCA IFSCA and MAS Framework of IFSCA to be and MAS Applicable. Cross‑border use cases will involve joint discussions Advocacy and Outreach with Business Innovator MoU with Gujarat Venture Finance Limited An MoU was exchanged between IFSCA and Gujarat Venture Finance Limited on April 7, 2022, This would be implemented via a “tiered” approach which includes a referral mechanism (Tier‐1) to boost the FinTech ecosystem in GIFT IFSC. followed by an application to the IFSCA regulatory sandbox and/or MAS regulatory sandbox (Tier‐2), and subsequently, if permitted, cross‐border testing within the regulatory sandboxes MoU with Department of Space of IFSCA and MAS respectively. The Authority and MAS will promote novel use cases that require global collaboration and suitable An MoU was exchanged between IFSCA and ISRO in the presence of the Hon’ble Prime Minister on use cases may be considered for Global Regulatory Sandbox (Tier‐3). Further, wherever July 29, 2022, to explore possibilities of convergence between FinTech and SpaceTech. As part appropriate, relevant participants from other jurisdictions may be invited for participating in the of the MoU, Department of Space (DoS) may provide subject matter experts to help in the technical sandbox. evaluation of FinTechs or TechFins and may provide handholding and guidance to SpaceTechs authorized as FinTech Entity by the Authority in areas related to space related datasets. MoUs with FinTech Hubs Under the MoU, IFSCA and DoS agreed to collaborate to facilitate development of the emerging space economy including lunar economy, space tourism, and other convergent areas with the MoUs were signed with the following domestic FinTech hubs and bodies to augment the FinTech financial sector. ecosystem at GIFT IFSC: i) T‐Hub foundation ‐ October 21, 2022 FinTech Co‐operation Agreement between IFSCA and MAS ii) Karnataka Digital Economy Mission (KDEM) ‐ December 17, 2022 A FinTech Cooperation Agreement between MAS and IFSCA was signed on September 18, 2022, iii) IIMK LIVE ‐ March 27, 2023 in the presence of Mr Lawrence Wong (Hon’ble Deputy Prime Minister, Minister for Finance and An MoU was also signed with the Israel FinTech Center based in Tel Aviv, Israel on February 15, Deputy Chairman of MAS). 2023, to boost the FinTech ecosystem in India and Israel. The ‘FinTech Co‐operation Agreement’ aims to promote cross‐border collaboration in financial services through the IFSCA regulatory sandbox and the MAS regulatory sandbox to encourage I‐Sprint’22 experimentation of innovative financial products or services, including potential cross border testing with industry players from both India and Singapore. In continuation to I‐Sprint’ 21, Global Hackathons (named I‐Sprints’22) were conducted in partnership with various organizations to promote innovation. A total of three Sprints (Sprint 5, 6 and 7) were held in which 229 applications were received as on March 31, 2023. 58 International Financial Services Centres Authority 59ANNUAL REPORT 2022-23 Participation in Global FinTech Fest (GFF) 2022 i) Sprint05 ‑ Innovation Day Partners‑ UK Government’s Foreign and Commonwealth Development Office (FCDO) The GFF 2022 was held at Jio World Centre, Mumbai by FinTech Convergence Council, Payment and PricewaterhouseCoopers (PwC) Pvt. Ltd Council of India (PCI) and National Payments Corporation of India (NPCI) from September 19 to 22, 2022, with the theme “Creating a Sustainable Financial World‐ Global/Inclusive/Green”. IFSCA participated in the event to showcase its FinTech initiatives. Themes‑ Longevity Finance, Sustainable Finance, Cross Border Transactions International Engagements Number of Applications‑ 22 Singapore FinTech Festival (SFF) 2022 Finalists‑ 14 The 7th edition of the Singapore FinTech Festival 2022 was held in Singapore from October 31 to November 5, 2022. ii) Sprint06 ‑ RegTech Cohort An IFSCA booth was set up to promote the visibility of its pioneering FinTech initiatives like FinTech Entity Framework, FinTech Incentive Scheme, FinTech Bridges, etc. Partners‑ Department of Science and Technology, RBI, SEBI, GIFT City, Deloitte, BSE, India INX, YES Bank, Bahwan CyberTek, Qapita, Sprinto and Zone StartUps. IFSCA delegation took part in the Innovation Lab Crawl as part of the Singapore FinTech Week wherein innovation labs across Singapore opened their doors and showcased their up‐and‐coming Theme‑ Regulatory Tech (RegTech) FinTech innovations and projects. As part of the Singapore FinTech Week, the delegation also took part in the World Bank and Number of Applications‑ 33 BIS Innovation Hub Reception, and in the Capital Meets Policy Dialogue. LongeviTech TLV 2023 Conference, Israel Shortlisted for virtual pitch‑ 22 IFSCA delegation took part in the LongeviTech TLV 2023 Conference on Longevity Finance held Selected Applicants‑ 17 on from February 13 to 14, 2023, in Tel Aviv, Israel. In addition to participating in regulatory roundtables and panel discussions, an IFSCA booth was Finalists/Winners (Including Program Partners’ Prize)‑ 4 set up at the Conference to promote the visibility of its pioneering FinTech initiatives like FE framework, FinTech Incentive Scheme, etc. iii) Sprint07 ‑ InnovateIN48 Ideathon During the visit, an MoU was signed with the Israel FinTech Center, and meetings were held with the financial sector regulators, Bank of Israel, and the Israeli Securities Authority in Tel Aviv, Partners‐ FIS, Amazon Web Services, Hedera Hash‐graph, Ideas to Innovate to promote cooperation on FinTech. Themes i) Data Innovation ii) AI in FinTech iii) Digital Assets Number of Applications‑ 174 from 10 Countries Shortlisted‑ 9 (3 in each theme) 60 International Financial Services Centres Authority 61ANNUAL REPORT 2022-23 Participation in Global FinTech Fest (GFF) 2022 i) Sprint05 ‑ Innovation Day Partners‑ UK Government’s Foreign and Commonwealth Development Office (FCDO) The GFF 2022 was held at Jio World Centre, Mumbai by FinTech Convergence Council, Payment and PricewaterhouseCoopers (PwC) Pvt. Ltd Council of India (PCI) and National Payments Corporation of India (NPCI) from September 19 to 22, 2022, with the theme “Creating a Sustainable Financial World‐ Global/Inclusive/Green”. IFSCA participated in the event to showcase its FinTech initiatives. Themes‑ Longevity Finance, Sustainable Finance, Cross Border Transactions International Engagements Number of Applications‑ 22 Singapore FinTech Festival (SFF) 2022 Finalists‑ 14 The 7th edition of the Singapore FinTech Festival 2022 was held in Singapore from October 31 to November 5, 2022. ii) Sprint06 ‑ RegTech Cohort An IFSCA booth was set up to promote the visibility of its pioneering FinTech initiatives like FinTech Entity Framework, FinTech Incentive Scheme, FinTech Bridges, etc. Partners‑ Department of Science and Technology, RBI, SEBI, GIFT City, Deloitte, BSE, India INX, YES Bank, Bahwan CyberTek, Qapita, Sprinto and Zone StartUps. IFSCA delegation took part in the Innovation Lab Crawl as part of the Singapore FinTech Week wherein innovation labs across Singapore opened their doors and showcased their up‐and‐coming Theme‑ Regulatory Tech (RegTech) FinTech innovations and projects. As part of the Singapore FinTech Week, the delegation also took part in the World Bank and Number of Applications‑ 33 BIS Innovation Hub Reception, and in the Capital Meets Policy Dialogue. LongeviTech TLV 2023 Conference, Israel Shortlisted for virtual pitch‑ 22 IFSCA delegation took part in the LongeviTech TLV 2023 Conference on Longevity Finance held Selected Applicants‑ 17 on from February 13 to 14, 2023, in Tel Aviv, Israel. In addition to participating in regulatory roundtables and panel discussions, an IFSCA booth was Finalists/Winners (Including Program Partners’ Prize)‑ 4 set up at the Conference to promote the visibility of its pioneering FinTech initiatives like FE framework, FinTech Incentive Scheme, etc. iii) Sprint07 ‑ InnovateIN48 Ideathon During the visit, an MoU was signed with the Israel FinTech Center, and meetings were held with the financial sector regulators, Bank of Israel, and the Israeli Securities Authority in Tel Aviv, Partners‐ FIS, Amazon Web Services, Hedera Hash‐graph, Ideas to Innovate to promote cooperation on FinTech. Themes i) Data Innovation ii) AI in FinTech iii) Digital Assets Number of Applications‑ 174 from 10 Countries Shortlisted‑ 9 (3 in each theme) 60 International Financial Services Centres Authority 61ANNUAL REPORT 2022-23 Asian Digital Finance Forum & Awards 2023, Sri Lanka Policies and programmes for the following year IFSCA was conferred the recognition of “Outstanding New Asian Regulatory and Technological Innovation in Financial Services” at the “Asian Digital Finance Forum & Awards 2023” organised “The initiatives associated with GIFT City are also a part of our efforts towards by Asian FinTech Academy (AFTA) at Hilton Colombo, Sril Lanka on March 19, 2023 under the 'ease of doing business' and 'ease of living'. We have to remember that a vibrant leadership of FinTech Association of Sri Lanka (FASL). FinTech sector does not mean just an easier business climate, reforms and regulations, it is also a medium of providing a better life and new opportunities to the professionals working in different fields.” ‑ Hon’ble Prime Minister, Shri Narendra Modi I‐Sprints on emerging areas are being planned for FY 2023‐24. It is also planned to maintain the ongoing focus on execution of the IFSCA FinTech Incentive Scheme 2022. Besides the current engagements of the Authority with external organizations, MoUs are being planned with overseas regulators (towards building FinTech Bridges), and FinTech Hubs (both domestic and international) and relevant stakeholder groups to further the growth of Image 6.1: Shri Joseph Joshy, CTO, IFSCA receiving the the FinTech ecosystem at GIFT IFSC. “Outstanding New Asian Regulatory and Technological Innovation in Financial Services” award on behalf of IFSCA The following parameters were taken into consideration by the Evaluation Committee for the awards: i) Innovative FinTech Entity Regulatory Framework ii) Built‐in sandbox construct that helps FinTechs to pivot from innovation to regulatory sandboxes iii) I‐Sprint Global Hackathons across banking, insurance and market areas iv) Leadership in identifying emerging areas like Distributed Ledger Tech, Sustainability, QuantumTech, SpaceTech, Longevity FinTech and Web 3.0 v) Incentive schemes for FinTechs especially with dedicated grant/focus on “Green/Sustainability” areas. In addition, the CTO delivered a talk at the event to acquaint the participants from Sri Lanka, Malaysia, Singapore and Hongkong with the FinTech Entity Regulatory Framework and the Incentive Scheme of IFSCA. 62 International Financial Services Centres Authority 63ANNUAL REPORT 2022-23 Asian Digital Finance Forum & Awards 2023, Sri Lanka Policies and programmes for the following year IFSCA was conferred the recognition of “Outstanding New Asian Regulatory and Technological Innovation in Financial Services” at the “Asian Digital Finance Forum & Awards 2023” organised “The initiatives associated with GIFT City are also a part of our efforts towards by Asian FinTech Academy (AFTA) at Hilton Colombo, Sril Lanka on March 19, 2023 under the 'ease of doing business' and 'ease of living'. We have to remember that a vibrant leadership of FinTech Association of Sri Lanka (FASL). FinTech sector does not mean just an easier business climate, reforms and regulations, it is also a medium of providing a better life and new opportunities to the professionals working in different fields.” ‑ Hon’ble Prime Minister, Shri Narendra Modi I‐Sprints on emerging areas are being planned for FY 2023‐24. It is also planned to maintain the ongoing focus on execution of the IFSCA FinTech Incentive Scheme 2022. Besides the current engagements of the Authority with external organizations, MoUs are being planned with overseas regulators (towards building FinTech Bridges), and FinTech Hubs (both domestic and international) and relevant stakeholder groups to further the growth of Image 6.1: Shri Joseph Joshy, CTO, IFSCA receiving the the FinTech ecosystem at GIFT IFSC. “Outstanding New Asian Regulatory and Technological Innovation in Financial Services” award on behalf of IFSCA The following parameters were taken into consideration by the Evaluation Committee for the awards: i) Innovative FinTech Entity Regulatory Framework ii) Built‐in sandbox construct that helps FinTechs to pivot from innovation to regulatory sandboxes iii) I‐Sprint Global Hackathons across banking, insurance and market areas iv) Leadership in identifying emerging areas like Distributed Ledger Tech, Sustainability, QuantumTech, SpaceTech, Longevity FinTech and Web 3.0 v) Incentive schemes for FinTechs especially with dedicated grant/focus on “Green/Sustainability” areas. In addition, the CTO delivered a talk at the event to acquaint the participants from Sri Lanka, Malaysia, Singapore and Hongkong with the FinTech Entity Regulatory Framework and the Incentive Scheme of IFSCA. 62 International Financial Services Centres Authority 63ecnarusnI ANNUAL REPORT 2022-23 (b) As a step forward to provide light touch regulatory framework and to strengthen the supervisory aspects, the following regulations were approved for notification by the Authority in the FY 2022‐23 i) IFSCA (Investment by IFSC Insurance Office) Regulations, 2022 ii) IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022 iii) IFSCA (Insurance Products and Pricing) Regulations, 2022 iv) IFSCA (Appointed Actuary) Regulations, 2022 v) IFSCA (Maintenance of Insurance Records and Submission of Requisite Information for Investigation and Inspection) Regulations, 2022 vi) IFSCA (Preparation & Presentation of Financial Statements of Investment by IFSC Insurance Offices) Regulations, 2022 vii) IFSCA (Assets, Liabilities, and Solvency Margin of Life Insurance business) Regulations, 2023 INSURANCE viii) IFSCA (Assets, Liabilities, and Solvency Margin of General, Health and Re‐insurance business) Regulations, 2023 As John Allen Paulos rightly said, “Uncertainty is the only certainty there is, and knowing how to ix) IFSCA (Management Control, Administrative Control and Market Conduct of insurance live with insecurity is the only security”. In a turbulent world, the value of life and property business) Regulations, 2023 of individuals stands threatened at the hands of death and destruction. Businesses fear expansion in the absence of any security against financial losses due to uncertain events. Insurance helps x) IFSCA (Re‐insurance) Regulations, 2023 overcome these fears by sharing over many the risks that accrue to a few. The concept of insurance isn’t new. The first life insurance policy goes back to early 18th century. ( c) Important features of these regulatory frameworks are as under – Apart from the risk management view, insurance industry also plays a crucial determining role i) IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022 were framed in the economy. With huge financial resources at disposal, their investment decisions have bearing consequent to the carve‐out provided by GoI vide S.O. 3035(E) dated July 4, 2022, on on financial stability in the markets. applicability of section 64VB of the Insurance Act, 1938 in the IFSC jurisdiction. As per GIFT IFSC, with its unique and strategic placement in the region, bears plethora of opportunities the said section, no insurer shall assume any risk in India in respect of any insurance to add to the exponential growth of insurance sector. In the near future, it is envisaged to gain business until the premium payable is received by it in advance. This makes Indian prominence as a global insurance and re‐insurance hub. With the objective of making India Atma insurance industry cash before cover i.e., upfront payment of premium before Nirbhar (self‐reliant) in meeting its own insurance and re‐insurance needs, IFSCA aims to make assumption of risk is a must. Now, consequent to the carve‐out by GoI and as specified IFSC as a bridge where Indian and foreign insurers can have access to other jurisdictions through by these regulations, IFSC Insurance Offices (IIOs) may assume the insurance risk with conducive regulatory policies and framework. or without receipt of premium in advance. The contract of insurance between IIO and the insured will be the base for assumption of insurance risk. Regulatory Framework ii) IFSCA (Investment by IFSC Insurance Offices) Regulations, 2022 were also framed (a) To facilitate the growth of insurance & re‐insurance sector and to provide best in class consequent to the carve‐out provided by GoI vide S.O. 3035(E) dated July 4, 2022, on regulatory framework that is at par with global standards, the Authority had issued applicability of sections 27,27A, 27B, 27C, 27D and 27E of the Insurance Act, 1938 in the the following three regulations in IFSC in the FY 2021‐22: IFSC. This enables IIOs to make investments in foreign jurisdictions, including India. The regulations also introduce the concept of Sovereign Credit Rating (SCR) based i) IFSCA (Registration of Insurance Business) Regulations, 2021 investment limits and do away with granular prescriptions on investments. ii) IFSCA (Insurance Intermediary) Regulations, 2021 iii) IFSCA (Insurance Web Aggregator) Regulations, 2022 64 International Financial Services Centres Authority 65ecnarusnI ANNUAL REPORT 2022-23 (b) As a step forward to provide light touch regulatory framework and to strengthen the supervisory aspects, the following regulations were approved for notification by the Authority in the FY 2022‐23 i) IFSCA (Investment by IFSC Insurance Office) Regulations, 2022 ii) IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022 iii) IFSCA (Insurance Products and Pricing) Regulations, 2022 iv) IFSCA (Appointed Actuary) Regulations, 2022 v) IFSCA (Maintenance of Insurance Records and Submission of Requisite Information for Investigation and Inspection) Regulations, 2022 vi) IFSCA (Preparation & Presentation of Financial Statements of Investment by IFSC Insurance Offices) Regulations, 2022 vii) IFSCA (Assets, Liabilities, and Solvency Margin of Life Insurance business) Regulations, 2023 INSURANCE viii) IFSCA (Assets, Liabilities, and Solvency Margin of General, Health and Re‐insurance business) Regulations, 2023 As John Allen Paulos rightly said, “Uncertainty is the only certainty there is, and knowing how to ix) IFSCA (Management Control, Administrative Control and Market Conduct of insurance live with insecurity is the only security”. In a turbulent world, the value of life and property business) Regulations, 2023 of individuals stands threatened at the hands of death and destruction. Businesses fear expansion in the absence of any security against financial losses due to uncertain events. Insurance helps x) IFSCA (Re‐insurance) Regulations, 2023 overcome these fears by sharing over many the risks that accrue to a few. The concept of insurance isn’t new. The first life insurance policy goes back to early 18th century. ( c) Important features of these regulatory frameworks are as under – Apart from the risk management view, insurance industry also plays a crucial determining role i) IFSCA (Manner of Payment and Receipt of Premium) Regulations, 2022 were framed in the economy. With huge financial resources at disposal, their investment decisions have bearing consequent to the carve‐out provided by GoI vide S.O. 3035(E) dated July 4, 2022, on on financial stability in the markets. applicability of section 64VB of the Insurance Act, 1938 in the IFSC jurisdiction. As per GIFT IFSC, with its unique and strategic placement in the region, bears plethora of opportunities the said section, no insurer shall assume any risk in India in respect of any insurance to add to the exponential growth of insurance sector. In the near future, it is envisaged to gain business until the premium payable is received by it in advance. This makes Indian prominence as a global insurance and re‐insurance hub. With the objective of making India Atma insurance industry cash before cover i.e., upfront payment of premium before Nirbhar (self‐reliant) in meeting its own insurance and re‐insurance needs, IFSCA aims to make assumption of risk is a must. Now, consequent to the carve‐out by GoI and as specified IFSC as a bridge where Indian and foreign insurers can have access to other jurisdictions through by these regulations, IFSC Insurance Offices (IIOs) may assume the insurance risk with conducive regulatory policies and framework. or without receipt of premium in advance. The contract of insurance between IIO and the insured will be the base for assumption of insurance risk. Regulatory Framework ii) IFSCA (Investment by IFSC Insurance Offices) Regulations, 2022 were also framed (a) To facilitate the growth of insurance & re‐insurance sector and to provide best in class consequent to the carve‐out provided by GoI vide S.O. 3035(E) dated July 4, 2022, on regulatory framework that is at par with global standards, the Authority had issued applicability of sections 27,27A, 27B, 27C, 27D and 27E of the Insurance Act, 1938 in the the following three regulations in IFSC in the FY 2021‐22: IFSC. This enables IIOs to make investments in foreign jurisdictions, including India. The regulations also introduce the concept of Sovereign Credit Rating (SCR) based i) IFSCA (Registration of Insurance Business) Regulations, 2021 investment limits and do away with granular prescriptions on investments. ii) IFSCA (Insurance Intermediary) Regulations, 2021 iii) IFSCA (Insurance Web Aggregator) Regulations, 2022 64 International Financial Services Centres Authority 65ANNUAL REPORT 2022-23 iii) IFSCA (Insurance Products and Pricing) Regulations, 2022 provide for light ‐ touch and offshore markets. The IFSCA (Re‐insurance) Regulations, 2023 adopt and keep pace principle ‐ based approach for designing, pricing, and marketing of product without with international benchmarks with respect to both regulation and business practices. prior approval of the Authority. Product approvals in the domestic market fall either These regulations deal with re‐insurance activities of the IIOs, and inter‑alia provide for under Use & File (U&F) or File & Use (F&U). In the spirit of international detailed framework for oversight and control of inward and outward arrangement of competitiveness and ease of doing business, the Authority has done away with both reinsurance by the IIOs. these mechanisms and has provided a regime which entrusts the IIOs with the viii) Solvency of insurance companies is of prime importance from a supervisory responsibility to manage their affairs on their own without need for any specific perspective. Ensuring adequate solvency safeguards the interests of the policyholders approval of the regulator. However, it may be pertinent to highlight here that adequate which is the underlying theme of regulatory and supervisory effort. In this spirit, the safeguards have also been put in place to empower the regulator to step in if the Authority came out with the IFSCA (Assets, Liabilities, and Solvency Margin of Life situation warrants. Insurance business) Regulations, 2023 and IFSCA (Assets, Liabilities, and Solvency iv) Actuaries play a crucial role in the operation and profitability of any insurance business. Margin of General Insurance and Re‐insurance business) Regulations, 2023. These The IFSCA (Appointed Actuary) Regulations, 2022 aim to lay down the regulatory regulations, inter‐alia, provide for the regulatory requirements towards maintenance framework for the persons who are authorised to perform the role and discharge the of capital and solvency margins by IIOs for transacting insurance business in the IFSC. functions of ‘Appointed Actuary’ for the IFSC Insurance Offices. These regulations, inter‑ The IIOs that are set up in an unincorporated form, shall be allowed to maintain their alia, provide for aspects related to appointments, powers, duties and obligations of capital requirements in accordance with the home country regulations. For IIOs in an Appointed Actuary. To ease operations for IIOs set up in an unincorporated form, incorporated form, capital requirements shall be maintained under these regulations. Appointed Actuary of the parent entity is permitted to be eligible for appointment as the Separate schedules have also been added to cover the aspects of valuation of assets and Appointed Actuary of such IIOs. format for statement of admissible assets, determination of amount of liabilities and statement of admissible liabilities, determination of solvency margin, etc. v) IFSCA (Maintenance of Insurance Records and Submission of Requisite Information for Investigation and Inspection) Regulations, 2022 aim to specify minimum information ix) IFSCA (Management Control, Administrative Control and Market Conduct of insurance that is required to be maintained by the IIO and IIIO, for the purposes of investigation business) Regulations, 2023 is a comprehensive set of regulations. These regulations and inspection, so as to enable the investigating officer to discharge his/her functions inter‑alia provide for change in shareholding pattern and management control, internal satisfactorily, under section 33 of the Insurance Act, 1938. These regulations, inter‑alia, administrative controls, expenses of management, payment of commissions, places of provide for maintenance of policy and claims records, maintenance of data, records, business, outsourcing of activities, sharing of confidential information concerning information etc. as per the provisions of the Insurance Act, 1938; maintenance of domestic or foreign entity, distribution of surplus to policyholders, acquisition of records of employees; and checks and other verifications. surrender and paid‐up values of life insurance policies, minimum limits for annuities and other benefits, advertisements, policyholders’ protection, etc. vi) To further strengthen the regulatory framework and promote ease of doing business so far as preparation & presentation of financial statements of IIOs is concerned, the Authority has notified IFSCA (Preparation & Presentation of Financial Statements of IIOs) Regulations, 2022 that focus on aspects of preparation & presentation of financial results in line with international best practices and principles. While IIOs that are set up in an unincorporated form, shall prepare their financial statements in accordance with the accounting standards applicable to its parent entity, accounting standards applicable to IIOs that are set up in an incorporated form are specified in these Regulations. However, in the spirit of uniform approach towards presentation of financial statements, common formats have been specified for all IIOs, whether set up in an incorporated form or otherwise. vii) Reinsurance (RI) helps in stabilising insurance business environment. Considering the importance of RI activities in a financial ecosystem, various jurisdictions have evolved as platforms for reinsurance solutions in the global market. For GIFT IFSC to become a global RI Hub, it needs a robust pool of RI participants, who can offer capacity to 66 International Financial Services Centres Authority 67ANNUAL REPORT 2022-23 iii) IFSCA (Insurance Products and Pricing) Regulations, 2022 provide for light ‐ touch and offshore markets. The IFSCA (Re‐insurance) Regulations, 2023 adopt and keep pace principle ‐ based approach for designing, pricing, and marketing of product without with international benchmarks with respect to both regulation and business practices. prior approval of the Authority. Product approvals in the domestic market fall either These regulations deal with re‐insurance activities of the IIOs, and inter‑alia provide for under Use & File (U&F) or File & Use (F&U). In the spirit of international detailed framework for oversight and control of inward and outward arrangement of competitiveness and ease of doing business, the Authority has done away with both reinsurance by the IIOs. these mechanisms and has provided a regime which entrusts the IIOs with the viii) Solvency of insurance companies is of prime importance from a supervisory responsibility to manage their affairs on their own without need for any specific perspective. Ensuring adequate solvency safeguards the interests of the policyholders approval of the regulator. However, it may be pertinent to highlight here that adequate which is the underlying theme of regulatory and supervisory effort. In this spirit, the safeguards have also been put in place to empower the regulator to step in if the Authority came out with the IFSCA (Assets, Liabilities, and Solvency Margin of Life situation warrants. Insurance business) Regulations, 2023 and IFSCA (Assets, Liabilities, and Solvency iv) Actuaries play a crucial role in the operation and profitability of any insurance business. Margin of General Insurance and Re‐insurance business) Regulations, 2023. These The IFSCA (Appointed Actuary) Regulations, 2022 aim to lay down the regulatory regulations, inter‐alia, provide for the regulatory requirements towards maintenance framework for the persons who are authorised to perform the role and discharge the of capital and solvency margins by IIOs for transacting insurance business in the IFSC. functions of ‘Appointed Actuary’ for the IFSC Insurance Offices. These regulations, inter‑ The IIOs that are set up in an unincorporated form, shall be allowed to maintain their alia, provide for aspects related to appointments, powers, duties and obligations of capital requirements in accordance with the home country regulations. For IIOs in an Appointed Actuary. To ease operations for IIOs set up in an unincorporated form, incorporated form, capital requirements shall be maintained under these regulations. Appointed Actuary of the parent entity is permitted to be eligible for appointment as the Separate schedules have also been added to cover the aspects of valuation of assets and Appointed Actuary of such IIOs. format for statement of admissible assets, determination of amount of liabilities and statement of admissible liabilities, determination of solvency margin, etc. v) IFSCA (Maintenance of Insurance Records and Submission of Requisite Information for Investigation and Inspection) Regulations, 2022 aim to specify minimum information ix) IFSCA (Management Control, Administrative Control and Market Conduct of insurance that is required to be maintained by the IIO and IIIO, for the purposes of investigation business) Regulations, 2023 is a comprehensive set of regulations. These regulations and inspection, so as to enable the investigating officer to discharge his/her functions inter‑alia provide for change in shareholding pattern and management control, internal satisfactorily, under section 33 of the Insurance Act, 1938. These regulations, inter‑alia, administrative controls, expenses of management, payment of commissions, places of provide for maintenance of policy and claims records, maintenance of data, records, business, outsourcing of activities, sharing of confidential information concerning information etc. as per the provisions of the Insurance Act, 1938; maintenance of domestic or foreign entity, distribution of surplus to policyholders, acquisition of records of employees; and checks and other verifications. surrender and paid‐up values of life insurance policies, minimum limits for annuities and other benefits, advertisements, policyholders’ protection, etc. vi) To further strengthen the regulatory framework and promote ease of doing business so far as preparation & presentation of financial statements of IIOs is concerned, the Authority has notified IFSCA (Preparation & Presentation of Financial Statements of IIOs) Regulations, 2022 that focus on aspects of preparation & presentation of financial results in line with international best practices and principles. While IIOs that are set up in an unincorporated form, shall prepare their financial statements in accordance with the accounting standards applicable to its parent entity, accounting standards applicable to IIOs that are set up in an incorporated form are specified in these Regulations. However, in the spirit of uniform approach towards presentation of financial statements, common formats have been specified for all IIOs, whether set up in an incorporated form or otherwise. vii) Reinsurance (RI) helps in stabilising insurance business environment. Considering the importance of RI activities in a financial ecosystem, various jurisdictions have evolved as platforms for reinsurance solutions in the global market. For GIFT IFSC to become a global RI Hub, it needs a robust pool of RI participants, who can offer capacity to 66 International Financial Services Centres Authority 67ANNUAL REPORT 2022-23 Trends and Transactions Business Transactions at the IFSC: Financial Services/ Products at GIFT IFSC: (a) IFSC Insurance Office: ‑ In the FY 2022‐23 the IIOs had booked premium of USD 84 Mn as compared to USD 72 Mn Registration of entities as on March 31, 2023 in FY 2021‐22. The financial year‐ wise business underwritten by the IIOs for previous five years is as under: ‐ a) IFSC Insurance Offices (IIOs) ‐ The Authority has issued registration to six (re)insurers to transact business in the IFSC. In addition to the four (re)insurers from India, that had already established their place of business in the IFSC, two new (re)insurers, both from foreign jurisdictions, namely Axa France IARD, France and HDFC International Life 2022‐23* 84 & Re Co. Ltd., Dubai, have opened their branch office in the IFSC. b) IFSC Insurance Intermediary Offices – The Authority has issued registration to 17 2021‐22 71.64 insurance brokers to transact business from the IFSC. All are branch offices of insurance 2020‐21 brokers registered in India. 18.6 c) One application of IIO and five applications of IIIO are under process with the Authority. 2019‐20 16.6 Table 7.1: Number of IIOs and IIIOs operating in the IFSC. 2018‐19 13.9 Particulars FY 2020‑21 FY 2021‑22 FY 2022‑23 0 10 20 30 40 50 60 70 80 90 IFSC Insurance Offices 4 4 6 Figures in USD Mn IFSC Insurance Intermediary offices 14 15 17 Total 18 19 23 *Data for FY 2022‐23 is Provisional Fig. 7.2: Business underwritten by IIOs. (b) IFSC Insurance Intermediary Office: In the FY 2022‐23 the IIIOs had transacted (re)insurance premium of USD 227 Mn, as compared to USD 223 Mn in FY 2021‐22. The financial year wise transactions of IIIOs 1 for the previous five years are as under: ‐ 2022‐23* 227 2021‐22 223.45 16 Direct Composite 2020‐21 153.1 2019‐20 42.4 Fig 7.1: Classification of IIIOs 2018‐19 14.9 0 50 100 150 200 250 Figures in USD Mn *Data for FY 2022‐23 is Provisional Fig 7.3: Business transacted by IIIOs. 68 International Financial Services Centres Authority 69ANNUAL REPORT 2022-23 Trends and Transactions Business Transactions at the IFSC: Financial Services/ Products at GIFT IFSC: (a) IFSC Insurance Office: ‑ In the FY 2022‐23 the IIOs had booked premium of USD 84 Mn as compared to USD 72 Mn Registration of entities as on March 31, 2023 in FY 2021‐22. The financial year‐ wise business underwritten by the IIOs for previous five years is as under: ‐ a) IFSC Insurance Offices (IIOs) ‐ The Authority has issued registration to six (re)insurers to transact business in the IFSC. In addition to the four (re)insurers from India, that had already established their place of business in the IFSC, two new (re)insurers, both from foreign jurisdictions, namely Axa France IARD, France and HDFC International Life 2022‐23* 84 & Re Co. Ltd., Dubai, have opened their branch office in the IFSC. b) IFSC Insurance Intermediary Offices – The Authority has issued registration to 17 2021‐22 71.64 insurance brokers to transact business from the IFSC. All are branch offices of insurance 2020‐21 brokers registered in India. 18.6 c) One application of IIO and five applications of IIIO are under process with the Authority. 2019‐20 16.6 Table 7.1: Number of IIOs and IIIOs operating in the IFSC. 2018‐19 13.9 Particulars FY 2020‑21 FY 2021‑22 FY 2022‑23 0 10 20 30 40 50 60 70 80 90 IFSC Insurance Offices 4 4 6 Figures in USD Mn IFSC Insurance Intermediary offices 14 15 17 Total 18 19 23 *Data for FY 2022‐23 is Provisional Fig. 7.2: Business underwritten by IIOs. (b) IFSC Insurance Intermediary Office: In the FY 2022‐23 the IIIOs had transacted (re)insurance premium of USD 227 Mn, as compared to USD 223 Mn in FY 2021‐22. The financial year wise transactions of IIIOs 1 for the previous five years are as under: ‐ 2022‐23* 227 2021‐22 223.45 16 Direct Composite 2020‐21 153.1 2019‐20 42.4 Fig 7.1: Classification of IIIOs 2018‐19 14.9 0 50 100 150 200 250 Figures in USD Mn *Data for FY 2022‐23 is Provisional Fig 7.3: Business transacted by IIIOs. 68 International Financial Services Centres Authority 69ANNUAL REPORT 2022-23 Advocacy & Outreach Policies and programmes for the following year Participation at IAIS events As pointed out in the Economic Survey 2022‐23, India is poised to emerge as one of the fastest‐ growing insurance markets in the coming decade. The competitive and conducive regulatory • 2022 Global Seminar at Croatia environment at GIFT IFSC will go a long way in supporting the growth of the insurance market. With the resonant theme of insurance sector resilience, the IAIS Global Seminar was held Partnerships, such as the Authority’s association with the International Association of Insurance with participation of over 350 participants from 70 countries, including IFSCA Supervisors (IAIS), enhance its access to supervisory information and help to establish better at Dubrovnik, Croatia, from June 16 to 17, 2022. Together, panelists and participants communication and cooperation amongst supervisors. Thus, expedited efforts are being made engaged and exchanged views on the steps needed to strengthen insurance sector towards the successful conclusion of the Multilateral MoU between the Authority and the IAIS. resilience following the unprecedented challenges of Covid faced in the past two and a half Various inter ‐ regulatory issues are proposed to be taken up on priority basis to aid ease of doing years. business for entities wishing to set up presence in the IFSC. Since entities are allowed to be set up in an unincorporated form also in the IFSC, coordinating with the parent regulator of such units • 2022 IAIS Annual Conference at Chile becomes crucial for their seamless operations. The IAIS’ annual flagship event, the 2022 Annual Conference had over 400 participants from 60 jurisdictions, including IFSCA, at Santiago de Chile during November 10–11, 2022. Panelists and participants engaged in rich conversations, exploring the changing landscape and the role of insurance sector in meeting emerging economic and social challenges. Diversity, equity and inclusion; changing consumer preferences; macroeconomic risks; climate risk and Insurance Capital Standard (ICS) were the key areas. A joint IAIS‐ IMF workshop on risk‐based solvency and an Access to Insurance Initiative (A2ii) session on the conclusions from its innovation labs were also held. Memorandum of Understanding (MoU) with National Insurance Academy (NIA) IFSCA, with an objective of capacity building and providing skilled talent pool in the insurance sector in IFSC, has entered into an MoU with the National Insurance Academy. IFSCA aims to develop a strong global connect and focus on the needs of the Indian economy as well as to serve as an international financial platform at regional/global level. Insurance is an emerging sector at IFSC, and the MoU with NIA would go a long way in capacity development in the field of insurance. NIA is a premier institution devoted to equipping the insurance industry with the best of talents. NIA has been involved in devising and continuously upgrading the curriculum and imparting training to the insurance industry in India. This MoU endeavours to build required skilled manpower for IFSC. With the focus to address the need of IFSC Insurance entities, IFSCA had also executed an MoU with Insurance Institute of India (III). 70 International Financial Services Centres Authority 71ANNUAL REPORT 2022-23 Advocacy & Outreach Policies and programmes for the following year Participation at IAIS events As pointed out in the Economic Survey 2022‐23, India is poised to emerge as one of the fastest‐ growing insurance markets in the coming decade. The competitive and conducive regulatory • 2022 Global Seminar at Croatia environment at GIFT IFSC will go a long way in supporting the growth of the insurance market. With the resonant theme of insurance sector resilience, the IAIS Global Seminar was held Partnerships, such as the Authority’s association with the International Association of Insurance with participation of over 350 participants from 70 countries, including IFSCA Supervisors (IAIS), enhance its access to supervisory information and help to establish better at Dubrovnik, Croatia, from June 16 to 17, 2022. Together, panelists and participants communication and cooperation amongst supervisors. Thus, expedited efforts are being made engaged and exchanged views on the steps needed to strengthen insurance sector towards the successful conclusion of the Multilateral MoU between the Authority and the IAIS. resilience following the unprecedented challenges of Covid faced in the past two and a half Various inter ‐ regulatory issues are proposed to be taken up on priority basis to aid ease of doing years. business for entities wishing to set up presence in the IFSC. Since entities are allowed to be set up in an unincorporated form also in the IFSC, coordinating with the parent regulator of such units • 2022 IAIS Annual Conference at Chile becomes crucial for their seamless operations. The IAIS’ annual flagship event, the 2022 Annual Conference had over 400 participants from 60 jurisdictions, including IFSCA, at Santiago de Chile during November 10–11, 2022. Panelists and participants engaged in rich conversations, exploring the changing landscape and the role of insurance sector in meeting emerging economic and social challenges. Diversity, equity and inclusion; changing consumer preferences; macroeconomic risks; climate risk and Insurance Capital Standard (ICS) were the key areas. A joint IAIS‐ IMF workshop on risk‐based solvency and an Access to Insurance Initiative (A2ii) session on the conclusions from its innovation labs were also held. Memorandum of Understanding (MoU) with National Insurance Academy (NIA) IFSCA, with an objective of capacity building and providing skilled talent pool in the insurance sector in IFSC, has entered into an MoU with the National Insurance Academy. IFSCA aims to develop a strong global connect and focus on the needs of the Indian economy as well as to serve as an international financial platform at regional/global level. Insurance is an emerging sector at IFSC, and the MoU with NIA would go a long way in capacity development in the field of insurance. NIA is a premier institution devoted to equipping the insurance industry with the best of talents. NIA has been involved in devising and continuously upgrading the curriculum and imparting training to the insurance industry in India. This MoU endeavours to build required skilled manpower for IFSC. With the focus to address the need of IFSC Insurance entities, IFSCA had also executed an MoU with Insurance Institute of India (III). 70 International Financial Services Centres Authority 71sertneC esuoh‑nI labolG ANNUAL REPORT 2022-23 Policies and programmes for the following year In line with IFSCA's vision for the future, several initiatives have been identified to promote GICs within GIFT IFSC. Recognising the significance of GIFT IFSC as a hub for GIC and IT/ITeS, an expert committee will be established to spearhead its development. Efforts will be made to raise awareness among potential investors about the availability of skilled talent pool for GICs in and around GIFT City. Collaboration with the State Education Department of Gujarat and GIFT City Company Limited will be prioritised to ensure the provision of comprehensive and up‐to‐date data pertaining to the skilled workforce. In close collaboration with the Government of Gujarat, awareness and branding events will be organized to promote GIFT‐IFSC as a premier destination for GICs in the country. To expand outreach and engage with potential investors, physical roadshows will be conducted GLOBAL IN‑HOUSE CENTRES across various prominent cities in India that have already established themselves as leaders in the GIC space. In the last two decades, India has emerged as a leading hub for Global In‐house Centres (GICs) These concerted efforts aim to position GIFT IFSC as a preferred choice for GICs, leveraging owing to its inherent strengths such as availability of highly skilled talent pool and competitive cost its robust ecosystem and strategic advantages. of operations. Essentially, GICs are offshore centres that perform designated in‐house functions for large corporates and organizations. Financial Sector GICs in India initially started as offshore back‐end processing centres for the parent companies offering technological solutions by leveraging low‐cost talent pool. Over the years, GICs have started playing a strategic role at global level and have evolved as innovation centres offering advanced services in areas such as analytics, risk management, fraud prevention, etc. To enable the GIC business in GIFT IFSC, the Central Government, on the recommendation of IFSCA, notified GICs as a financial service under the IFSCA Act, 2019 to provide services relating to financial products and financial services. Subsequently, IFSCA notified the Global In‐House Centres Regulations, 2020 which permitted entities belonging to any financial services group to set up a GIC in the IFSC. There are multiple institutions that have established GICs in the GIFT‐IFSC. These GICs are expected to have a combined employment strength of over 2500. Major MNCs from the financial sector, including renowned banks like Bank of America, auditing and assurance service providers, and securities and capital market firms, have established their GICs in GIFT IFSC. Advocacy and Outreach IFSCA has been actively engaging with the industry and collaborating with government agencies and GIFT City authorities. Continuous efforts have been made to provide the necessary infrastructure required by these large corporates. Notable advancements have been made in GIFT IFSC in terms of office space, commuting facilities, recreational amenities, etc. 72 International Financial Services Centres Authority 73sertneC esuoh‑nI labolG ANNUAL REPORT 2022-23 Policies and programmes for the following year In line with IFSCA's vision for the future, several initiatives have been identified to promote GICs within GIFT IFSC. Recognising the significance of GIFT IFSC as a hub for GIC and IT/ITeS, an expert committee will be established to spearhead its development. Efforts will be made to raise awareness among potential investors about the availability of skilled talent pool for GICs in and around GIFT City. Collaboration with the State Education Department of Gujarat and GIFT City Company Limited will be prioritised to ensure the provision of comprehensive and up‐to‐date data pertaining to the skilled workforce. In close collaboration with the Government of Gujarat, awareness and branding events will be organized to promote GIFT‐IFSC as a premier destination for GICs in the country. To expand outreach and engage with potential investors, physical roadshows will be conducted GLOBAL IN‑HOUSE CENTRES across various prominent cities in India that have already established themselves as leaders in the GIC space. In the last two decades, India has emerged as a leading hub for Global In‐house Centres (GICs) These concerted efforts aim to position GIFT IFSC as a preferred choice for GICs, leveraging owing to its inherent strengths such as availability of highly skilled talent pool and competitive cost its robust ecosystem and strategic advantages. of operations. Essentially, GICs are offshore centres that perform designated in‐house functions for large corporates and organizations. Financial Sector GICs in India initially started as offshore back‐end processing centres for the parent companies offering technological solutions by leveraging low‐cost talent pool. Over the years, GICs have started playing a strategic role at global level and have evolved as innovation centres offering advanced services in areas such as analytics, risk management, fraud prevention, etc. To enable the GIC business in GIFT IFSC, the Central Government, on the recommendation of IFSCA, notified GICs as a financial service under the IFSCA Act, 2019 to provide services relating to financial products and financial services. Subsequently, IFSCA notified the Global In‐House Centres Regulations, 2020 which permitted entities belonging to any financial services group to set up a GIC in the IFSC. There are multiple institutions that have established GICs in the GIFT‐IFSC. These GICs are expected to have a combined employment strength of over 2500. Major MNCs from the financial sector, including renowned banks like Bank of America, auditing and assurance service providers, and securities and capital market firms, have established their GICs in GIFT IFSC. Advocacy and Outreach IFSCA has been actively engaging with the industry and collaborating with government agencies and GIFT City authorities. Continuous efforts have been made to provide the necessary infrastructure required by these large corporates. Notable advancements have been made in GIFT IFSC in terms of office space, commuting facilities, recreational amenities, etc. 72 International Financial Services Centres Authority 7374 International Financial Services Centres Authority ecnaniF elbaniatsuS ANNUAL REPORT 2022-23 SUSTAINABLE FINANCE Global Scenario Globally, sustainable finance is emerging as one of the most important areas for governments, policy makers, standard setting bodies and other stakeholders. As per a report by Climate Bonds Initiative (CBI), a total of USD 858.5 Bn Green, Social, Sustainable, and other labelled (GSS+) bonds were issued in 2022, bringing the cumulative total to USD 3.7 trillion. The report also indicates that while GSS+ volumes dropped YoY for the first time in a decade, its five per cent contribution to global bond market issuance was maintained. 24 1200 1000 800 600 400 200 0 Fig 9.1: Volumes of Green, Social, Sustainable and Other Labelled (GSS+) bonds in 2022 24 Global State of Market Report 2022 by Climate Bond Initiative 75 snoilliB DSU Sustainable Finance at IFSC “.... today India is leading the world in the field of sustainable development. We have set a target of net zero carbon emissions for ourselves. At the national level, we are pursuing the Gatishakti Master Plan and setting new records for renewable energy and e‑mobility. Internationally, India is leading the International Solar Alliance. This is one area in which our dedication will open up immense possibilities. I want GIFT IFSC to be a gateway to global debt and equity capital for sustainable and climate projects." ‑ Hon’ble Prime Minister, Shri Narendra Modi at the launch of NSE IFSC International Sustainability platform The Hon’ble Prime Minister of India at COP26 announced ‘Panchamrits’ which will be an unprecedented contribution of India to climate action. Further, the GoI updated its Nationally Determined Contribution (NDC) and launched several initiatives including National Hydrogen Mission and Mission LiFE. The Hon’ble Union Finance Minister, in her budget speech in 2022‐23 mentioned that “services for global capital for sustainable & climate finance in the country will be facilitated in the GIFT City”. Keeping this mandate in mind, the Authority is strategically focused on the development of sustainable finance at IFSC across capital markets, banking, insurance and fintech with the aim to develop the necessary eco‐system and act as a gateway for global sustainable capital flows into India. Policy and Regulations The Authority, during F.Y. 2022‐23, has taken various regulatory and policy initiatives to mobilise finance towards green and sustainable projects, including the following: a) Sustainable lending by IBUs b) Sustainability Disclosures by Fund Management Entities c) Framework for ESG Schemes <2015 2016 2017 2018 2019 2020 2021 2022 Sustainable Lending by IBUs/FCs Green Social Sustainability SLB Transition The Authority issued a ‘Guidance Framework for Sustainable and Sustainability linked lending by Source: Global State of Market Report by Climate Bond Initiative 2022 (data as on December 31, 2022) Financial Institutions’ on April 26, 2022, to promote sustainable lending by IBUs and FCs. The core components of the framework are highlighted below: a) The framework mandates IBUs and FCs/FUs, who engage in lending as a permitted activity, to develop a comprehensive board‐approved policy on green/social/sustainable/sustainability‐linked lending by March 31, 2023. This74 International Financial Services Centres Authority ecnaniF elbaniatsuS ANNUAL REPORT 2022-23 SUSTAINABLE FINANCE Global Scenario Globally, sustainable finance is emerging as one of the most important areas for governments, policy makers, standard setting bodies and other stakeholders. As per a report by Climate Bonds Initiative (CBI), a total of USD 858.5 Bn Green, Social, Sustainable, and other labelled (GSS+) bonds were issued in 2022, bringing the cumulative total to USD 3.7 trillion. The report also indicates that while GSS+ volumes dropped YoY for the first time in a decade, its five per cent contribution to global bond market issuance was maintained. 24 1200 1000 800 600 400 200 0 Fig 9.1: Volumes of Green, Social, Sustainable and Other Labelled (GSS+) bonds in 2022 24 Global State of Market Report 2022 by Climate Bond Initiative 75 snoilliB DSU Sustainable Finance at IFSC “.... today India is leading the world in the field of sustainable development. We have set a target of net zero carbon emissions for ourselves. At the national level, we are pursuing the Gatishakti Master Plan and setting new records for renewable energy and e‑mobility. Internationally, India is leading the International Solar Alliance. This is one area in which our dedication will open up immense possibilities. I want GIFT IFSC to be a gateway to global debt and equity capital for sustainable and climate projects." ‑ Hon’ble Prime Minister, Shri Narendra Modi at the launch of NSE IFSC International Sustainability platform The Hon’ble Prime Minister of India at COP26 announced ‘Panchamrits’ which will be an unprecedented contribution of India to climate action. Further, the GoI updated its Nationally Determined Contribution (NDC) and launched several initiatives including National Hydrogen Mission and Mission LiFE. The Hon’ble Union Finance Minister, in her budget speech in 2022‐23 mentioned that “services for global capital for sustainable & climate finance in the country will be facilitated in the GIFT City”. Keeping this mandate in mind, the Authority is strategically focused on the development of sustainable finance at IFSC across capital markets, banking, insurance and fintech with the aim to develop the necessary eco‐system and act as a gateway for global sustainable capital flows into India. Policy and Regulations The Authority, during F.Y. 2022‐23, has taken various regulatory and policy initiatives to mobilise finance towards green and sustainable projects, including the following: a) Sustainable lending by IBUs b) Sustainability Disclosures by Fund Management Entities c) Framework for ESG Schemes <2015 2016 2017 2018 2019 2020 2021 2022 Sustainable Lending by IBUs/FCs Green Social Sustainability SLB Transition The Authority issued a ‘Guidance Framework for Sustainable and Sustainability linked lending by Source: Global State of Market Report by Climate Bond Initiative 2022 (data as on December 31, 2022) Financial Institutions’ on April 26, 2022, to promote sustainable lending by IBUs and FCs. The core components of the framework are highlighted below: a) The framework mandates IBUs and FCs/FUs, who engage in lending as a permitted activity, to develop a comprehensive board‐approved policy on green/social/sustainable/sustainability‐linked lending by March 31, 2023. ThisANNUAL REPORT 2022-23 framework will in turn allow lenders to label long‐ term and short‐ term financing Box 9.1: Salient features of “Framework for Disclosures by Fund Management accordingly. Entities for Environmental, Social or Governance (ESG) Schemes” b) Further, such entities shall have at least 5 per cent of their gross loans and advances directed towards green/social/sustainable/sustainability‐linked sectors/facilities, Applicability starting from April 1, 2023. The circular is applicable to such retail schemes, exchange traded funds (ETFs), restricted c) The guidance framework proposes these entities to incorporate assessment process, schemes and venture capital schemes, which have terms, such as ‘Environment’, ‘Social’, reporting mechanisms, and monitoring process within the framework, for alignment ‘ESG’, ‘Green’, ‘Sustainability’ or any combination thereof or similar terms, incorporated in with international standards. their names, or represent or market themselves as ESG focused schemes. d) The framework mandates these entities to report the details of lending under Initial disclosures green/social/sustainable/sustainability‐linked categories on a half‐yearly basis. For every ESG scheme launched by an FME, the FME shall ensure the following: Sustainability Disclosures by Fund Management Entities Name of the Scheme: The name of an ESG scheme should be reflective of its ESG focus and consistent with its ESG‐related investment objectives and investment strategy. To encourage Fund Management Entities (FMEs) to incorporate sustainability‐related risks and opportunities in investment decision making, the Authority has included a chapter on ESG in IFSCA Investment Objective: FME should transparently disclose the nature and extent of the (Fund Management) Regulations, 2022. The regulations mandate large FMEs (AUM above USD 3 scheme’s ESG‐related investment objectives, including details of the primary components Bn) to have additional requirements (mentioned below) related to ESG factors. of sustainability addressed by the scheme. Investment Strategy: Detailed explanation of type of investment strategy, including ESG‐ Table 9.1: Additional requirements related to ESG factors. related investment strategy, that FME intends to pursue which amongst others may be Particulars Remarks towards Integration, Impact Investing, Engagement, Transition for hard‐to‐abate and Establish policy on governance around material sustainability‐ other emission‐intensive sectors, etc. Governance related risks and opportunities. Risks and Risk Management Practices: FME managing an ESG scheme should disclose all Disclose how the fund manager identifies, assesses, and manages the specific risks that arise on account of the scheme’s pursuit of ESG‐related investment Risk management material sustainability‐related risks. objectives, related investment strategies and processes in addition to all the other material risks faced by the scheme. Establish and disclose the process of factoring sustainability‐related Investment Strategy risks and opportunities into fund manager’s investment strategies. Periodic Disclosures for ESG Schemes: For every ESG scheme, the FME shall disclose on a half‐yearly basis for a retail scheme and on annual basis for other types of schemes, the ESG Schemes compliance with the stated ESG‐related investment objectives of the scheme, ESG‐related performance, actual proportion of the investable corpus/assets under management To promote consistency, comparability and reliability in disclosures concerning ESG schemes, the invested as per the stated ESG‐related investment objectives, Key findings/Major Authority has issued the framework for ESG schemes which inter‑alia covers requirements observations of Internal audits or third‐party validation, if any, etc. relating to initial and periodic disclosures, ongoing monitoring, and performance evaluation. Monitoring and Compliance: The FME should undertake, on a half‐yearly basis for a retail scheme and on annual basis for other types of schemes, assessment of their compliance with the stated ESG‐related investment objectives of the schemes, measurement of the ESG‐related performance of the scheme by evaluating any pre‐determined KPIs, expected outcomes and other relevant factors and submit a declaration. 76 International Financial Services Centres Authority 77ANNUAL REPORT 2022-23 framework will in turn allow lenders to label long‐ term and short‐ term financing Box 9.1: Salient features of “Framework for Disclosures by Fund Management accordingly. Entities for Environmental, Social or Governance (ESG) Schemes” b) Further, such entities shall have at least 5 per cent of their gross loans and advances directed towards green/social/sustainable/sustainability‐linked sectors/facilities, Applicability starting from April 1, 2023. The circular is applicable to such retail schemes, exchange traded funds (ETFs), restricted c) The guidance framework proposes these entities to incorporate assessment process, schemes and venture capital schemes, which have terms, such as ‘Environment’, ‘Social’, reporting mechanisms, and monitoring process within the framework, for alignment ‘ESG’, ‘Green’, ‘Sustainability’ or any combination thereof or similar terms, incorporated in with international standards. their names, or represent or market themselves as ESG focused schemes. d) The framework mandates these entities to report the details of lending under Initial disclosures green/social/sustainable/sustainability‐linked categories on a half‐yearly basis. For every ESG scheme launched by an FME, the FME shall ensure the following: Sustainability Disclosures by Fund Management Entities Name of the Scheme: The name of an ESG scheme should be reflective of its ESG focus and consistent with its ESG‐related investment objectives and investment strategy. To encourage Fund Management Entities (FMEs) to incorporate sustainability‐related risks and opportunities in investment decision making, the Authority has included a chapter on ESG in IFSCA Investment Objective: FME should transparently disclose the nature and extent of the (Fund Management) Regulations, 2022. The regulations mandate large FMEs (AUM above USD 3 scheme’s ESG‐related investment objectives, including details of the primary components Bn) to have additional requirements (mentioned below) related to ESG factors. of sustainability addressed by the scheme. Investment Strategy: Detailed explanation of type of investment strategy, including ESG‐ Table 9.1: Additional requirements related to ESG factors. related investment strategy, that FME intends to pursue which amongst others may be Particulars Remarks towards Integration, Impact Investing, Engagement, Transition for hard‐to‐abate and Establish policy on governance around material sustainability‐ other emission‐intensive sectors, etc. Governance related risks and opportunities. Risks and Risk Management Practices: FME managing an ESG scheme should disclose all Disclose how the fund manager identifies, assesses, and manages the specific risks that arise on account of the scheme’s pursuit of ESG‐related investment Risk management material sustainability‐related risks. objectives, related investment strategies and processes in addition to all the other material risks faced by the scheme. Establish and disclose the process of factoring sustainability‐related Investment Strategy risks and opportunities into fund manager’s investment strategies. Periodic Disclosures for ESG Schemes: For every ESG scheme, the FME shall disclose on a half‐yearly basis for a retail scheme and on annual basis for other types of schemes, the ESG Schemes compliance with the stated ESG‐related investment objectives of the scheme, ESG‐related performance, actual proportion of the investable corpus/assets under management To promote consistency, comparability and reliability in disclosures concerning ESG schemes, the invested as per the stated ESG‐related investment objectives, Key findings/Major Authority has issued the framework for ESG schemes which inter‑alia covers requirements observations of Internal audits or third‐party validation, if any, etc. relating to initial and periodic disclosures, ongoing monitoring, and performance evaluation. Monitoring and Compliance: The FME should undertake, on a half‐yearly basis for a retail scheme and on annual basis for other types of schemes, assessment of their compliance with the stated ESG‐related investment objectives of the schemes, measurement of the ESG‐related performance of the scheme by evaluating any pre‐determined KPIs, expected outcomes and other relevant factors and submit a declaration. 76 International Financial Services Centres Authority 77ANNUAL REPORT 2022-23 The framework prescribed by the Authority is principle‐based, and largely aligned with international best practices. Considering the transition needs of India and other emerging markets, the framework issued by the Authority enables strategies such as: a) Transition Funds for investing in hard‐to‐abate and other emission‐intensive sectors with the objective of reducing GHG emissions. b) Engagement Funds for investing in companies wherein the fund manager effectively engages with companies to improve their ESG scoring/profile. ESG Labelled Debt Securities As on March 31, 2023, the cumulative listing of all the ESG labelled debt securities on the recognised stock exchanges in the IFSC is USD 9.28 Bn, out of which debt securities totalling to USD 2 Bn have been listed in FY 2022‐23. The figure below depicts cumulative ESG labelled debt listings on the IFSC exchanges for the last 3 years. 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 78 International Financial Services Centres Authority 79 nB DSU Expert Committee on Sustainable Finance 9.3 Image 9.1: Committee of Experts on Sustainable Finance submits Report to Chairperson, IFSCA 7.3 The Authority constituted a ‘Committee of Experts on Sustainable Finance’ (“Expert Committee”), in September 2021, to recommend approach towards development of Sustainable Finance Hub at IFSC and provide a road map for the same. The Committee, chaired by Shri C.K. Mishra, Former Secretary to Government of India, Ministry of Environment, Forest & Climate Change, has 2.0 submitted its final report on October 3, 2022. The key recommendations of the Expert Committee include: a) Transition Financing: The Authority to issue specific guidelines/framework for transition Mar‐21 Mar‐22 Mar‐23 bonds, enabling carbon intensive industries/sectors to raise global capital for gradual transition towards net‐zero. Source: India INX and NSE IFSC b) Partnership with stakeholders: The Authority to lead initiatives and actions towards creation Fig 9.2: Cumulative Listing of ESG‑labelled debt securities on IFSC Exchanges (USD Bn) of a global climate alliance by partnering with policy thinktanks, standard setting bodies, industry associations and academic institutions among others. c) Voluntary Carbon Markets: The Authority can bolster IFSC’s sustainability credentials by championing the voluntary carbon market and creating it in IFSC. d) Capacity Building i) The Authority to engage with ESG and climate risk experts like Council on Energy, Environment and Water (CEEW), Climate Bonds Initiative, UNDP Financial Centres for Sustainability (FC4S) and auctus ESG among others for creating skill enhancement programs to bridge the knowledge gap and enhance professional capacity within the IFSC.ANNUAL REPORT 2022-23 The framework prescribed by the Authority is principle‐based, and largely aligned with international best practices. Considering the transition needs of India and other emerging markets, the framework issued by the Authority enables strategies such as: a) Transition Funds for investing in hard‐to‐abate and other emission‐intensive sectors with the objective of reducing GHG emissions. b) Engagement Funds for investing in companies wherein the fund manager effectively engages with companies to improve their ESG scoring/profile. ESG Labelled Debt Securities As on March 31, 2023, the cumulative listing of all the ESG labelled debt securities on the recognised stock exchanges in the IFSC is USD 9.28 Bn, out of which debt securities totalling to USD 2 Bn have been listed in FY 2022‐23. The figure below depicts cumulative ESG labelled debt listings on the IFSC exchanges for the last 3 years. 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 78 International Financial Services Centres Authority 79 nB DSU Expert Committee on Sustainable Finance 9.3 Image 9.1: Committee of Experts on Sustainable Finance submits Report to Chairperson, IFSCA 7.3 The Authority constituted a ‘Committee of Experts on Sustainable Finance’ (“Expert Committee”), in September 2021, to recommend approach towards development of Sustainable Finance Hub at IFSC and provide a road map for the same. The Committee, chaired by Shri C.K. Mishra, Former Secretary to Government of India, Ministry of Environment, Forest & Climate Change, has 2.0 submitted its final report on October 3, 2022. The key recommendations of the Expert Committee include: a) Transition Financing: The Authority to issue specific guidelines/framework for transition Mar‐21 Mar‐22 Mar‐23 bonds, enabling carbon intensive industries/sectors to raise global capital for gradual transition towards net‐zero. Source: India INX and NSE IFSC b) Partnership with stakeholders: The Authority to lead initiatives and actions towards creation Fig 9.2: Cumulative Listing of ESG‑labelled debt securities on IFSC Exchanges (USD Bn) of a global climate alliance by partnering with policy thinktanks, standard setting bodies, industry associations and academic institutions among others. c) Voluntary Carbon Markets: The Authority can bolster IFSC’s sustainability credentials by championing the voluntary carbon market and creating it in IFSC. d) Capacity Building i) The Authority to engage with ESG and climate risk experts like Council on Energy, Environment and Water (CEEW), Climate Bonds Initiative, UNDP Financial Centres for Sustainability (FC4S) and auctus ESG among others for creating skill enhancement programs to bridge the knowledge gap and enhance professional capacity within the IFSC.ANNUAL REPORT 2022-23 ii) The Authority to engage with relevant international organisations to train G20 Sustainable Finance Working Group ‐ Knowledge Partner regulators, policymakers, and key managerial personnel of systemically important IFSCA is the domestic knowledge partner of Department of Economic Affairs, Ministry of Finance financial institutions. (DEA, MoF), GoI for Sustainable Finance Working Group (SFWG) as part of India’s G20 Presidency. iii) The Authority to create an institutional‐level framework for capacity building As a knowledge partner, IFSCA is responsible for providing inputs for presidency papers, concept specific to the type of financial institution. This framework can incorporate notes for the side events, research, and inputs for the key deliverables amongst other things. IFSCA mandatory certifications/trainings on key areas related to sustainability. contributed to the G20 input paper ‐ “Building capacities to accelerate sustainable finance and e) Promote Innovation, New Products and Services manage climate and sustainability risks”. i) The Authority to facilitate the structuring and issuance of innovative green products Advocacy and Outreach through regulatory framework and guidelines to attract private foreign capital. FC4S ii) The Authority to promote regulatory sandbox for Green FinTech in order to boost investments in green technology through IFSC. The Financial Centres for Sustainability (FC4S) Network is a growing collective of the world’s iii) The Authority to facilitate blended finance mechanism at IFSC by attracting financial centres which is supported by UNDP Secretariat. It consists of 39 members and the concessional financing from multilateral development banks (MDBs) and entities representing financial centres include regulators, public‐private agencies, and market development finance institutions (DFIs), thereby reducing the financial risks of associations. The objective of FC4S is to accelerate the expansion of sustainable finance by enabling private and commercial investors. financial centres to evaluate the state of sustainable finance and to provide the tools and insights to engage local institutions, inform and influence policy, and ultimately accelerate market iv) The Authority to create an enabling regulatory framework for MDBs to offer transformation. products like Risk Sharing Facilities and Partial Credit Guarantees. IFSCA is a member of the FC4S Network and participated in the Annual General Meeting (AGM) v) The Authority could encourage setting up of impact funds within IFSC and can create held on October 20, 2022, in Casablanca, Morocco. During the AGM, the progress and focus areas of guidelines for investors looking to see a social return on their capital. member financial centres and initiatives of FC4S were discussed with the objective to design the vi) The Authority could facilitate development of a dedicated lending platform for roadmap and action plan for FC4S. green/sustainable projects in the MSME sector. The platform will provide opportunity to MSMEs to avail green/sustainable financing through IFSC. MoU between IFSCA and the Council on Energy, Environment vii) The Authority to facilitate formation and development of green aggregation vehicles and Water (CEEW) (REITs, InvITs, ETF) and facilitate their listing on stock exchanges within IFSC to encourage capital flows. IFSCA and the CEEW have signed an MoU for mutual assistance and cooperation in the area of sustainable finance. IFSCA and CEEW are collaborating through this wide‐ranging MoU, which f) Sustainability Reporting includes research and joint convenings. The MoU, focusing on broad areas of sustainable finance, is i) The Authority to mandate reporting on non‐financial parameters, with a special a step towards achieving climate goals and mobilising global capital, through IFSC, for enabling focus on climate risk by IBUs and FIs in a phased manner. These disclosures may be sustainable development. voluntary initially, paving the way for mandatory disclosures. ii) The Authority to strive towards standardisation of climate disclosures by entities. g) G20 Engagement The Authority to engage with GoI on the subject of India's presidency of G20 in the areas of sustainable finance and climate actions. 80 International Financial Services Centres Authority 81ANNUAL REPORT 2022-23 ii) The Authority to engage with relevant international organisations to train G20 Sustainable Finance Working Group ‐ Knowledge Partner regulators, policymakers, and key managerial personnel of systemically important IFSCA is the domestic knowledge partner of Department of Economic Affairs, Ministry of Finance financial institutions. (DEA, MoF), GoI for Sustainable Finance Working Group (SFWG) as part of India’s G20 Presidency. iii) The Authority to create an institutional‐level framework for capacity building As a knowledge partner, IFSCA is responsible for providing inputs for presidency papers, concept specific to the type of financial institution. This framework can incorporate notes for the side events, research, and inputs for the key deliverables amongst other things. IFSCA mandatory certifications/trainings on key areas related to sustainability. contributed to the G20 input paper ‐ “Building capacities to accelerate sustainable finance and e) Promote Innovation, New Products and Services manage climate and sustainability risks”. i) The Authority to facilitate the structuring and issuance of innovative green products Advocacy and Outreach through regulatory framework and guidelines to attract private foreign capital. FC4S ii) The Authority to promote regulatory sandbox for Green FinTech in order to boost investments in green technology through IFSC. The Financial Centres for Sustainability (FC4S) Network is a growing collective of the world’s iii) The Authority to facilitate blended finance mechanism at IFSC by attracting financial centres which is supported by UNDP Secretariat. It consists of 39 members and the concessional financing from multilateral development banks (MDBs) and entities representing financial centres include regulators, public‐private agencies, and market development finance institutions (DFIs), thereby reducing the financial risks of associations. The objective of FC4S is to accelerate the expansion of sustainable finance by enabling private and commercial investors. financial centres to evaluate the state of sustainable finance and to provide the tools and insights to engage local institutions, inform and influence policy, and ultimately accelerate market iv) The Authority to create an enabling regulatory framework for MDBs to offer transformation. products like Risk Sharing Facilities and Partial Credit Guarantees. IFSCA is a member of the FC4S Network and participated in the Annual General Meeting (AGM) v) The Authority could encourage setting up of impact funds within IFSC and can create held on October 20, 2022, in Casablanca, Morocco. During the AGM, the progress and focus areas of guidelines for investors looking to see a social return on their capital. member financial centres and initiatives of FC4S were discussed with the objective to design the vi) The Authority could facilitate development of a dedicated lending platform for roadmap and action plan for FC4S. green/sustainable projects in the MSME sector. The platform will provide opportunity to MSMEs to avail green/sustainable financing through IFSC. MoU between IFSCA and the Council on Energy, Environment vii) The Authority to facilitate formation and development of green aggregation vehicles and Water (CEEW) (REITs, InvITs, ETF) and facilitate their listing on stock exchanges within IFSC to encourage capital flows. IFSCA and the CEEW have signed an MoU for mutual assistance and cooperation in the area of sustainable finance. IFSCA and CEEW are collaborating through this wide‐ranging MoU, which f) Sustainability Reporting includes research and joint convenings. The MoU, focusing on broad areas of sustainable finance, is i) The Authority to mandate reporting on non‐financial parameters, with a special a step towards achieving climate goals and mobilising global capital, through IFSC, for enabling focus on climate risk by IBUs and FIs in a phased manner. These disclosures may be sustainable development. voluntary initially, paving the way for mandatory disclosures. ii) The Authority to strive towards standardisation of climate disclosures by entities. g) G20 Engagement The Authority to engage with GoI on the subject of India's presidency of G20 in the areas of sustainable finance and climate actions. 80 International Financial Services Centres Authority 81Policies and programmes for the following year The Authority has planned several initiatives for the next FY with respect to sustainable finance, including the following: i) Transition Finance: Tackling climate change by limiting the global temperature rise to 1.5 degree Celsius is fundamental not just for achieving Paris agreement but also SDGs. This requires fundamental change in the way business is being done across all sectors of the economy. This will be particularly true for the industries which fall under hard‐to‐abate sectors. However, mobilisation of funds towards climate action has been restricted to certain sectors of the economy. There is a need to finance hard‐to‐abate and emission‐ intensive sectors such as steel, cement, aviation, oil and gas, shipping, and chemicals for an orderly transition towards a low‐carbon future. This is very significant for developing countries, including India. The Authority is working on developing a regulatory framework for mobilising foreign capital through various transition finance instruments, particularly addressing the needs of Indian entities in these sectors. ii) Voluntary Carbon Markets: The voluntary carbon market is rapidly growing globally. The Taskforce on Scaling Voluntary Carbon Markets, with knowledge support from McKinsey, estimates that the market for carbon credits could be worth upward of USD 50 Bn in 2030. Considering that India is one of the largest exporters of voluntary carbon credits, the Authority is considering enabling international voluntary carbon markets at IFSC. iii) Centre of Excellence for capacity building: The Authority is working with relevant partners to setup Centre of Excellence for capacity building on sustainable finance. The goal is to create institutional level framework for capacity building and engage with experts from international institutions, academia, and other stakeholders for building a skilled ecosystem at systemic, institutional, and individual levels to support sustainable finance both regionally and globally. iv) Innovative Products: The Authority aims to create enabling regulatory ecosystem, to put in place de‐risking mechanisms and blended finance with the help from various MDBs. 82 International Financial Services Centres Authority 83Policies and programmes for the following year The Authority has planned several initiatives for the next FY with respect to sustainable finance, including the following: i) Transition Finance: Tackling climate change by limiting the global temperature rise to 1.5 degree Celsius is fundamental not just for achieving Paris agreement but also SDGs. This requires fundamental change in the way business is being done across all sectors of the economy. This will be particularly true for the industries which fall under hard‐to‐abate sectors. However, mobilisation of funds towards climate action has been restricted to certain sectors of the economy. There is a need to finance hard‐to‐abate and emission‐ intensive sectors such as steel, cement, aviation, oil and gas, shipping, and chemicals for an orderly transition towards a low‐carbon future. This is very significant for developing countries, including India. The Authority is working on developing a regulatory framework for mobilising foreign capital through various transition finance instruments, particularly addressing the needs of Indian entities in these sectors. ii) Voluntary Carbon Markets: The voluntary carbon market is rapidly growing globally. The Taskforce on Scaling Voluntary Carbon Markets, with knowledge support from McKinsey, estimates that the market for carbon credits could be worth upward of USD 50 Bn in 2030. Considering that India is one of the largest exporters of voluntary carbon credits, the Authority is considering enabling international voluntary carbon markets at IFSC. iii) Centre of Excellence for capacity building: The Authority is working with relevant partners to setup Centre of Excellence for capacity building on sustainable finance. The goal is to create institutional level framework for capacity building and engage with experts from international institutions, academia, and other stakeholders for building a skilled ecosystem at systemic, institutional, and individual levels to support sustainable finance both regionally and globally. iv) Innovative Products: The Authority aims to create enabling regulatory ecosystem, to put in place de‐risking mechanisms and blended finance with the help from various MDBs. 82 International Financial Services Centres Authority 8384 International Financial Services Centres Authority secivreS yrallicnA ANNUAL REPORT 2022-23 The following entities are eligible to act as a service provider so as to provide permissible ancillary services pertaining to activities in relation to financial products, financial services and financial institutions in the IFSC: i) Any existing or newly incorporated entity set up in the IFSC ii) Any Indian or foreign incorporated entity by establishing a branch or a subsidiary The entity may be set up in the IFSC in the form of a company or a limited liability partnership or a registered partnership firm, branch thereof or any other form as may be approved by the IFSCA. Service providers can provide permissible services to any one or more of the following: ANCILLARY SERVICES i) Entities set up in IFSC ii) Entities from foreign jurisdictions for various permissible ancillary services in IFSCs in International Financial Centres are jurisdictions with high concentration of both financial services India or overseas firms such as Banks, Capital Market entities, Insurance firms, Fund Managers, Fintech firms as well iii) Indian entities who propose to open, set up or carry out operations in IFSCs or foreign as professional services firms providing services in fields of Audit and Accountancy, Taxation, jurisdiction, provided consideration is received in freely convertible foreign currency Legal, Consulting and Advisory services etc. Professional services firms are quintessential for the development of an international financial centre as they aid and assist the delivery of financial Ancillary services are playing a significant role in creating employment opportunities for services by financial institutions. Globally, the growth of financial firms and financial markets are professionals in GIFT IFSC. More importantly, India’s inherent advantage in the availability of predicated on the growth and concentration of high‐quality professional services firms. skilled talent pool across such professional services is being leveraged to create a robust professional services ecosystem in GIFT IFSC. Considering the inherent importance of professional services firms in developing a robust financial services market in GIFT IFSC, the Authority in February 2021 issued the framework for Trends and Transactions enabling Ancillary Services at IFSC. Under the Ancillary Framework, IFSCA has granted authorisation to 46 entities as on March 31, Framework for enabling Ancillary services at IFSC 2023, out of which 18 entities25 were granted Authorisation during Financial Year 2022‐23. Ancillary Services are defined as services which directly or indirectly aid, help, assist or strengthen Table 10.1: Activity‑wise break up of ancillary services entities as on March 31, 2023 or are attendant upon or connected with 'services' as defined under section 3 of IFSCA Act, 2019. S. No. of Authorised Core Activity No. Entities The permissible ancillary services under the framework are as follows: 1 Legal, Compliance and Secretarial 7 i) Legal, Compliance and Secretarial 2 Auditing, Accounting, Bookkeeping and Taxation Services 5 ii) Auditing, Accounting, Book‐keeping and Taxation Services 3 Professional & Management Consulting Services 16 iii) Professional & Management Consulting Services Administration, Asset Management Support Services and 4 18 Trusteeship Services iv) Administration, Assets Management Support Services and Trusteeship Services Total 46 v) Any other services as approved by IFSCA from time to time The ancillary services ecosystem is rapidly growing with leading professional services firms setting up operations in GIFT IFSC to provide services to IFSC entities as well as overseas clients. 25 Including in‐principle approval 8584 International Financial Services Centres Authority secivreS yrallicnA ANNUAL REPORT 2022-23 The following entities are eligible to act as a service provider so as to provide permissible ancillary services pertaining to activities in relation to financial products, financial services and financial institutions in the IFSC: i) Any existing or newly incorporated entity set up in the IFSC ii) Any Indian or foreign incorporated entity by establishing a branch or a subsidiary The entity may be set up in the IFSC in the form of a company or a limited liability partnership or a registered partnership firm, branch thereof or any other form as may be approved by the IFSCA. Service providers can provide permissible services to any one or more of the following: ANCILLARY SERVICES i) Entities set up in IFSC ii) Entities from foreign jurisdictions for various permissible ancillary services in IFSCs in International Financial Centres are jurisdictions with high concentration of both financial services India or overseas firms such as Banks, Capital Market entities, Insurance firms, Fund Managers, Fintech firms as well iii) Indian entities who propose to open, set up or carry out operations in IFSCs or foreign as professional services firms providing services in fields of Audit and Accountancy, Taxation, jurisdiction, provided consideration is received in freely convertible foreign currency Legal, Consulting and Advisory services etc. Professional services firms are quintessential for the development of an international financial centre as they aid and assist the delivery of financial Ancillary services are playing a significant role in creating employment opportunities for services by financial institutions. Globally, the growth of financial firms and financial markets are professionals in GIFT IFSC. More importantly, India’s inherent advantage in the availability of predicated on the growth and concentration of high‐quality professional services firms. skilled talent pool across such professional services is being leveraged to create a robust professional services ecosystem in GIFT IFSC. Considering the inherent importance of professional services firms in developing a robust financial services market in GIFT IFSC, the Authority in February 2021 issued the framework for Trends and Transactions enabling Ancillary Services at IFSC. Under the Ancillary Framework, IFSCA has granted authorisation to 46 entities as on March 31, Framework for enabling Ancillary services at IFSC 2023, out of which 18 entities25 were granted Authorisation during Financial Year 2022‐23. Ancillary Services are defined as services which directly or indirectly aid, help, assist or strengthen Table 10.1: Activity‑wise break up of ancillary services entities as on March 31, 2023 or are attendant upon or connected with 'services' as defined under section 3 of IFSCA Act, 2019. S. No. of Authorised Core Activity No. Entities The permissible ancillary services under the framework are as follows: 1 Legal, Compliance and Secretarial 7 i) Legal, Compliance and Secretarial 2 Auditing, Accounting, Bookkeeping and Taxation Services 5 ii) Auditing, Accounting, Book‐keeping and Taxation Services 3 Professional & Management Consulting Services 16 iii) Professional & Management Consulting Services Administration, Asset Management Support Services and 4 18 Trusteeship Services iv) Administration, Assets Management Support Services and Trusteeship Services Total 46 v) Any other services as approved by IFSCA from time to time The ancillary services ecosystem is rapidly growing with leading professional services firms setting up operations in GIFT IFSC to provide services to IFSC entities as well as overseas clients. 25 Including in‐principle approval 85ANNUAL REPORT 2022-23 Advocacy and Outreach As part of industry engagement, IFSCA collaborated with statutory organisations such as Institute of Chartered Accountants of India and Institute of Company Secretaries of India and organised interactions with their members with a view to acquaint them with IFSCA regulations and frameworks. Additionally, Ancillary services firms organised several webinars, roundtables, and conferences globally and within India to create awareness about opportunities, in areas of Banking, Funds, Insurance, Aircraft Leasing, etc. Policies and programmes for the following year i) To enhance the business activities in GIFT IFSC, the Hon’ble Finance Minister in the Union Budget 2023‐24 announced that amendment will be carried out under the IFSCA Act for incorporating statutory provision on ancillary services. Accordingly, IFSCA is carrying out necessary research and will propose required amendments in IFSCA Act to implement the above announcement. ii) The Voice‐broking and Ship‐broking services are proposed to be included in the list of permissible ancillary services under the Ancillary services framework. 86 International Financial Services Centres Authority 87ANNUAL REPORT 2022-23 Advocacy and Outreach As part of industry engagement, IFSCA collaborated with statutory organisations such as Institute of Chartered Accountants of India and Institute of Company Secretaries of India and organised interactions with their members with a view to acquaint them with IFSCA regulations and frameworks. Additionally, Ancillary services firms organised several webinars, roundtables, and conferences globally and within India to create awareness about opportunities, in areas of Banking, Funds, Insurance, Aircraft Leasing, etc. Policies and programmes for the following year i) To enhance the business activities in GIFT IFSC, the Hon’ble Finance Minister in the Union Budget 2023‐24 announced that amendment will be carried out under the IFSCA Act for incorporating statutory provision on ancillary services. Accordingly, IFSCA is carrying out necessary research and will propose required amendments in IFSCA Act to implement the above announcement. ii) The Voice‐broking and Ship‐broking services are proposed to be included in the list of permissible ancillary services under the Ancillary services framework. 86 International Financial Services Centres Authority 87ANNUAL REPORT 2022-23 To enable the aircraft operating lease business in IFSC, the Authority issued 'Framework for Aircraft Operating Leases' on February 19, 2021, covering permissible activities, eligibility, capital requirement, registration and other compliances, for the aircraft leasing entities, post which the industry has shown great interest in the business opportunities emanating from IFSC. Subsequently on May 18, 2022, a revised framework was issued by the Authority based on the regular feedback and interactions with various stakeholders, the Authority further widened the scope of the activities that could be undertaken under aircraft lease. The said Framework enabled leasing of ‘Aircraft Ground Support Equipment’ in the IFSC. It also specified regulatory requirements for undertaking financial lease and/or hybrid of operating and financial lease of aircrafts and Aircraft Ground Support Equipment. Further, it broadened the scope of providing asset management support services so as to extend it to assets leased by the entity or by its wholly owned subsidiary without the need for separate authorisation. 88 International Financial Services Centres Authority 89 gnisaeL tfarcriA Capital Requirement: Aircraft lessors in IFSC are required to maintain minimum own funds at all times. The minimum owned fund requirement for entities undertaking operating lease and for those undertaking financial lease or hybrid of operating and financial lease are USD 0.2 million and USD 3 million respectively. Prudential regulations: FCs intending to undertake finance lease in IFSCs must comply with prudential norms such as capital ratio, exposure ceiling, and liquidity coverage ratio. However, entities intending to undertake operating lease are exempt from these norms, provided they have a Board approved prudential policy and meet the fit and proper requirement set out by the Authority. All entities, regardless of the type of lease, must comply with KYC, AML, and corporate governance requirements as set out in the FC Regulations. AIRCRAFT LEASING Advocacy and Outreach Roadshow organised in Dublin IFSCA delegation held roundtable discussions and one to one meetings with lessors, financiers, consultants and counsels during their visit to Dublin from October 12 to 14, 2022. Airline Economic Event, Delhi Airline Economics organised its first aircraft leasing focused event from February 28 to March 1, 2023 in Delhi, India. Event was attended by global leasing firms, IFSC leasing companies, airlines and other stakeholders in aviation leasing ecosystem. During the event, General Manager, IFSCA, delivered the keynote address on “Opportunities for Aircraft leasing at GIFT IFSC”. Trends and Transactions The first Aircraft leasing entity was registered with IFSCA on May 06, 2021, and the first aircraft Box 11.1: Salient features of the ‘Framework for Aircraft Lease’ was leased by an IFSC entity to a lessee in India on August 19, 2021, marking the beginning of onshoring the offshore aircraft leasing services through GIFT IFSC. Eligibility: To become a Lessor for undertaking permissible activities in IFSCs, the As on March 31, 2023, there are 15 lessors registered with the Authority. Further, four lessors have applicant must meet the eligibility criteria outlined in the Finance Company Regulations. been granted in‐principle approval and one application is under process. As on March 31, 2023, This includes setting up operations in IFSC in the form of a Company, LLP, Trust, or any the lessors based at GIFT IFSC have leased 26 aviation assets including aircraft, engines, etc. other form specified by the IFSCA. Permissible Activity: Operating/Finance lease for an aircraft or an aircraft ground support equipment including the sale and lease back, purchase, novation, transfer, assignment and any such other similar transactions in relation to aircraft lease; Asset management support services for assets owned or leased out by the Lessor or by its wholly owned subsidiary in IFSC and any other related activity with the prior approval of IFSCA.ANNUAL REPORT 2022-23 To enable the aircraft operating lease business in IFSC, the Authority issued 'Framework for Aircraft Operating Leases' on February 19, 2021, covering permissible activities, eligibility, capital requirement, registration and other compliances, for the aircraft leasing entities, post which the industry has shown great interest in the business opportunities emanating from IFSC. Subsequently on May 18, 2022, a revised framework was issued by the Authority based on the regular feedback and interactions with various stakeholders, the Authority further widened the scope of the activities that could be undertaken under aircraft lease. The said Framework enabled leasing of ‘Aircraft Ground Support Equipment’ in the IFSC. It also specified regulatory requirements for undertaking financial lease and/or hybrid of operating and financial lease of aircrafts and Aircraft Ground Support Equipment. Further, it broadened the scope of providing asset management support services so as to extend it to assets leased by the entity or by its wholly owned subsidiary without the need for separate authorisation. 88 International Financial Services Centres Authority 89 gnisaeL tfarcriA Capital Requirement: Aircraft lessors in IFSC are required to maintain minimum own funds at all times. The minimum owned fund requirement for entities undertaking operating lease and for those undertaking financial lease or hybrid of operating and financial lease are USD 0.2 million and USD 3 million respectively. Prudential regulations: FCs intending to undertake finance lease in IFSCs must comply with prudential norms such as capital ratio, exposure ceiling, and liquidity coverage ratio. However, entities intending to undertake operating lease are exempt from these norms, provided they have a Board approved prudential policy and meet the fit and proper requirement set out by the Authority. All entities, regardless of the type of lease, must comply with KYC, AML, and corporate governance requirements as set out in the FC Regulations. AIRCRAFT LEASING Advocacy and Outreach Roadshow organised in Dublin IFSCA delegation held roundtable discussions and one to one meetings with lessors, financiers, consultants and counsels during their visit to Dublin from October 12 to 14, 2022. Airline Economic Event, Delhi Airline Economics organised its first aircraft leasing focused event from February 28 to March 1, 2023 in Delhi, India. Event was attended by global leasing firms, IFSC leasing companies, airlines and other stakeholders in aviation leasing ecosystem. During the event, General Manager, IFSCA, delivered the keynote address on “Opportunities for Aircraft leasing at GIFT IFSC”. Trends and Transactions The first Aircraft leasing entity was registered with IFSCA on May 06, 2021, and the first aircraft Box 11.1: Salient features of the ‘Framework for Aircraft Lease’ was leased by an IFSC entity to a lessee in India on August 19, 2021, marking the beginning of onshoring the offshore aircraft leasing services through GIFT IFSC. Eligibility: To become a Lessor for undertaking permissible activities in IFSCs, the As on March 31, 2023, there are 15 lessors registered with the Authority. Further, four lessors have applicant must meet the eligibility criteria outlined in the Finance Company Regulations. been granted in‐principle approval and one application is under process. As on March 31, 2023, This includes setting up operations in IFSC in the form of a Company, LLP, Trust, or any the lessors based at GIFT IFSC have leased 26 aviation assets including aircraft, engines, etc. other form specified by the IFSCA. Permissible Activity: Operating/Finance lease for an aircraft or an aircraft ground support equipment including the sale and lease back, purchase, novation, transfer, assignment and any such other similar transactions in relation to aircraft lease; Asset management support services for assets owned or leased out by the Lessor or by its wholly owned subsidiary in IFSC and any other related activity with the prior approval of IFSCA.90 International Financial Services Centres Authority snoitutitsnI dna seitisrevinU ngieroF ANNUAL REPORT 2022-23 Mathematics by Foreign Universities or Foreign Institutions in International Financial Services Centres, as ‘Financial Service’ vide Gazette Notification dated May 23, 2022. The Authority notified IFSCA (Setting Up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022 which were published in the Gazette of India on October 11, 2022. The enabling regulations provide a comprehensive and unified regulatory framework for a Foreign University and Foreign Education Institution to establish International Branch Campus (IBC) and Offshore Education Centre (OEC) in IFSC respectively. Box 12.1: Salient Features of IFSCA (Setting Up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022 FOREIGN UNIVERSITIES AND INSTITUTIONS i) Definitions International Branch Campus (IBC) shall mean a campus set up as a branch by a Foreign University, and Offshore Education Centre (OEC) shall mean a centre set up as a “I suggest that we tie‑up our financial ecosystem with non‑finance colleges and branch by a Foreign Educational Institution (other than a Foreign University); In GIFT the youth should be educated. After all, it is the youth who will become the earners IFSC on stand‐alone basis, or in such other form as may be permitted by the Authority and investors in the times to come. To inculcate the confidence of the people in for the purpose of delivering courses including research programmes in the permissible subject areas, that are duly accredited under the relevant framework in these courses, they should be run on not‑for‑profit mode. GIFT City can also work their respective home jurisdiction, and is registered with the Authority. on preparing a good roadmap and ground rules for this by looking at the performance of private players. This year's budget announcement regarding ii) Permissible Subject Areas foreign universities in GIFT City will also benefit it.” Foreign University/Education Institution can offer courses including research programmes in the disciplines of Financial Management, FinTech, Science, Technology, ‑ Hon’ble Prime Minister, Shri Narendra Modi Engineering and Mathematics in GIFT IFSC. iii) Eligibility a) In case the Applicant is a Foreign University, it should have secured a position In a landmark policy reform that will pave the way for Foreign Universities & Institutions to within top 500 in global overall ranking and/or subject ranking in the latest QS establish their presence in GIFT IFSC, the Hon’ble Union Minister of Finance in the Union Budget World Universities ranking. 2022‐23 announced, “World Class Foreign Universities and Institutions will be allowed in the GIFT City to offer courses in Financial Management, FinTech, Science, Technology, Engineering and b) In the case of Foreign Educational Institution, the Applicant should be a reputed Mathematics, free from domestic regulations, except those by the IFSCA to facilitate availability of Institution in its home jurisdiction. high‑end human resources for financial services and technology”. c) The Applicant shall satisfy the Authority about its financial capability to establish The overall objective of this policy announcement is to develop GIFT IFSC as an international and ensure the continuity of the proposed activities in GIFT IFSC. educational centre catering to both Indian and foreign students in specified disciplines, encourage d) The Applicant shall undertake to put in place suitable infrastructure and facilities research in areas of Banking, Insurance, Capital Market, Funds Management, FinTech, Longevity to conduct the courses including research programmes in the permissible subject Finance, Sustainable Finance, Quantum Computing, etc. and nurture high‐end human resources in areas. finance, technology, and related fields. iv) Registration In furtherance of the Union Budget announcement, Central Government in exercise of the powers conferred by sub‐clause (xiv) of clause (e) of sub‐section (1) of section 3 of the IFSCA Act, 2019 a) An Applicant satisfying the eligibility conditions specified in these regulations, notified “courses offered in Financial Management, FinTech, Science, Technology, Engineering and shall apply to the Authority, in the specified format, for the grant of registration to 9190 International Financial Services Centres Authority snoitutitsnI dna seitisrevinU ngieroF ANNUAL REPORT 2022-23 Mathematics by Foreign Universities or Foreign Institutions in International Financial Services Centres, as ‘Financial Service’ vide Gazette Notification dated May 23, 2022. The Authority notified IFSCA (Setting Up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022 which were published in the Gazette of India on October 11, 2022. The enabling regulations provide a comprehensive and unified regulatory framework for a Foreign University and Foreign Education Institution to establish International Branch Campus (IBC) and Offshore Education Centre (OEC) in IFSC respectively. Box 12.1: Salient Features of IFSCA (Setting Up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022 FOREIGN UNIVERSITIES AND INSTITUTIONS i) Definitions International Branch Campus (IBC) shall mean a campus set up as a branch by a Foreign University, and Offshore Education Centre (OEC) shall mean a centre set up as a “I suggest that we tie‑up our financial ecosystem with non‑finance colleges and branch by a Foreign Educational Institution (other than a Foreign University); In GIFT the youth should be educated. After all, it is the youth who will become the earners IFSC on stand‐alone basis, or in such other form as may be permitted by the Authority and investors in the times to come. To inculcate the confidence of the people in for the purpose of delivering courses including research programmes in the permissible subject areas, that are duly accredited under the relevant framework in these courses, they should be run on not‑for‑profit mode. GIFT City can also work their respective home jurisdiction, and is registered with the Authority. on preparing a good roadmap and ground rules for this by looking at the performance of private players. This year's budget announcement regarding ii) Permissible Subject Areas foreign universities in GIFT City will also benefit it.” Foreign University/Education Institution can offer courses including research programmes in the disciplines of Financial Management, FinTech, Science, Technology, ‑ Hon’ble Prime Minister, Shri Narendra Modi Engineering and Mathematics in GIFT IFSC. iii) Eligibility a) In case the Applicant is a Foreign University, it should have secured a position In a landmark policy reform that will pave the way for Foreign Universities & Institutions to within top 500 in global overall ranking and/or subject ranking in the latest QS establish their presence in GIFT IFSC, the Hon’ble Union Minister of Finance in the Union Budget World Universities ranking. 2022‐23 announced, “World Class Foreign Universities and Institutions will be allowed in the GIFT City to offer courses in Financial Management, FinTech, Science, Technology, Engineering and b) In the case of Foreign Educational Institution, the Applicant should be a reputed Mathematics, free from domestic regulations, except those by the IFSCA to facilitate availability of Institution in its home jurisdiction. high‑end human resources for financial services and technology”. c) The Applicant shall satisfy the Authority about its financial capability to establish The overall objective of this policy announcement is to develop GIFT IFSC as an international and ensure the continuity of the proposed activities in GIFT IFSC. educational centre catering to both Indian and foreign students in specified disciplines, encourage d) The Applicant shall undertake to put in place suitable infrastructure and facilities research in areas of Banking, Insurance, Capital Market, Funds Management, FinTech, Longevity to conduct the courses including research programmes in the permissible subject Finance, Sustainable Finance, Quantum Computing, etc. and nurture high‐end human resources in areas. finance, technology, and related fields. iv) Registration In furtherance of the Union Budget announcement, Central Government in exercise of the powers conferred by sub‐clause (xiv) of clause (e) of sub‐section (1) of section 3 of the IFSCA Act, 2019 a) An Applicant satisfying the eligibility conditions specified in these regulations, notified “courses offered in Financial Management, FinTech, Science, Technology, Engineering and shall apply to the Authority, in the specified format, for the grant of registration to 91ANNUAL REPORT 2022-23 Grant of 1st In‐principle Approval conduct the courses including research programmes or/and executive education programmes in the permissible subject areas. During FY 2022‐23, IFSCA received the first application from Deakin University, a leading University from Australia, which has secured 266th rank in QS World University Ranking 2023, b) An application received shall be referred to the Committee of Experts intending to set up its International Branch Campus at GIFT IFSC. constituted by the GIFT Company Limited for appraisal and recommendations. IFSCA granted in‐principle approval to the Deakin University in March 2023 to operate and establish its IBC in GIFT IFSC. To begin with, the University will offer two courses from their GIFT c) Based on the recommendations of the Committee of Experts, the Authority IFSC branch i.e., Master of Cyber Security (Professional) and Master of Business Analytics. may upon its satisfaction, at first instance, grant in‐principle approval to the Applicant giving it 180 days’ time to set up all required infrastructure, Advocacy and Outreach engage necessary manpower, etc. During FY 2022‐23, IFSCA collaborated with Indian Missions abroad as well as Foreign Missions in d) The Authority on being satisfied that the applicant fulfils all the conditions India to showcase opportunities in GIFT IFSC to leading & reputed foreign universities and for the grant of registration, may issue a Certificate of Registration. institutions. Roundtable interactions were held with leading Universities from United States, v) Course Recognition United Kingdom, and Australia. Several universities from the US, UK and Australia indicated keen interest to explore this unique opportunity of setting up an IBC in GIFT IFSC and enrol students a) Any course or programme conducted by a registered entity in the GIFT IFSC from India and abroad. shall be identical in all respects with the course or programme conducted by the Parent Entity in its home jurisdiction and identical degree, diploma or certificate shall be conferred upon the students of the IBC or OEC directly by the Parent Entity in the same manner as it confers to its students for the same course or programme in its home jurisdiction. b) The degree, diploma or certificate issued with respect to courses or programmes conducted in the GIFT IFSC shall enjoy the same recognition and status as if they were conducted by the Parent Entity in its home jurisdiction. vi) Safeguarding the interest of Students No IBC or OEC shall wholly or partially discontinue, suspend, or close any of its approved courses or programmes in the permissible subject areas for any reason without the prior written approval of the Authority. In the eventuality of disruption or discontinuation of a course or programme for any reason, it shall be the responsibility of the Parent Entity to provide an alternative to the affected students, including reallocation to the course or programme conducted by it. Application Form for setting up of IBC or OEC in the IFSC To enable Foreign Universities and Foreign Education Institutions to apply under the extant regulations, IFSCA vide circular dated February 23, 2023, issued the Application Form for setting up of IBC or OEC in the IFSC. The Application Form has been divided into two parts, Part A seeks information regarding the Foreign University/Institution in its home campus and Part‐B relates to the applicant’s proposal for establishing IBC/OEC in IFSC. 92 International Financial Services Centres Authority 93ANNUAL REPORT 2022-23 Grant of 1st In‐principle Approval conduct the courses including research programmes or/and executive education programmes in the permissible subject areas. During FY 2022‐23, IFSCA received the first application from Deakin University, a leading University from Australia, which has secured 266th rank in QS World University Ranking 2023, b) An application received shall be referred to the Committee of Experts intending to set up its International Branch Campus at GIFT IFSC. constituted by the GIFT Company Limited for appraisal and recommendations. IFSCA granted in‐principle approval to the Deakin University in March 2023 to operate and establish its IBC in GIFT IFSC. To begin with, the University will offer two courses from their GIFT c) Based on the recommendations of the Committee of Experts, the Authority IFSC branch i.e., Master of Cyber Security (Professional) and Master of Business Analytics. may upon its satisfaction, at first instance, grant in‐principle approval to the Applicant giving it 180 days’ time to set up all required infrastructure, Advocacy and Outreach engage necessary manpower, etc. During FY 2022‐23, IFSCA collaborated with Indian Missions abroad as well as Foreign Missions in d) The Authority on being satisfied that the applicant fulfils all the conditions India to showcase opportunities in GIFT IFSC to leading & reputed foreign universities and for the grant of registration, may issue a Certificate of Registration. institutions. Roundtable interactions were held with leading Universities from United States, v) Course Recognition United Kingdom, and Australia. Several universities from the US, UK and Australia indicated keen interest to explore this unique opportunity of setting up an IBC in GIFT IFSC and enrol students a) Any course or programme conducted by a registered entity in the GIFT IFSC from India and abroad. shall be identical in all respects with the course or programme conducted by the Parent Entity in its home jurisdiction and identical degree, diploma or certificate shall be conferred upon the students of the IBC or OEC directly by the Parent Entity in the same manner as it confers to its students for the same course or programme in its home jurisdiction. b) The degree, diploma or certificate issued with respect to courses or programmes conducted in the GIFT IFSC shall enjoy the same recognition and status as if they were conducted by the Parent Entity in its home jurisdiction. vi) Safeguarding the interest of Students No IBC or OEC shall wholly or partially discontinue, suspend, or close any of its approved courses or programmes in the permissible subject areas for any reason without the prior written approval of the Authority. In the eventuality of disruption or discontinuation of a course or programme for any reason, it shall be the responsibility of the Parent Entity to provide an alternative to the affected students, including reallocation to the course or programme conducted by it. Application Form for setting up of IBC or OEC in the IFSC To enable Foreign Universities and Foreign Education Institutions to apply under the extant regulations, IFSCA vide circular dated February 23, 2023, issued the Application Form for setting up of IBC or OEC in the IFSC. The Application Form has been divided into two parts, Part A seeks information regarding the Foreign University/Institution in its home campus and Part‐B relates to the applicant’s proposal for establishing IBC/OEC in IFSC. 92 International Financial Services Centres Authority 9394 International Financial Services Centres Authority ygolonhceT noitamrofnI ANNUAL REPORT 2022-23 Revamp of IFSCA Website The revamp of IFSCA’s website is needed in order to create an outstanding digital experience for visitors from across the spectrum. The revamped website shall cater to the needs of regulated entities (REs), prospective businesses and foreign financial regulators, ultimately improving their ease of doing business in IFSC. Towards this end, a request for proposal for “Re‐Design, Development and Maintenance of IFSCA Website” was floated in January 2023. Incorporation of Single Window IT‐enabled system for Application Processing The Hon’ble Union Minister of Finance, in the Union Budget 2023‐24, announced the implementation of a single window IT‐enabled system for processing of registration applications INFORMATION TECHNOLOGY of entities desirous of setting up operations in GIFT IFSC. The same is being incorporated in IFSCA’s website for improving the ease of doing business in IFSC. Technology has become an indispensable part of regulation, supervision, and governance in the IT Infrastructure financial regulatory ecosystem. IFSCA recognises that the technology is the key in increasing transparency and efficiency in operations and in improving the ease of doing business in IFSC and IFSCA provides workstations equipped with computers, printers, telephones, and high‐speed thus has taken a number of initiatives in the FY 2022‐23. Local Area Network (LAN) connectivity to its employees. IFSCA has operationalised an internal mail server for ease of document sharing within the organisation, while ensuring data security. IFSCA’s Supervisory Technology (SupTech) System IFSCA Headquarters has high‐speed Wi‐Fi connectivity, and the meeting rooms are equipped with world‐class video conferencing devices for seamless communication. IFSCA is in the process of appointing a suitable SupTech Solution Provider to implement the system to facilitate the supervisory functioning of the Authority. The envisioned system aims to establish a Human Resource Management System (HRMS) comprehensive framework for administration, compliance, supervision, and enforcement amongst its regulated entities. The primary focus is to incorporate advanced technology and The HRMS application of IFSCA is aimed at easing the general administration through digitising adhere to global best practices in order to achieve the Authority's objectives effectively. employees’ attendance management, leave management, and pay slip generation. This system will be used for processing the claims of all the employees in a paperless manner. Further, the objective IFSCA Website is to scale the system to include all other general administrative functions within its ambit. eOffice‑IFSCA application The IFSCA website acts as an important interface with the public as well as the regulated entities and other ancillaries to disseminate information through its regulations, circulars, notifications, The eOffice‐IFSCA application, from the National Informatics Centre (NIC), is IFSCA’s electronic file etc. management system. The objective of eOffice‐IFSCA is to achieve simplified, responsive, effective, and transparent working of all departments. IFSCA (Maintenance of Website) Regulations, 2022 The eOffice application helps to enable a less‐paper office by scanning, registering, and routing the IFSCA (Maintenance of Website) Regulations, notified in November 2022, provide an enabling inward correspondences along with creation of file, noting, referencing, correspondence framework for IFSCA to develop a best‐in‐class website, comparable to those of other international attachment, draft for approvals and finally movement and tracking of files as well as receipts. financial sector regulators, while conforming to the standards and guidelines of Government of India and other relevant agencies. 9594 International Financial Services Centres Authority ygolonhceT noitamrofnI ANNUAL REPORT 2022-23 Revamp of IFSCA Website The revamp of IFSCA’s website is needed in order to create an outstanding digital experience for visitors from across the spectrum. The revamped website shall cater to the needs of regulated entities (REs), prospective businesses and foreign financial regulators, ultimately improving their ease of doing business in IFSC. Towards this end, a request for proposal for “Re‐Design, Development and Maintenance of IFSCA Website” was floated in January 2023. Incorporation of Single Window IT‐enabled system for Application Processing The Hon’ble Union Minister of Finance, in the Union Budget 2023‐24, announced the implementation of a single window IT‐enabled system for processing of registration applications INFORMATION TECHNOLOGY of entities desirous of setting up operations in GIFT IFSC. The same is being incorporated in IFSCA’s website for improving the ease of doing business in IFSC. Technology has become an indispensable part of regulation, supervision, and governance in the IT Infrastructure financial regulatory ecosystem. IFSCA recognises that the technology is the key in increasing transparency and efficiency in operations and in improving the ease of doing business in IFSC and IFSCA provides workstations equipped with computers, printers, telephones, and high‐speed thus has taken a number of initiatives in the FY 2022‐23. Local Area Network (LAN) connectivity to its employees. IFSCA has operationalised an internal mail server for ease of document sharing within the organisation, while ensuring data security. IFSCA’s Supervisory Technology (SupTech) System IFSCA Headquarters has high‐speed Wi‐Fi connectivity, and the meeting rooms are equipped with world‐class video conferencing devices for seamless communication. IFSCA is in the process of appointing a suitable SupTech Solution Provider to implement the system to facilitate the supervisory functioning of the Authority. The envisioned system aims to establish a Human Resource Management System (HRMS) comprehensive framework for administration, compliance, supervision, and enforcement amongst its regulated entities. The primary focus is to incorporate advanced technology and The HRMS application of IFSCA is aimed at easing the general administration through digitising adhere to global best practices in order to achieve the Authority's objectives effectively. employees’ attendance management, leave management, and pay slip generation. This system will be used for processing the claims of all the employees in a paperless manner. Further, the objective IFSCA Website is to scale the system to include all other general administrative functions within its ambit. eOffice‑IFSCA application The IFSCA website acts as an important interface with the public as well as the regulated entities and other ancillaries to disseminate information through its regulations, circulars, notifications, The eOffice‐IFSCA application, from the National Informatics Centre (NIC), is IFSCA’s electronic file etc. management system. The objective of eOffice‐IFSCA is to achieve simplified, responsive, effective, and transparent working of all departments. IFSCA (Maintenance of Website) Regulations, 2022 The eOffice application helps to enable a less‐paper office by scanning, registering, and routing the IFSCA (Maintenance of Website) Regulations, notified in November 2022, provide an enabling inward correspondences along with creation of file, noting, referencing, correspondence framework for IFSCA to develop a best‐in‐class website, comparable to those of other international attachment, draft for approvals and finally movement and tracking of files as well as receipts. financial sector regulators, while conforming to the standards and guidelines of Government of India and other relevant agencies. 95ANNUAL REPORT 2022-23 Cybersecurity IFSCA has put in place certain necessary cyber security infrastructure in line with the Framework for Improving Critical Infrastructure Cybersecurity developed by National Institute of Standards & Technology (NIST).26 As proposed under the NIST framework, the cyber security policy proposed to be implemented by IFSCA includes the following processes to identify, assess, and manage cyber security risk associated with its processes, information, networks, and systems: i) Identify: Critical IT assets are inventoried and protected. Physical access to assets is managed and restricted using CCTV cameras. ii) Protect assets by deploying suitable controls, tools, and measures such as: • Contracts with suppliers and third‐party vendors are used to implement appropriate measures for cybersecurity. • Suppliers and third‐party vendors are routinely assessed using audits. (IFSCA website was audited by a CERT‐In empaneled 3rd party auditor in Q3 of FY21‐22 and accorded a positive rating for its cybersecurity posture). • Implemented Identity Management, Authentication and Access Control. • IFSCA uses NIC’s email service, which extends all NIC’s safeguards to IFSCA’s official email communication. iii) Detect: Incidents, anomalies and attacks are being detected using appropriate monitoring tools/processes such as endpoint security agent has been made operational and firewall has been deployed. iv) Respond: By taking immediate steps after identification of the incident, anomaly, or attack, activities are performed to prevent expansion of an event, mitigate its effects, and resolve the incident by patching the newly identified vulnerabilities. v) Recover: from incident through incident management, disaster recovery and business continuity framework. IFSCA acknowledges the need for continuous improvement, incorporating advanced technologies and best practices to always maintain a robust cybersecurity posture and shall endeavor for the same. 26 A non‐regulatory government agency under the U.S. Department of Commerce. 96 International Financial Services Centres Authority 97ANNUAL REPORT 2022-23 Cybersecurity IFSCA has put in place certain necessary cyber security infrastructure in line with the Framework for Improving Critical Infrastructure Cybersecurity developed by National Institute of Standards & Technology (NIST).26 As proposed under the NIST framework, the cyber security policy proposed to be implemented by IFSCA includes the following processes to identify, assess, and manage cyber security risk associated with its processes, information, networks, and systems: i) Identify: Critical IT assets are inventoried and protected. Physical access to assets is managed and restricted using CCTV cameras. ii) Protect assets by deploying suitable controls, tools, and measures such as: • Contracts with suppliers and third‐party vendors are used to implement appropriate measures for cybersecurity. • Suppliers and third‐party vendors are routinely assessed using audits. (IFSCA website was audited by a CERT‐In empaneled 3rd party auditor in Q3 of FY21‐22 and accorded a positive rating for its cybersecurity posture). • Implemented Identity Management, Authentication and Access Control. • IFSCA uses NIC’s email service, which extends all NIC’s safeguards to IFSCA’s official email communication. iii) Detect: Incidents, anomalies and attacks are being detected using appropriate monitoring tools/processes such as endpoint security agent has been made operational and firewall has been deployed. iv) Respond: By taking immediate steps after identification of the incident, anomaly, or attack, activities are performed to prevent expansion of an event, mitigate its effects, and resolve the incident by patching the newly identified vulnerabilities. v) Recover: from incident through incident management, disaster recovery and business continuity framework. IFSCA acknowledges the need for continuous improvement, incorporating advanced technologies and best practices to always maintain a robust cybersecurity posture and shall endeavor for the same. 26 A non‐regulatory government agency under the U.S. Department of Commerce. 96 International Financial Services Centres Authority 9798 International Financial Services Centres Authority seitivitcA latnempoleveD ANNUAL REPORT 2022-23 Image 14.1: Digital gallery presentation by Chairperson, IFSCA to the Hon'ble Prime Minister of India DEVELOPMENTAL ACTIVITIES “GIFT City is making a strong mark as a hub of commerce and technology. GIFT City celebrates both wealth and wisdom. I am glad to see that through GIFT City, India is striding ahead strongly in the services sector globally.” ‑ Hon’ble Prime Minister, Shri Narendra Modi Visit of the Hon’ble Prime Minister to GIFT IFSC The Hon’ble Prime Minister visited GIFT IFSC on July 29, 2022, to inaugurate the India International Bullion Exchange and NSE IFSC–SGX Connect and lay the foundation stone for IFSCA headquarters building along with the launch of other initiatives. Image 14.2: Hon’ble Prime Minister addressing the gathering at GIFT IFSC 9998 International Financial Services Centres Authority seitivitcA latnempoleveD ANNUAL REPORT 2022-23 Image 14.1: Digital gallery presentation by Chairperson, IFSCA to the Hon'ble Prime Minister of India DEVELOPMENTAL ACTIVITIES “GIFT City is making a strong mark as a hub of commerce and technology. GIFT City celebrates both wealth and wisdom. I am glad to see that through GIFT City, India is striding ahead strongly in the services sector globally.” ‑ Hon’ble Prime Minister, Shri Narendra Modi Visit of the Hon’ble Prime Minister to GIFT IFSC The Hon’ble Prime Minister visited GIFT IFSC on July 29, 2022, to inaugurate the India International Bullion Exchange and NSE IFSC–SGX Connect and lay the foundation stone for IFSCA headquarters building along with the launch of other initiatives. Image 14.2: Hon’ble Prime Minister addressing the gathering at GIFT IFSC 99ANNUAL REPORT 2022-23 Announcements and Key Milestones The following announcements, including five MoU Exchanges and eight key milestones, pertaining to the development of financial market in GIFT IFSC were made: i) Four MoUs were exchanged between IFSCA and the following overseas financial regulators: a) Monetary Authority of Singapore (MAS), Singapore b) Commission de Surveillance du Secteur Financier (CSSF), Grand Duchy of Luxembourg c) Finansinspektionen (FI), Sweden d) Qatar Financial Centre Authority (QFCA), Qatar In addition, a Cooperation MoU was signed between IFSCA and Department of Space, GoI. ii) Setting up of Indian Regional Office (IRO) by New Development Bank (NDB) in GIFT IFSC. iii) Inauguration of IFSC Banking Units of the following three Foreign Banks: Image 14.3: Hon’ble Prime Minister launching various initiatives at GIFT IFSC on July 29, 2022 a) Deutsche Bank L – R: Shri Kanubhai Desai (Minister of Finance, Gujarat), Shri Pankaj Chaudhary (Union Minister of State for Finance), Shri Bhupendra Patel (Chief Minister, b) JP Morgan Chase NA Bank Gujarat), Shri Narendra Modi (Hon’ble Prime Minister of India), Smt. Nirmala Sitharaman (Minister of Finance, India), Dr. Bhagwat Karad (Union Minister of State for Finance). c) MUFG Bank Ltd. During the event, Hon’ble Prime Minister highlighted the importance of GIFT IFSC as a wonderful iv) Capacity expansion of Global In‐house Centre set up by Bank of America in GIFT IFSC combination of global capital for local welfare and local productivity for global welfare. He exuded v) Operationalisation of the following four International Trade Finance Services (ITFS) confidence that all the institutions associated with GIFT City will work to further strengthen this Platforms: bond as there are many institutions in IFSC which have global footprints, and have local connections. a) RXIL Global IFSC Pvt. Ltd. Emphasising the role of IFSC as a gateway of global capital flows, Hon’ble Prime Minister stated, b) Minions Ventures IFSC Pvt. Ltd. ‘with global markets, we are rapidly integrating with global supply chains and GIFT City is an c) Vayana IFSC Pvt. Ltd important gateway to connect India with global opportunities. When you integrate with d) Mynd Solutions IFSC Pvt. Ltd. GIFT City, you will integrate with the whole world’. vi) Grant of Authorisation Certificates to five FinTech firms under IFSCA FinTech Entity Highlighting the way ahead for achieving the vision of India’s maiden IFSC, Hon’ble Prime Minister Framework 2022. emphasised that India needs many financial innovations from aircraft leasing, ship financing, carbon trading, digital currency, and IP rights to investment management. He guided IFSCA to work vii) Submission of a joint letter of intent by Association of National Exchanges Members of India in this direction and make regulation and operation cost‐competitive in comparison to other (ANMI) and Commodity Participants Association of India (CPAI) on behalf of 100+ Broker‐ financial jurisdictions. He further motivated IFSCA to turn into a leader in terms of regulations, set Dealers for setting up operations in GIFT IFSC. high standards for rule of law, and develop GIFT IFSC as the preferred arbitration centre for the viii) 75th Bond listing on India INX with a cumulative value of approx. USD 50 Bn to commemorate world. 75th year of India’s independence and Azadi ka Amrit Mahotsav. ix) Launch of International Sustainability Platform by NSE IFSC: A first of its kind initiative in India with end‐to‐end sustainable products which will enable global capital flows into India to meet SDGs and Climate change goals. 100 International Financial Services Centres Authority 101ANNUAL REPORT 2022-23 Announcements and Key Milestones The following announcements, including five MoU Exchanges and eight key milestones, pertaining to the development of financial market in GIFT IFSC were made: i) Four MoUs were exchanged between IFSCA and the following overseas financial regulators: a) Monetary Authority of Singapore (MAS), Singapore b) Commission de Surveillance du Secteur Financier (CSSF), Grand Duchy of Luxembourg c) Finansinspektionen (FI), Sweden d) Qatar Financial Centre Authority (QFCA), Qatar In addition, a Cooperation MoU was signed between IFSCA and Department of Space, GoI. ii) Setting up of Indian Regional Office (IRO) by New Development Bank (NDB) in GIFT IFSC. iii) Inauguration of IFSC Banking Units of the following three Foreign Banks: Image 14.3: Hon’ble Prime Minister launching various initiatives at GIFT IFSC on July 29, 2022 a) Deutsche Bank L – R: Shri Kanubhai Desai (Minister of Finance, Gujarat), Shri Pankaj Chaudhary (Union Minister of State for Finance), Shri Bhupendra Patel (Chief Minister, b) JP Morgan Chase NA Bank Gujarat), Shri Narendra Modi (Hon’ble Prime Minister of India), Smt. Nirmala Sitharaman (Minister of Finance, India), Dr. Bhagwat Karad (Union Minister of State for Finance). c) MUFG Bank Ltd. During the event, Hon’ble Prime Minister highlighted the importance of GIFT IFSC as a wonderful iv) Capacity expansion of Global In‐house Centre set up by Bank of America in GIFT IFSC combination of global capital for local welfare and local productivity for global welfare. He exuded v) Operationalisation of the following four International Trade Finance Services (ITFS) confidence that all the institutions associated with GIFT City will work to further strengthen this Platforms: bond as there are many institutions in IFSC which have global footprints, and have local connections. a) RXIL Global IFSC Pvt. Ltd. Emphasising the role of IFSC as a gateway of global capital flows, Hon’ble Prime Minister stated, b) Minions Ventures IFSC Pvt. Ltd. ‘with global markets, we are rapidly integrating with global supply chains and GIFT City is an c) Vayana IFSC Pvt. Ltd important gateway to connect India with global opportunities. When you integrate with d) Mynd Solutions IFSC Pvt. Ltd. GIFT City, you will integrate with the whole world’. vi) Grant of Authorisation Certificates to five FinTech firms under IFSCA FinTech Entity Highlighting the way ahead for achieving the vision of India’s maiden IFSC, Hon’ble Prime Minister Framework 2022. emphasised that India needs many financial innovations from aircraft leasing, ship financing, carbon trading, digital currency, and IP rights to investment management. He guided IFSCA to work vii) Submission of a joint letter of intent by Association of National Exchanges Members of India in this direction and make regulation and operation cost‐competitive in comparison to other (ANMI) and Commodity Participants Association of India (CPAI) on behalf of 100+ Broker‐ financial jurisdictions. He further motivated IFSCA to turn into a leader in terms of regulations, set Dealers for setting up operations in GIFT IFSC. high standards for rule of law, and develop GIFT IFSC as the preferred arbitration centre for the viii) 75th Bond listing on India INX with a cumulative value of approx. USD 50 Bn to commemorate world. 75th year of India’s independence and Azadi ka Amrit Mahotsav. ix) Launch of International Sustainability Platform by NSE IFSC: A first of its kind initiative in India with end‐to‐end sustainable products which will enable global capital flows into India to meet SDGs and Climate change goals. 100 International Financial Services Centres Authority 101ANNUAL REPORT 2022-23 Visit of Hon’ble Deputy Prime Minister of Singapore to GIFT IFSC A high‐level delegation led by Hon’ble Deputy Prime Minister and Minister for Finance, Singapore, Mr. Lawrence Wong visited GIFT IFSC on September 18, 2022, to discuss ongoing collaboration between India and Singapore for development of GIFT IFSC and witness the exchange of first of its kind FinTech Cooperation Agreement between Monetary Authority of Singapore and IFSCA. Image 14.4: Hon’ble Prime Minister launching the NSE IFSC‑SGX Connect Image 14.5: Visit of Singapore delegation to GIFT IFSC L – R: Shri Bhupendra Patel (Chief Minister, Gujarat), Shri Ashish Kumar Chauhan (MD & CEO, NSE), Shri Narendra Modi (Hon’ble Prime Minister of India), Mr Loh Boon Chye (CEO SGX), Smt. Nirmala Sitharaman (Minister of Finance, India) The Hon’ble Prime Minister highlighted the importance of these developments and said, ’we have crossed several important milestones today. These will further help in connecting the potential of 130 crore countrymen to the modern global economy’. Hon'ble Prime minister underlined his vision for GIFT City in the following words: “The aspirations of the common man of the country are linked to the vision of GIFT City. The vision of India's future is associated with the GIFT City; the dreams of India's golden past are also associated with it. Gift City is turning into a place from where new ideas are emerging, wealth creation is happening, and the best minds of the world are coming here to learn and grow. That is, in a way, GIFT City is also becoming a medium of achieving the old economic glory of India." Image 14.6: Chairperson, IFSCA presenting momento to Deputy Prime Minister, Singapore ‑ Hon’ble Prime Minister, Shri Narendra Modi L to R ‐ Mr Lawrence Wong (Hon’ble Deputy Prime Minister, Singapore), Mr Kanubhai Desai (Minister of Finance of Gujarat) and Mr Injeti Srinivas (Chairperson, IFSCA) 102 International Financial Services Centres Authority 103ANNUAL REPORT 2022-23 Visit of Hon’ble Deputy Prime Minister of Singapore to GIFT IFSC A high‐level delegation led by Hon’ble Deputy Prime Minister and Minister for Finance, Singapore, Mr. Lawrence Wong visited GIFT IFSC on September 18, 2022, to discuss ongoing collaboration between India and Singapore for development of GIFT IFSC and witness the exchange of first of its kind FinTech Cooperation Agreement between Monetary Authority of Singapore and IFSCA. Image 14.4: Hon’ble Prime Minister launching the NSE IFSC‑SGX Connect Image 14.5: Visit of Singapore delegation to GIFT IFSC L – R: Shri Bhupendra Patel (Chief Minister, Gujarat), Shri Ashish Kumar Chauhan (MD & CEO, NSE), Shri Narendra Modi (Hon’ble Prime Minister of India), Mr Loh Boon Chye (CEO SGX), Smt. Nirmala Sitharaman (Minister of Finance, India) The Hon’ble Prime Minister highlighted the importance of these developments and said, ’we have crossed several important milestones today. These will further help in connecting the potential of 130 crore countrymen to the modern global economy’. Hon'ble Prime minister underlined his vision for GIFT City in the following words: “The aspirations of the common man of the country are linked to the vision of GIFT City. The vision of India's future is associated with the GIFT City; the dreams of India's golden past are also associated with it. Gift City is turning into a place from where new ideas are emerging, wealth creation is happening, and the best minds of the world are coming here to learn and grow. That is, in a way, GIFT City is also becoming a medium of achieving the old economic glory of India." Image 14.6: Chairperson, IFSCA presenting momento to Deputy Prime Minister, Singapore ‑ Hon’ble Prime Minister, Shri Narendra Modi L to R ‐ Mr Lawrence Wong (Hon’ble Deputy Prime Minister, Singapore), Mr Kanubhai Desai (Minister of Finance of Gujarat) and Mr Injeti Srinivas (Chairperson, IFSCA) 102 International Financial Services Centres Authority 103ANNUAL REPORT 2022-23 Visit to USA During the interaction, IFSCA highlighted its ongoing regulatory and developmental initiatives and collaborations with Singapore in the areas of capital markets, inter‐regulatory cooperation and fintech. During the visit, IFSCA delegation, led by Chairperson, IFSCA, held dialogue with US Treasury officials, financial regulators, World Bank Group institutions, stock exchanges, industry 11th U.S.‑India Financial Regulatory Dialogue (FRD) associations and US financial services industry. Dedicated roundtables were also organised for held in GIFT IFSC banks, funds industry, aircraft leasing firms, etc. The 11th U.S.‐India Financial Regulatory Dialogue (FRD) was hosted by IFSCA on March 7, 2023, on behalf of GoI. From the US side, the dialogue was led by Counsellor to the Secretary and Director, International Financial Markets, Department of Treasury. Senior officials from GoI, IFSCA, RBI, SEBI, IRDAI and PFRDA also participated in the dialogue. During the dialogue, a dedicated session was held on GIFT IFSC wherein both sides discussed potential areas of collaboration. Image 14.8: IFSCA delegates at Nasdaq Market Site, New York Image 14.7: 11th India ‑ US Financial Regulatory Dialogue Global Outreach Initiatives of IFSCA Visit to United Kingdom Under the aegis of UK‐India strategic collaboration which was established at the 10th India‐UK Economic and Financial Dialogue (EFD) held in October 2020 to accelerate the development of GIFT IFSC, a delegation led by the Chairperson, IFSCA visited London, in July 2022. During the visit, the delegation held several engagements with UK officials, financial regulators as well as their financial services industry. Several roundtable interactions were also organised to acquaint the UK financial services industry with the opportunities at GIFT IFSC. Image 14.9: IFSCA delegates at the New York Stock Exchange 104 International Financial Services Centres Authority 105ANNUAL REPORT 2022-23 Visit to USA During the interaction, IFSCA highlighted its ongoing regulatory and developmental initiatives and collaborations with Singapore in the areas of capital markets, inter‐regulatory cooperation and fintech. During the visit, IFSCA delegation, led by Chairperson, IFSCA, held dialogue with US Treasury officials, financial regulators, World Bank Group institutions, stock exchanges, industry 11th U.S.‑India Financial Regulatory Dialogue (FRD) associations and US financial services industry. Dedicated roundtables were also organised for held in GIFT IFSC banks, funds industry, aircraft leasing firms, etc. The 11th U.S.‐India Financial Regulatory Dialogue (FRD) was hosted by IFSCA on March 7, 2023, on behalf of GoI. From the US side, the dialogue was led by Counsellor to the Secretary and Director, International Financial Markets, Department of Treasury. Senior officials from GoI, IFSCA, RBI, SEBI, IRDAI and PFRDA also participated in the dialogue. During the dialogue, a dedicated session was held on GIFT IFSC wherein both sides discussed potential areas of collaboration. Image 14.8: IFSCA delegates at Nasdaq Market Site, New York Image 14.7: 11th India ‑ US Financial Regulatory Dialogue Global Outreach Initiatives of IFSCA Visit to United Kingdom Under the aegis of UK‐India strategic collaboration which was established at the 10th India‐UK Economic and Financial Dialogue (EFD) held in October 2020 to accelerate the development of GIFT IFSC, a delegation led by the Chairperson, IFSCA visited London, in July 2022. During the visit, the delegation held several engagements with UK officials, financial regulators as well as their financial services industry. Several roundtable interactions were also organised to acquaint the UK financial services industry with the opportunities at GIFT IFSC. Image 14.9: IFSCA delegates at the New York Stock Exchange 104 International Financial Services Centres Authority 105ANNUAL REPORT 2022-23 Visit to Malaysia Visit to Australia IFSCA delegation led by the Chairperson visited Kuala Lumpur, Malaysia in March 2023, to Executive Director, IFSCA participate in the 5th ASEAN‐India Business Summit, which was organised by ASEAN India Business visited Australia in February Council (AIBC) in collaboration with the High Commission of India in Malaysia. During the visit, the 2023 to participate in the IFSCA delegation also held meetings with Malaysian financial regulators i.e. Securities Commission Universities Australia Malaysia and Labuan Financial Services Authority to explore potential areas of bilateral Conference 2023 and highlight collaboration. Dedicated roundtable interactions with Malaysian financial services industry and the opportunities arising in universities were also held to acquaint them with opportunities at GIFT IFSC. GIFT IFSC for Australian Universities. During the visit, roundtable interactions were held with Australian financial services industry and study tours were made to some of the Image 14.11: Shri Dipesh Shah, Executive Director, IFSCA at leading Australian Universities. Universities Australia Conference, 2023 in Canberra Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal’s visit to IFSCA Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal, reviewed the functioning of GIFT IFSC during his visit on October 8, 2022. He interacted with various heads of units in GIFT city comprising bankers, fund managers, derivative exchange management, aviation industry representatives among others and heard their issues with allied offices of Commerce and Industry, DGFT and SEZ among others. He discussed benefits of setting up units in GIFT City and received suggestions including Image 14.10: Chairperson, IFSCA delivering the keynote address at the 5th ASEAN India those on exports promotion and 'Make in Business Summit in Kuala Lumpur, Malaysia India' in manufacturing. Further, he issued Visit to Singapore directions to explore whether the Start up ecosystem can benefit from the facilities Executive Director, IFSCA visited Singapore in November 2022 to participate in their flagship available at GIFT city. higher education event “Going Global Conference 2022”. During the conference, he highlighted the “IFSC will be a key driver of economic growth emerging opportunity for foreign universities to set up International Branch Campus at GIFT IFSC. with enhanced Ease of Doing Business for global investors who will gain from the India Image 14.12: Review of GIFT IFSC by Hon’ble growth story”, the Minister tweeted on the Union Minister of Commerce and Industry meeting. 106 International Financial Services Centres Authority 107ANNUAL REPORT 2022-23 Visit to Malaysia Visit to Australia IFSCA delegation led by the Chairperson visited Kuala Lumpur, Malaysia in March 2023, to Executive Director, IFSCA participate in the 5th ASEAN‐India Business Summit, which was organised by ASEAN India Business visited Australia in February Council (AIBC) in collaboration with the High Commission of India in Malaysia. During the visit, the 2023 to participate in the IFSCA delegation also held meetings with Malaysian financial regulators i.e. Securities Commission Universities Australia Malaysia and Labuan Financial Services Authority to explore potential areas of bilateral Conference 2023 and highlight collaboration. Dedicated roundtable interactions with Malaysian financial services industry and the opportunities arising in universities were also held to acquaint them with opportunities at GIFT IFSC. GIFT IFSC for Australian Universities. During the visit, roundtable interactions were held with Australian financial services industry and study tours were made to some of the Image 14.11: Shri Dipesh Shah, Executive Director, IFSCA at leading Australian Universities. Universities Australia Conference, 2023 in Canberra Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal’s visit to IFSCA Hon’ble Union Minister of Commerce and Industry, Shri Piyush Goyal, reviewed the functioning of GIFT IFSC during his visit on October 8, 2022. He interacted with various heads of units in GIFT city comprising bankers, fund managers, derivative exchange management, aviation industry representatives among others and heard their issues with allied offices of Commerce and Industry, DGFT and SEZ among others. He discussed benefits of setting up units in GIFT City and received suggestions including Image 14.10: Chairperson, IFSCA delivering the keynote address at the 5th ASEAN India those on exports promotion and 'Make in Business Summit in Kuala Lumpur, Malaysia India' in manufacturing. Further, he issued Visit to Singapore directions to explore whether the Start up ecosystem can benefit from the facilities Executive Director, IFSCA visited Singapore in November 2022 to participate in their flagship available at GIFT city. higher education event “Going Global Conference 2022”. During the conference, he highlighted the “IFSC will be a key driver of economic growth emerging opportunity for foreign universities to set up International Branch Campus at GIFT IFSC. with enhanced Ease of Doing Business for global investors who will gain from the India Image 14.12: Review of GIFT IFSC by Hon’ble growth story”, the Minister tweeted on the Union Minister of Commerce and Industry meeting. 106 International Financial Services Centres Authority 107ANNUAL REPORT 2022-23 Key outreach and engagement activities Month Activity Brief Description During FY 2022‐23, following major outreach and engagement activities were carried out in collaboration with the Indian missions, foreign missions, industry associations, investment August 2022 Webinar with leading A webinar was organised jointly with the promotion agencies and other stakeholders. Universities from United Indian Mission in Washington D.C. to discuss States of America opportunities for US Universities to set up Table 14.1: Key outreach and engagement activities of IFSCA during FY 2022‑23 IFSC International Branch Campus (IBC) in GIFT IFSC Month Activity Brief Description Webinar on ‘Important steps ANMI and CPAI jointly organised a webinar to April 2022 Webinar on the theme “The IFSCA participated in the webinar organised for setting up IFSC Broking highlight the business opportunities in Butterfly Effect series: by CPA Australia in collaboration with Invest firm in GIFT IFSC’ India’s maiden IFSC in GIFT City with special Investment opportunities in India to discuss GIFT IFSC business focus on Capital Market opportunities. South Asia” opportunities. Webinar on theme ‘Ship IFSCA participated in a webinar organised by Webinar on IFSCA (Fund IFSCA participated in a webinar organised by Leasing Framework in IFSC’ PwC on 'Ship Leasing Framework' to create Management) Regulations, PwC to create awareness about IFSCA (Fund awareness about ship leasing opportunities 2022 Management) Regulations, 2022. in GIFT IFSC Webinar on IFSCA (Fund IFSCA participated in a webinar organised by September Roundtable on Redomiciling A roundtable was organised in collaboration Management) Regulations, Deloitte to create awareness about IFSCA 2022 of Funds in GIFT IFSC with Multiples Asset Management IFSC Pvt. 2022 (Fund Management) Regulations, 2022. Ltd. on 'Redomiciling of funds in GIFT IFSC'. During the roundtable, discussions were held May 2022 CPAI Event on Opportunities IFSCA participated in 8th International on the measures undertaken by IFSCA for in IFSC ‐ Making India a Price Convention of CPAI (Commodity Participants attracting India centric funds to redomicile in Discovery Centre Association of India) to apprise the GIFT IFSC from overseas jurisdiction. participants about the opportunities in GIFT Roundtable on Funds IFSCA participated in the roundtable IFSC. Industry in GIFT IFSC interaction organised by the Apex Group Ltd. June 2022 Webinar on Marine Insurance Virtual webinar organised by Informa on the theme –“Leveraging the Indian in India Markets on Marine Insurance in India and Alternative Growth Story and the role of opportunities present in GIFT‐IFSC followed Global Institutional capital”. by a Q&A session. Conference organised by IFSCA participated in a conference organised Webinar on International Webinar was organised by Association of Bloomberg LP on business by Bloomberg LP with participation from Trading opportunities at GIFT National Exchanges Members of India opportunities in GIFT IFSC leading financial services industry. During IFSC (ANMI) to elaborate on the growing the event, IFSCA disseminated information international trading opportunities in GIFT‐ on various business opportunities in GIFT IFSC. IFSC across Banking, Capital Markets, Insurance, FinTech, etc. 108 International Financial Services Centres Authority 109ANNUAL REPORT 2022-23 Key outreach and engagement activities Month Activity Brief Description During FY 2022‐23, following major outreach and engagement activities were carried out in collaboration with the Indian missions, foreign missions, industry associations, investment August 2022 Webinar with leading A webinar was organised jointly with the promotion agencies and other stakeholders. Universities from United Indian Mission in Washington D.C. to discuss States of America opportunities for US Universities to set up Table 14.1: Key outreach and engagement activities of IFSCA during FY 2022‑23 IFSC International Branch Campus (IBC) in GIFT IFSC Month Activity Brief Description Webinar on ‘Important steps ANMI and CPAI jointly organised a webinar to April 2022 Webinar on the theme “The IFSCA participated in the webinar organised for setting up IFSC Broking highlight the business opportunities in Butterfly Effect series: by CPA Australia in collaboration with Invest firm in GIFT IFSC’ India’s maiden IFSC in GIFT City with special Investment opportunities in India to discuss GIFT IFSC business focus on Capital Market opportunities. South Asia” opportunities. Webinar on theme ‘Ship IFSCA participated in a webinar organised by Webinar on IFSCA (Fund IFSCA participated in a webinar organised by Leasing Framework in IFSC’ PwC on 'Ship Leasing Framework' to create Management) Regulations, PwC to create awareness about IFSCA (Fund awareness about ship leasing opportunities 2022 Management) Regulations, 2022. in GIFT IFSC Webinar on IFSCA (Fund IFSCA participated in a webinar organised by September Roundtable on Redomiciling A roundtable was organised in collaboration Management) Regulations, Deloitte to create awareness about IFSCA 2022 of Funds in GIFT IFSC with Multiples Asset Management IFSC Pvt. 2022 (Fund Management) Regulations, 2022. Ltd. on 'Redomiciling of funds in GIFT IFSC'. During the roundtable, discussions were held May 2022 CPAI Event on Opportunities IFSCA participated in 8th International on the measures undertaken by IFSCA for in IFSC ‐ Making India a Price Convention of CPAI (Commodity Participants attracting India centric funds to redomicile in Discovery Centre Association of India) to apprise the GIFT IFSC from overseas jurisdiction. participants about the opportunities in GIFT Roundtable on Funds IFSCA participated in the roundtable IFSC. Industry in GIFT IFSC interaction organised by the Apex Group Ltd. June 2022 Webinar on Marine Insurance Virtual webinar organised by Informa on the theme –“Leveraging the Indian in India Markets on Marine Insurance in India and Alternative Growth Story and the role of opportunities present in GIFT‐IFSC followed Global Institutional capital”. by a Q&A session. Conference organised by IFSCA participated in a conference organised Webinar on International Webinar was organised by Association of Bloomberg LP on business by Bloomberg LP with participation from Trading opportunities at GIFT National Exchanges Members of India opportunities in GIFT IFSC leading financial services industry. During IFSC (ANMI) to elaborate on the growing the event, IFSCA disseminated information international trading opportunities in GIFT‐ on various business opportunities in GIFT IFSC. IFSC across Banking, Capital Markets, Insurance, FinTech, etc. 108 International Financial Services Centres Authority 109ANNUAL REPORT 2022-23 Month Activity Brief Description Month Activity Brief Description September CII Summit on ‘Building IFSCA participated in summit organised by October Conference on business IFSCA participated in a conference organised 2022 2022 blocks for a US$100B AUM Confederation of Indian Industry (CII) to opportunities in GIFT IFSC by ICICI Bank with participation from the Aatmanirbhar PE&VC discuss and deliberate on the growing financial services industry. During the event, industry’ importance of Private Equity & Venture IFSCA presented the overall opportunities for Capital Industry. During the event, role and the financial services industry including fund significance of GIFT IFSC as a preferred management industry. jurisdiction for PE and VC funds was also discussed. IFSCA delegation's visit to An IFSCA delegation participated in the Sibos Netherlands for SIBOS Conference 2022 held in Amsterdam, 19th International Tax IFSCA participated in the 19th International Conference 2022 Netherlands. During the conference, IFSCA Conference organised by Tax Conference organised by ASSOCHAM in organised a dedicated session on the theme ASSOCHAM New Delhi. During the conference, a “Opportunities at GIFT IFSC” and held dedicated session was held on GIFT IFSC bilateral interactions with various business opportunities. international financial institutions and FinTechs. ISHKA Global event on IFSCA attended the Ishka Global Conference Aviation Sector in New Delhi, which was organised on the IFSCA Aircraft Leasing IFSCA held roadshows in Dublin, Ireland to opportunities in GIFT IFSC theme 'Aviation India ‐ New Horizons, New Roadshow at Dublin, Ireland disseminate information regarding Aircraft Opportunities'. During the conference, leasing opportunities in GIFT IFSC. Aircraft leasing opportunities in GIFT IFSC were presented to global lessors, who Webinar on 'Opportunities at IFSCA participated in a webinar organised by participated in the event in large numbers. the International Financial Hongkong Chapter of ICAI to discuss and Services Centre, GIFT City, highlight the opportunities for financial IFSCA participated in a conference organised October Conference on “GIFT IFSC: India’ institutions at GIFT IFSC. 2022 The International Financial by Edelweiss Wealth Management with participation from the financial services Gateway of India.” Webinar on Ship Leasing A webinar was organised with leading firms industry. During the event, IFSCA presented Opportunities in IFSC on the ship leasing opportunities in GIFT‐ GIFT IFSC business opportunities across IFSC. various verticals including Banking, Capital Markets, Insurance, FinTech, etc. November Conference on “International A Conference was organised in collaboration 2022 Financial Services Centre at with Indian Consulate in New York and Roundtable on “Ship Leasing Roundtable was organised by IFSCA with GIFT City: financial Gateway Bloomberg LP to showcase GIFT IFSC Opportunities” in IFSC support of the Ministry of Ports, Shipping and to India – opportunities for opportunities to the US Financial Services Waterways and the Directorate General of Global institutions” Industry including Banks, Capital Market Shipping. Policy and other legal enablements participants, Law Firms, Fund Managers, etc. for developing ship leasing ecosystem in GIFT IFSC were discussed. Roundtable interaction on A dedicated Roundtable on Funds was “Opportunities for Global organised to create awareness about Funds Funds at International Industry opportunities in GIFT IFSC. Financial Services Centre, GIFT City” 110 International Financial Services Centres Authority 111ANNUAL REPORT 2022-23 Month Activity Brief Description Month Activity Brief Description September CII Summit on ‘Building IFSCA participated in summit organised by October Conference on business IFSCA participated in a conference organised 2022 2022 blocks for a US$100B AUM Confederation of Indian Industry (CII) to opportunities in GIFT IFSC by ICICI Bank with participation from the Aatmanirbhar PE&VC discuss and deliberate on the growing financial services industry. During the event, industry’ importance of Private Equity & Venture IFSCA presented the overall opportunities for Capital Industry. During the event, role and the financial services industry including fund significance of GIFT IFSC as a preferred management industry. jurisdiction for PE and VC funds was also discussed. IFSCA delegation's visit to An IFSCA delegation participated in the Sibos Netherlands for SIBOS Conference 2022 held in Amsterdam, 19th International Tax IFSCA participated in the 19th International Conference 2022 Netherlands. During the conference, IFSCA Conference organised by Tax Conference organised by ASSOCHAM in organised a dedicated session on the theme ASSOCHAM New Delhi. During the conference, a “Opportunities at GIFT IFSC” and held dedicated session was held on GIFT IFSC bilateral interactions with various business opportunities. international financial institutions and FinTechs. ISHKA Global event on IFSCA attended the Ishka Global Conference Aviation Sector in New Delhi, which was organised on the IFSCA Aircraft Leasing IFSCA held roadshows in Dublin, Ireland to opportunities in GIFT IFSC theme 'Aviation India ‐ New Horizons, New Roadshow at Dublin, Ireland disseminate information regarding Aircraft Opportunities'. During the conference, leasing opportunities in GIFT IFSC. Aircraft leasing opportunities in GIFT IFSC were presented to global lessors, who Webinar on 'Opportunities at IFSCA participated in a webinar organised by participated in the event in large numbers. the International Financial Hongkong Chapter of ICAI to discuss and Services Centre, GIFT City, highlight the opportunities for financial IFSCA participated in a conference organised October Conference on “GIFT IFSC: India’ institutions at GIFT IFSC. 2022 The International Financial by Edelweiss Wealth Management with participation from the financial services Gateway of India.” Webinar on Ship Leasing A webinar was organised with leading firms industry. During the event, IFSCA presented Opportunities in IFSC on the ship leasing opportunities in GIFT‐ GIFT IFSC business opportunities across IFSC. various verticals including Banking, Capital Markets, Insurance, FinTech, etc. November Conference on “International A Conference was organised in collaboration 2022 Financial Services Centre at with Indian Consulate in New York and Roundtable on “Ship Leasing Roundtable was organised by IFSCA with GIFT City: financial Gateway Bloomberg LP to showcase GIFT IFSC Opportunities” in IFSC support of the Ministry of Ports, Shipping and to India – opportunities for opportunities to the US Financial Services Waterways and the Directorate General of Global institutions” Industry including Banks, Capital Market Shipping. Policy and other legal enablements participants, Law Firms, Fund Managers, etc. for developing ship leasing ecosystem in GIFT IFSC were discussed. Roundtable interaction on A dedicated Roundtable on Funds was “Opportunities for Global organised to create awareness about Funds Funds at International Industry opportunities in GIFT IFSC. Financial Services Centre, GIFT City” 110 International Financial Services Centres Authority 111ANNUAL REPORT 2022-23 Month Activity Brief Description Month Activity Brief Description November Roundtable interaction on A dedicated Roundtable was organised to January ICAI ‐ One Day Conference Conference was organised by Ahmedabad 2022 2023 “Banking and Global In‐ create awareness about Banking and GIC on Opportunities in GIFT Branch of WIRC of ICAI in partnership with House Centre opportunities opportunities in GIFT IFSC. IFSC IFSCA to educate and sensitise CA fraternity at India’s International regarding GIFT IFSC business regulations and Financial Services Centre, opportunities. GIFT City” ICICI Event on GIFT IFSC IFSCA officials participated in a two‐day opportunities event organised by ICICI Bank in Bengaluru to Roundtable interaction with A roundtable interaction was organised to showcase GIFT IFSC business opportunities US Universities on GIFT IFSC discuss opportunities for US Universities in for funds industry as well as discuss the Opportunities GIFT IFSC. impact of new ODI regulations with the financial services industry. Meeting with members of A roundtable interaction was organised to The Indus Entrepreneurs brief TiE members on the FinTech Hub being February Meeting with Multi‐lateral Senior officials of MIGA held a meeting with (TiE‐ D.C.) on FinTech developed in GIFT IFSC and educate them on 2023 Investment Guarantee IFSCA officials and heads of IBU’s to discuss Opportunities in GIFT IFSC the FinTech Entity Framework 2022. Agency (MIGA) ‐World Bank the potential of MIGA products and solutions Group being offered from GIFT IFSC including Credit Roundtable on “Aircraft Roundtable interaction was organised jointly Enhancement Guarantee. Leasing Opportunities” in by GIFT City and IFSCA on the aircraft leasing GIFT IFSC opportunities in GIFT IFSC. KPMG‐CNBC Budget A session was organised by KPMG and CNBC discussion for the Financial to discuss the GIFT IFSC related Union Budget Roundtable conference on Roundtable conference was organised by Services sector announcements and the future benefits and “Business opportunities in German Consulate General in Mumbai to business opportunities. GIFT IFSC” showcase business opportunities in GIFT IFSC for German financial services entities. Post Union Budget Webinar IFSCA participated in a webinar organised by by Ernst & Young LLP Ernst & Young on the Union Budget 2023 Webinar on “Concessions Webinar organised by SW India in association announcements related to GIFT IFSC and the provided to foreign with SW Australia, with participation of 20+ business opportunities emerging from the universities to operate in Australian universities to disseminate announcements. GIFT IFSC” information on setting up of International Branch Campus in GIFT IFSC. Post Budget Webinar by PE‐ IFSCA participated in a webinar organised by VC CFO Association PE‐VC CFO Association on the Union Budget December Meeting with officials from IFSCA held discussions with Austrade 2023 announcements made for GIFT IFSC 2022 Australian Trade and officials to highlight opportunities for and business opportunities emerging from Investment Commission Australian Universities to open International the announcements. (Austrade) Branch Campuses in GIFT IFSC International Trade IFSCA in collaboration with Export Financing Services Platform Promotion Councils and ITFS platforms, (ITFS) Workshop held in conducted a workshop to sensitise and Mumbai educate the MSME community regarding benefits of availing trading financing services from ITFS platforms in GIFT IFSC. 112 International Financial Services Centres Authority 113ANNUAL REPORT 2022-23 Month Activity Brief Description Month Activity Brief Description November Roundtable interaction on A dedicated Roundtable was organised to January ICAI ‐ One Day Conference Conference was organised by Ahmedabad 2022 2023 “Banking and Global In‐ create awareness about Banking and GIC on Opportunities in GIFT Branch of WIRC of ICAI in partnership with House Centre opportunities opportunities in GIFT IFSC. IFSC IFSCA to educate and sensitise CA fraternity at India’s International regarding GIFT IFSC business regulations and Financial Services Centre, opportunities. GIFT City” ICICI Event on GIFT IFSC IFSCA officials participated in a two‐day opportunities event organised by ICICI Bank in Bengaluru to Roundtable interaction with A roundtable interaction was organised to showcase GIFT IFSC business opportunities US Universities on GIFT IFSC discuss opportunities for US Universities in for funds industry as well as discuss the Opportunities GIFT IFSC. impact of new ODI regulations with the financial services industry. Meeting with members of A roundtable interaction was organised to The Indus Entrepreneurs brief TiE members on the FinTech Hub being February Meeting with Multi‐lateral Senior officials of MIGA held a meeting with (TiE‐ D.C.) on FinTech developed in GIFT IFSC and educate them on 2023 Investment Guarantee IFSCA officials and heads of IBU’s to discuss Opportunities in GIFT IFSC the FinTech Entity Framework 2022. Agency (MIGA) ‐World Bank the potential of MIGA products and solutions Group being offered from GIFT IFSC including Credit Roundtable on “Aircraft Roundtable interaction was organised jointly Enhancement Guarantee. Leasing Opportunities” in by GIFT City and IFSCA on the aircraft leasing GIFT IFSC opportunities in GIFT IFSC. KPMG‐CNBC Budget A session was organised by KPMG and CNBC discussion for the Financial to discuss the GIFT IFSC related Union Budget Roundtable conference on Roundtable conference was organised by Services sector announcements and the future benefits and “Business opportunities in German Consulate General in Mumbai to business opportunities. GIFT IFSC” showcase business opportunities in GIFT IFSC for German financial services entities. Post Union Budget Webinar IFSCA participated in a webinar organised by by Ernst & Young LLP Ernst & Young on the Union Budget 2023 Webinar on “Concessions Webinar organised by SW India in association announcements related to GIFT IFSC and the provided to foreign with SW Australia, with participation of 20+ business opportunities emerging from the universities to operate in Australian universities to disseminate announcements. GIFT IFSC” information on setting up of International Branch Campus in GIFT IFSC. Post Budget Webinar by PE‐ IFSCA participated in a webinar organised by VC CFO Association PE‐VC CFO Association on the Union Budget December Meeting with officials from IFSCA held discussions with Austrade 2023 announcements made for GIFT IFSC 2022 Australian Trade and officials to highlight opportunities for and business opportunities emerging from Investment Commission Australian Universities to open International the announcements. (Austrade) Branch Campuses in GIFT IFSC International Trade IFSCA in collaboration with Export Financing Services Platform Promotion Councils and ITFS platforms, (ITFS) Workshop held in conducted a workshop to sensitise and Mumbai educate the MSME community regarding benefits of availing trading financing services from ITFS platforms in GIFT IFSC. 112 International Financial Services Centres Authority 113Month Activity Brief Description March Roundtable for Ship Leasing IFSCA participated virtually in a roundtable 2023 Opportunities in GIFT IFSC interaction organised by PwC to showcase held in Dubai Ship leasing opportunities in GIFT IFSC to global ship lessors and other market participants. Global Professional IFSCA participated in the Global Professional Conference organised by Conference organised in Ahmedabad by TeraPanth Professional TeraPanth Professional Forum. The Forum. conference was aimed at showcasing the business opportunities in GIFT IFSC for professionals across the globe. Conference organised by JP IFSCA participated in a conference organised Morgan Chase by JP Morgan Chase to showcase Funds Industry opportunities in GIFT IFSC. During the conference, benefits for relocation of funds to GIFT IFSC were also discussed. Seminar on, “The Company IFSCA participated in a seminar organised by Secretary: A Global the Institute of Company Secretaries of India Profession" by ICSI (ICSI). The seminar was attended by more Ahmedabad Chapter than 100 professionals and the opportunities for the secretarial and compliance services in GIFT IFSC were highlighted. Roundtable organised for A roundtable was organised by the IFSCA Framework for enabling with leading professional and consultancy Ancillary services in 2023 firms to discuss the potential for GIFT IFSC to become a Global Accountancy Hub. 114 International Financial Services Centres AuthoritySECTION‑D 115ANNUAL REPORT 2022-23 List of Regulations Table D.1: List of Regulations Sr. Date Regulations Objectives No of Issue 1 IFSCA (Fund 19/04/2022 The Fund Management Regulations provide a Management) comprehensive framework governing a host of Regulations, 2022. fund management activities in IFSC, ranging IFSCA/2021‐ from various types of private investment funds, 22/GN/REG024 such as venture capital funds, special situations funds, hedge funds, etc. to retail investment funds, such as mutual funds and exchange traded funds. 2 IFSCA (Banking) 29/06/2022 The Authority has issued these regulations to (Amendment) make certain amendments to insert, modify, QUASI‑LEGISLATIVE FUNCTIONS OF Regulations, 2022. omit and to substitute certain definitions and THE AUTHORITY IFSCA/2022‐ provisions in the IFSCA Banking Regulations, 23/GN/REG025 2020. IFSCA has been established as a unified regulator to develop and regulate the financial services 3 IFSCA (Finance 01/07/2022 The Authority has issued these regulations to market in the IFSCs in India. The Authority can perform all such executive, quasi‐legislative and Company) make certain amendments to insert certain quasi‐judicial functions in IFSCs, as are being performed by the domestic financial sector (Amendment) provisions by expanding the “Permitted and regulators in India. Section 12 of the IFSCA Act, 2019 empowers IFSCA to develop and regulate Regulations, 2022. Non‐Core Activities” in the IFSCA (Finance financial products, financial services, and financial institutions in an IFSC. It can also recommend to IFSCA/2022‐ Company) Regulations, 2021. the Central Government certain financial products, financial services, and financial institutions 23/GN/REG026 which may be permitted in an IFSC. Further, under section 13 of the Act, IFSCA can exercise all 4 IFSCA (Setting up and 11/10/2022 The Authority has issued these regulations to powers exercisable by the aforesaid four domestic regulators with respect to certain Acts specified Operation of make GIFT IFSC an international educational under the First Schedule of the Act in so far as they relate to financial products, financial services, International Branch centre, catering to both Indian and foreign and financial institutions in the IFSCs. Campuses and Offshore students in the specified disciplines. The Authority while exercising its quasi‐legislative powers has notified regulations on multiple Education Centres) Additionally, it aims to encourage research in areas. Apart from the core activities of banking, capital markets and insurance, the regulations Regulations, 2022 Banking, Insurance, Capital Market, Funds have also been framed on administrative and miscellaneous matters. To give effect to the IFSCA/2022‐ Management, FinTech, Longevity Finance, functioning of various financial products and financial services regulated by the Authority, the 23/GN/REG027 Sustainable Finance, Quantum Computing, etc., following regulations, notifications, guidelines, and circulars have been issued: to provide high‐end human resources in finance, technology, and related fields. 5 IFSCA (Maintenance of 25/11/2022 These regulations aim to provide an enabling Website) Regulations, framework for the Authority to develop a best‐ 2022. IFSCA/2022‐ in‐class website, comparable to those of other 23/GN/REG021 international financial sector regulators, while conforming to the standards and guidelines of the Government of India and other relevant agencies. 116 International Financial Services Centres Authority 117 snoitcnuF evitalsigeL‑isauQANNUAL REPORT 2022-23 List of Regulations Table D.1: List of Regulations Sr. Date Regulations Objectives No of Issue 1 IFSCA (Fund 19/04/2022 The Fund Management Regulations provide a Management) comprehensive framework governing a host of Regulations, 2022. fund management activities in IFSC, ranging IFSCA/2021‐ from various types of private investment funds, 22/GN/REG024 such as venture capital funds, special situations funds, hedge funds, etc. to retail investment funds, such as mutual funds and exchange traded funds. 2 IFSCA (Banking) 29/06/2022 The Authority has issued these regulations to (Amendment) make certain amendments to insert, modify, QUASI‑LEGISLATIVE FUNCTIONS OF Regulations, 2022. omit and to substitute certain definitions and THE AUTHORITY IFSCA/2022‐ provisions in the IFSCA Banking Regulations, 23/GN/REG025 2020. IFSCA has been established as a unified regulator to develop and regulate the financial services 3 IFSCA (Finance 01/07/2022 The Authority has issued these regulations to market in the IFSCs in India. The Authority can perform all such executive, quasi‐legislative and Company) make certain amendments to insert certain quasi‐judicial functions in IFSCs, as are being performed by the domestic financial sector (Amendment) provisions by expanding the “Permitted and regulators in India. Section 12 of the IFSCA Act, 2019 empowers IFSCA to develop and regulate Regulations, 2022. Non‐Core Activities” in the IFSCA (Finance financial products, financial services, and financial institutions in an IFSC. It can also recommend to IFSCA/2022‐ Company) Regulations, 2021. the Central Government certain financial products, financial services, and financial institutions 23/GN/REG026 which may be permitted in an IFSC. Further, under section 13 of the Act, IFSCA can exercise all 4 IFSCA (Setting up and 11/10/2022 The Authority has issued these regulations to powers exercisable by the aforesaid four domestic regulators with respect to certain Acts specified Operation of make GIFT IFSC an international educational under the First Schedule of the Act in so far as they relate to financial products, financial services, International Branch centre, catering to both Indian and foreign and financial institutions in the IFSCs. Campuses and Offshore students in the specified disciplines. The Authority while exercising its quasi‐legislative powers has notified regulations on multiple Education Centres) Additionally, it aims to encourage research in areas. Apart from the core activities of banking, capital markets and insurance, the regulations Regulations, 2022 Banking, Insurance, Capital Market, Funds have also been framed on administrative and miscellaneous matters. To give effect to the IFSCA/2022‐ Management, FinTech, Longevity Finance, functioning of various financial products and financial services regulated by the Authority, the 23/GN/REG027 Sustainable Finance, Quantum Computing, etc., following regulations, notifications, guidelines, and circulars have been issued: to provide high‐end human resources in finance, technology, and related fields. 5 IFSCA (Maintenance of 25/11/2022 These regulations aim to provide an enabling Website) Regulations, framework for the Authority to develop a best‐ 2022. IFSCA/2022‐ in‐class website, comparable to those of other 23/GN/REG021 international financial sector regulators, while conforming to the standards and guidelines of the Government of India and other relevant agencies. 116 International Financial Services Centres Authority 117 snoitcnuF evitalsigeL‑isauQANNUAL REPORT 2022-23 Sr. Date Sr. Date Regulations Objectives Regulations Objectives No of Issue No of Issue 6 IFSCA (Insurance 12/01/2023 The regulations inter‑alia provide framework 11 IFSCA (Preparation and 12/01/2023 These regulations aim to put in place the Products and Pricing) for: Presentation of process of preparation and presentation of Regulations, 2022. Financial Statements of financial statements of the IIOs. • designing and pricing of insurance IFSCA/2022‐ International Financial products 23/GN/REG029 Service Centre • put in place systems and controls to provide Insurance Offices) adequate capacity to identify and mitigate Regulations, 2022. product related risks IFSCA/2022‐ 23/GN/REG033 7 IFSCA (Investment by 12/01/2023 The regulations aim to put in place the International Financial regulatory framework and processes related to List of Notifications Service Centre investment of assets by an IFSC Insurance Insurance Office) Office. Table D.2: List of Notifications Regulations, 2022. Sr. Date of IFSCA/2022‐ Notifications Purpose of Notification No Publication 23/GN/REG030 1 IFSCA/2022‐ 12/04/2022 To notify “Aircraft Ground Support Equipment” 8 IFSCA (Maintenance of 12/01/2023 The objective of these regulations is to specify 23/GN/023 as a financial product in IFSC u/s 3(1) (d) of Insurance Records and minimum information that is required to be IFSCA Act, 2019. Submission of Requisite maintained by an IIO and IIIO, for the purposes Information for of investigation and inspection, under section 2 329/IFSCA/Bullion 06/12/2022 The notification extended renewal of Investigation and 33 of the Insurance Act, 1938. MIIs/2021‐22 recognition to India International Bullion Inspection) Regulations, Exchange and Bullion Clearing Corporation for 2022. IFSCA/2022‐ one year. 23/GN/REG031 3 IFSCA/2022‐ 27/04/2022 The corrigendum was issued to make certain 9 IFSCA (Appointed 12/01/2023 These regulations aim to lay down the 23/GN/023 modifications in the notification related to Actuary) Regulations, regulatory framework for the persons who are notifying “Aircraft Ground Support Equipment” 2022. engaged by the IIOs to perform the roles and as a financial product in IFSC. IFSCA/2022‐ discharge the functions of ‘Appointed Actuary’. 23/GN/REG028 10 IFSCA (Manner of 12/01/2023 The objective of these regulations is to put in Payment and Receipt of place the manner of payment of premium for Premium) Regulations, insurance policy, assumption of risk, receipt or 2022. refund of premium and other terms and IFSCA/2022‐ conditions, in accordance with Section 64 VB of 23/GN/REG032 the Insurance Act, 1938, for carrying on the insurance business in IFSC. 118 International Financial Services Centres Authority 119ANNUAL REPORT 2022-23 Sr. Date Sr. Date Regulations Objectives Regulations Objectives No of Issue No of Issue 6 IFSCA (Insurance 12/01/2023 The regulations inter‑alia provide framework 11 IFSCA (Preparation and 12/01/2023 These regulations aim to put in place the Products and Pricing) for: Presentation of process of preparation and presentation of Regulations, 2022. Financial Statements of financial statements of the IIOs. • designing and pricing of insurance IFSCA/2022‐ International Financial products 23/GN/REG029 Service Centre • put in place systems and controls to provide Insurance Offices) adequate capacity to identify and mitigate Regulations, 2022. product related risks IFSCA/2022‐ 23/GN/REG033 7 IFSCA (Investment by 12/01/2023 The regulations aim to put in place the International Financial regulatory framework and processes related to List of Notifications Service Centre investment of assets by an IFSC Insurance Insurance Office) Office. Table D.2: List of Notifications Regulations, 2022. Sr. Date of IFSCA/2022‐ Notifications Purpose of Notification No Publication 23/GN/REG030 1 IFSCA/2022‐ 12/04/2022 To notify “Aircraft Ground Support Equipment” 8 IFSCA (Maintenance of 12/01/2023 The objective of these regulations is to specify 23/GN/023 as a financial product in IFSC u/s 3(1) (d) of Insurance Records and minimum information that is required to be IFSCA Act, 2019. Submission of Requisite maintained by an IIO and IIIO, for the purposes Information for of investigation and inspection, under section 2 329/IFSCA/Bullion 06/12/2022 The notification extended renewal of Investigation and 33 of the Insurance Act, 1938. MIIs/2021‐22 recognition to India International Bullion Inspection) Regulations, Exchange and Bullion Clearing Corporation for 2022. IFSCA/2022‐ one year. 23/GN/REG031 3 IFSCA/2022‐ 27/04/2022 The corrigendum was issued to make certain 9 IFSCA (Appointed 12/01/2023 These regulations aim to lay down the 23/GN/023 modifications in the notification related to Actuary) Regulations, regulatory framework for the persons who are notifying “Aircraft Ground Support Equipment” 2022. engaged by the IIOs to perform the roles and as a financial product in IFSC. IFSCA/2022‐ discharge the functions of ‘Appointed Actuary’. 23/GN/REG028 10 IFSCA (Manner of 12/01/2023 The objective of these regulations is to put in Payment and Receipt of place the manner of payment of premium for Premium) Regulations, insurance policy, assumption of risk, receipt or 2022. refund of premium and other terms and IFSCA/2022‐ conditions, in accordance with Section 64 VB of 23/GN/REG032 the Insurance Act, 1938, for carrying on the insurance business in IFSC. 118 International Financial Services Centres Authority 119ANNUAL REPORT 2022-23 List of Major Circulars/Guidelines Sr. Date Circulars/Guidelines Objectives No of Issue Table D.3: List of Major Circulars/Guidelines 7 The IFSCA Banking 06/06/2022 The PRU directions are aimed at establishing Sr. Date Circulars/Guidelines Objectives Handbook Prudential certain minimum non‐quantitative prudential No of Issue Directions‐V 3.0 (PRU) requirements that shall be applicable to the 1 Guidance framework 26/04/2022 The circular directs the IBUs and FCs/FUs IBUs set up as branches in IFSC, in addition to on Sustainable and operating in the IFSC, undertaking lending those applicable on them as a branch of the Sustainability linked activities from IFSC, to develop a Banking Company under the respective Home lending by financial comprehensive board approved policy on Regulations. The PRU modules cover the institutions green/social/sustainable/sustainability‐ qualitative aspects of prudential requirements linked lending. in respect of governance, governing board 2 Framework for FinTech 27/04/2022 The framework provides for manner of responsibilities, policies, systems, and controls Entity in IFSCs authorisation of fintech entities in IFSC. to be made applicable to IBUs. 3 Framework for Aircraft 18/05/2022 The framework specifies the entities to get 8 Committees at Market 28/06/2022 The committees were constituted as per Lease registered under Finance Company Infrastructure Chapter VI of IFSCA (Bullion Exchange) Regulations as a ‘Finance Company’ or a Institutions (MIIs) in Regulations, 2020 and Chapter III of IFSCA ‘Finance Unit’ for undertaking aircraft lease IFSC (Market Infrastructure Institutions) transactions. Regulations, 2021 with respect to constitution 4 Amendments and 06/06/2022 Through these circulars, certain amendments of various statutory committees in order to additions to IFSCA /additions have been carried out in the ensure effective oversight of the functioning of Banking Handbook Handbook. A new module ‘Raising queries MIIs. pertaining to Banking’ has been added. 9 Angel Funds under 01/07/2022 In recognition of the crucial role played by angel 5 The IFSCA Banking 06/06/2022 The IFSCA Banking Handbook contains the IFSCA (Fund investors, a framework for Angel Funds, Handbook General directions of the Authority to the Banking Units Management) specifically attuned to the requirements of Directions‐V 3.0 (GEN) operating as branch of a Banking Company Regulations, 2022 early‐stage investing is specified under this (also referred to as ‘parent bank’ in the IFSCA circular. Banking Regulations). 10 IFSCA Banking 13/07/2022 The COB directions are aimed at ensuring that Handbook Conduct of IBUs meet the minimum standards of conduct The GEN directions deal with licensing of IBUs, Business Directions‐V expected, particularly with regard to the defining ‘controlled’ and ‘designated’ functions 4.0 treatment of their clients, their dealings with and the requirements from ‘approved/ counterparties and other market participants. authorised individuals’ who can carry out such It also includes directions to ensure that the functions. The GEN directions also lay out the IBUs contribute to fostering and maintaining broad principles for banking business and the integrity of financial markets in the IFSC. provide information about the Authority’s supervisory powers, functions, and approach. 11 Framework for Ship 16/08/2022 The framework was issued in order to facilitate Leasing the Ship Leasing business in IFSC and 6 The IFSCA Banking 06/06/2022 The COB directions are aimed at ensuring that registration of entities under Finance Company Handbook Conduct of IBUs meet the minimum standards of conduct Regulations. Business Directions‐ V expected, particularly with regard to the 3.0 treatment of their clients, their dealings with counterparties and other market participants. 120 International Financial Services Centres Authority 121ANNUAL REPORT 2022-23 List of Major Circulars/Guidelines Sr. Date Circulars/Guidelines Objectives No of Issue Table D.3: List of Major Circulars/Guidelines 7 The IFSCA Banking 06/06/2022 The PRU directions are aimed at establishing Sr. Date Circulars/Guidelines Objectives Handbook Prudential certain minimum non‐quantitative prudential No of Issue Directions‐V 3.0 (PRU) requirements that shall be applicable to the 1 Guidance framework 26/04/2022 The circular directs the IBUs and FCs/FUs IBUs set up as branches in IFSC, in addition to on Sustainable and operating in the IFSC, undertaking lending those applicable on them as a branch of the Sustainability linked activities from IFSC, to develop a Banking Company under the respective Home lending by financial comprehensive board approved policy on Regulations. The PRU modules cover the institutions green/social/sustainable/sustainability‐ qualitative aspects of prudential requirements linked lending. in respect of governance, governing board 2 Framework for FinTech 27/04/2022 The framework provides for manner of responsibilities, policies, systems, and controls Entity in IFSCs authorisation of fintech entities in IFSC. to be made applicable to IBUs. 3 Framework for Aircraft 18/05/2022 The framework specifies the entities to get 8 Committees at Market 28/06/2022 The committees were constituted as per Lease registered under Finance Company Infrastructure Chapter VI of IFSCA (Bullion Exchange) Regulations as a ‘Finance Company’ or a Institutions (MIIs) in Regulations, 2020 and Chapter III of IFSCA ‘Finance Unit’ for undertaking aircraft lease IFSC (Market Infrastructure Institutions) transactions. Regulations, 2021 with respect to constitution 4 Amendments and 06/06/2022 Through these circulars, certain amendments of various statutory committees in order to additions to IFSCA /additions have been carried out in the ensure effective oversight of the functioning of Banking Handbook Handbook. A new module ‘Raising queries MIIs. pertaining to Banking’ has been added. 9 Angel Funds under 01/07/2022 In recognition of the crucial role played by angel 5 The IFSCA Banking 06/06/2022 The IFSCA Banking Handbook contains the IFSCA (Fund investors, a framework for Angel Funds, Handbook General directions of the Authority to the Banking Units Management) specifically attuned to the requirements of Directions‐V 3.0 (GEN) operating as branch of a Banking Company Regulations, 2022 early‐stage investing is specified under this (also referred to as ‘parent bank’ in the IFSCA circular. Banking Regulations). 10 IFSCA Banking 13/07/2022 The COB directions are aimed at ensuring that Handbook Conduct of IBUs meet the minimum standards of conduct The GEN directions deal with licensing of IBUs, Business Directions‐V expected, particularly with regard to the defining ‘controlled’ and ‘designated’ functions 4.0 treatment of their clients, their dealings with and the requirements from ‘approved/ counterparties and other market participants. authorised individuals’ who can carry out such It also includes directions to ensure that the functions. The GEN directions also lay out the IBUs contribute to fostering and maintaining broad principles for banking business and the integrity of financial markets in the IFSC. provide information about the Authority’s supervisory powers, functions, and approach. 11 Framework for Ship 16/08/2022 The framework was issued in order to facilitate Leasing the Ship Leasing business in IFSC and 6 The IFSCA Banking 06/06/2022 The COB directions are aimed at ensuring that registration of entities under Finance Company Handbook Conduct of IBUs meet the minimum standards of conduct Regulations. Business Directions‐ V expected, particularly with regard to the 3.0 treatment of their clients, their dealings with counterparties and other market participants. 120 International Financial Services Centres Authority 121ANNUAL REPORT 2022-23 Sr. Date Circulars/Guidelines Objectives Box D.1: IFSCA (Anti Money Laundering, Counter‑Terrorist No of Issue Financing and Know Your Customer) Guidelines, 2022 12 IFSCA (Anti Money 28/10/2022 IFSCA issued the guidelines applicable for all Laundering, Counter‐ the regulated entities in IFSC. The guidelines • IFSCA (Anti Money Laundering, Counter‐Terrorist Financing and Know Your Terrorist Financing and cover major aspects such as risk‐based Customer) Guidelines, 2022 have been issued by IFSCA in exercise of powers Know Your Customer) assessment, customer due diligence, reporting conferred by Section 12 of the IFSCA Act, 2019 read with sub‐rule 14 of rule 9 of Guidelines, 2022 of suspicious transactions, etc. The guidelines Prevention of Money Laundering (Maintenance of Record) Rules, 2005. The IFSCA/2022‐ will supersede all the other AML‐CFT guidelines came into effect from October 31, 2022. 23/GN/GL001 guidelines/circulars of the domestic financial • The Guidelines have been framed in accordance with Financial Action Task Force regulators for regulated entities in IFSC. (FATF) Recommendations, Prevention of Money Laundering Act, 2002 (PMLA), 13 Framework for 21/11/2022 The framework was issued in recognition of the PML Rules and the best practices prevailing in the global AML‐CFT regulatory distribution of Capital crucial role played by the distributors in regime. Market Products and distribution of capital market products and • As IFSCA is a unified financial sector regulator, it is imperative that the Guidelines Services under IFSCA services. are uniformly applicable to various financial services and financial institutions in (Capital Market the areas of capital market, banking, insurance, and pension, among others. Intermediaries) Therefore, a ‘principle‐based approach’ is adopted under the Guidelines. Regulations, 2021 14 Guidelines for Business 16/11/2022 Considering the advancement in technology • To promote ease of doing business and smooth onboarding of customers for Continuity Plan (BCP) and improved automation of various processes, regulated entities (REs), amendments in respect of Official Valid Document (OVD), and Disaster Recovery a framework for BCP and DR for the MIIs in IFSC Designated Director, etc., have been carried out in PML Rules, 2005. Further, (DR) for Market was prescribed. exemption from the Central KYC Registry requirement for foreign nationals has Infrastructure also been provided. institutions (MIIs) • The Guidelines are applicable to all the entities licensed, recognised or registered 15 Circular prescribing net 01/01/2023 The circular prescribes net worth for bullion or authorised by the Authority, collectively called Regulated Entities. The worth for bullion exchange and bullion clearing corporation. provisions of these Guidelines are also applicable to a financial group of the RE, to exchange and bullion such extent as specified in Chapter‐XII of the Guidelines. clearing corporation • The primary thrust of the Guidelines is to enable an RE to adopt Risk‐Based 16 Guidelines for 03/03/2023 The circular was issued to enable a mechanism Approach (RBA) to identify and assess the Money Laundering (ML) and Terrorist execution of block deals for execution of large trades in gold in a single Financing (TF) risks to which the RE is exposed, depending upon its nature of on the Bullion transaction. business and exposure to or involvement with certain types of clients, countries or Exchange geographic areas, products, services, transactions, or delivery channels, etc. The Guidelines have dedicated chapters for RBA, Business Risk Assessment and 17 Amendment to the 22/03/2023 The circular was issued for modifying the Customer Risk Assessment. Circular titled framework for ship leasing by inter‑alia ‘Framework for Ship enabling voyage charter and other commercial • Based on the risk assessment, the customers will be categorised into three risk Leasing’ transactions for employment of ships, as categories as low, medium, and high‐risk. Based on the categorisation, the relevant permissible activities under operating lease. Customer Due Diligence (CDD) measures i.e., either simplified or enhanced CDD measures are applicable. • The Guidelines are comprehensive in nature and emphasise special focus on RBA, CDD, identifying and verifying the beneficial owners, reporting suspicious transactions among other things. For easier understanding and to avoid ambiguity in interpretation for REs, ‘Guidance Notes’ are provided under different chapters. 122 International Financial Services Centres Authority 123ANNUAL REPORT 2022-23 Sr. Date Circulars/Guidelines Objectives Box D.1: IFSCA (Anti Money Laundering, Counter‑Terrorist No of Issue Financing and Know Your Customer) Guidelines, 2022 12 IFSCA (Anti Money 28/10/2022 IFSCA issued the guidelines applicable for all Laundering, Counter‐ the regulated entities in IFSC. The guidelines • IFSCA (Anti Money Laundering, Counter‐Terrorist Financing and Know Your Terrorist Financing and cover major aspects such as risk‐based Customer) Guidelines, 2022 have been issued by IFSCA in exercise of powers Know Your Customer) assessment, customer due diligence, reporting conferred by Section 12 of the IFSCA Act, 2019 read with sub‐rule 14 of rule 9 of Guidelines, 2022 of suspicious transactions, etc. The guidelines Prevention of Money Laundering (Maintenance of Record) Rules, 2005. The IFSCA/2022‐ will supersede all the other AML‐CFT guidelines came into effect from October 31, 2022. 23/GN/GL001 guidelines/circulars of the domestic financial • The Guidelines have been framed in accordance with Financial Action Task Force regulators for regulated entities in IFSC. (FATF) Recommendations, Prevention of Money Laundering Act, 2002 (PMLA), 13 Framework for 21/11/2022 The framework was issued in recognition of the PML Rules and the best practices prevailing in the global AML‐CFT regulatory distribution of Capital crucial role played by the distributors in regime. Market Products and distribution of capital market products and • As IFSCA is a unified financial sector regulator, it is imperative that the Guidelines Services under IFSCA services. are uniformly applicable to various financial services and financial institutions in (Capital Market the areas of capital market, banking, insurance, and pension, among others. Intermediaries) Therefore, a ‘principle‐based approach’ is adopted under the Guidelines. Regulations, 2021 14 Guidelines for Business 16/11/2022 Considering the advancement in technology • To promote ease of doing business and smooth onboarding of customers for Continuity Plan (BCP) and improved automation of various processes, regulated entities (REs), amendments in respect of Official Valid Document (OVD), and Disaster Recovery a framework for BCP and DR for the MIIs in IFSC Designated Director, etc., have been carried out in PML Rules, 2005. Further, (DR) for Market was prescribed. exemption from the Central KYC Registry requirement for foreign nationals has Infrastructure also been provided. institutions (MIIs) • The Guidelines are applicable to all the entities licensed, recognised or registered 15 Circular prescribing net 01/01/2023 The circular prescribes net worth for bullion or authorised by the Authority, collectively called Regulated Entities. The worth for bullion exchange and bullion clearing corporation. provisions of these Guidelines are also applicable to a financial group of the RE, to exchange and bullion such extent as specified in Chapter‐XII of the Guidelines. clearing corporation • The primary thrust of the Guidelines is to enable an RE to adopt Risk‐Based 16 Guidelines for 03/03/2023 The circular was issued to enable a mechanism Approach (RBA) to identify and assess the Money Laundering (ML) and Terrorist execution of block deals for execution of large trades in gold in a single Financing (TF) risks to which the RE is exposed, depending upon its nature of on the Bullion transaction. business and exposure to or involvement with certain types of clients, countries or Exchange geographic areas, products, services, transactions, or delivery channels, etc. The Guidelines have dedicated chapters for RBA, Business Risk Assessment and 17 Amendment to the 22/03/2023 The circular was issued for modifying the Customer Risk Assessment. Circular titled framework for ship leasing by inter‑alia ‘Framework for Ship enabling voyage charter and other commercial • Based on the risk assessment, the customers will be categorised into three risk Leasing’ transactions for employment of ships, as categories as low, medium, and high‐risk. Based on the categorisation, the relevant permissible activities under operating lease. Customer Due Diligence (CDD) measures i.e., either simplified or enhanced CDD measures are applicable. • The Guidelines are comprehensive in nature and emphasise special focus on RBA, CDD, identifying and verifying the beneficial owners, reporting suspicious transactions among other things. For easier understanding and to avoid ambiguity in interpretation for REs, ‘Guidance Notes’ are provided under different chapters. 122 International Financial Services Centres Authority 123Advocacy and Outreach MoU between IFSCA and National Law University, Delhi The International Financial Services Centres Authority and National Law University, Delhi have signed a Memorandum of Understanding (MoU) for cooperation and collaboration in conducting evidence‐based policy research into the relevant areas of IFSCs and legal framework including the regulations governing the business activities therein. Policies and programmes for the following year Setting up of International Arbitration Centre (IAC) in GIFT IFSC In the Union Budget 2022‐23, Hon’ble Finance Minister announced setting up of an International Arbitration Centre in GIFT City for timely settlement of disputes under international jurisprudence. As one of the main objectives of the Authority is to bring offshore business to IFSC and thereby make it a globally competitive financial centre, having a contemporary and robust dispute resolution centre will attract international financial sector players towards IFSC. In pursuance of the same, the Authority has undertaken research and identified areas which would require certain dispensations for conducting arbitration in IFSC. Delegation of Powers under SEZ Act and SEZ Rules to IFSCA To enhance business activities in GIFT IFSC, Hon’ble Finance Minister, in the Union Budget 2023‐ 24, announced that measures will be taken for ‘delegating powers under the SEZ Act to IFSCA to avoid dual regulation’. Towards this end, the Authority has identified and sought certain carve outs under the Special Economic Zones Act, 2005. This would enhance the ease of doing business for the IFSC Units. Research on carrying out comprehensive amendments under IFSCA Act Research will be carried out to create an overarching framework for IFSCs in India through amendment in the IFSCA Act, 2019. The areas of amendment inter‑alia include Arbitration, Ancillary Services, Variable Capital Companies, enforcement powers on newly notified financial products and financial services not covered under section 13 of the Act. 124 International Financial Services Centres AuthoritySECTION‑E 125126 International Financial Services Centres Authority tnemssessA ecnamrofreP ANNUAL REPORT 2022-23 In the meeting held on November 30, 2022, the members of the Committee unanimously nominated Shri Bahram N. Vakil as the Chairperson of this Committee. 2. Committee on Transparency and Best Practices of Governance The scope of the Committee on Transparency and Best Practices of Governance in terms of Regulation 5(2) of the PRC Regulations, requires the Committee to assess whether the regulations made by the Authority: a) reduce compliance burden of stakeholders and promote transparency and best practices of governance; b) are fair and non‐discriminatory to the stakeholders and easily accessible; c) are clear, understandable and provide regulated entities with the predictability and necessary guidance to comply with regulations. PERFORMANCE ASSESSMENT Accordingly, with the abovementioned terms of reference, a Performance Review Committee was constituted by IFSCA with the following members: Section 17(3) of the IFSCA Act, 2019 provides the mechanism to review the performance of IFSCA. i) Shri Ananta Gopal Das (Member of IFSCA Board) IFSCA is required to constitute a Performance Review Committee, consisting of at least two members of the Authority to review the functioning of the Authority, specifically on whether‐ ii) Shri Suchindra Misra (Member of IFSCA Board) a. it has adhered to the provisions of the applicable laws while exercising powers or iii) Dr. M. S. Sahoo (Independent member) performing functions under the Act; iv) Shri M. V. Nair (Independent member) b. the regulations made by the Authority to give effect to the provisions of the Act promote In the meeting held on December 7, 2022, the members of the Committee unanimously nominated transparency and best practices of governance; and Dr. M. S. Sahoo as the Chairperson of the Committee. c. the Authority is managing risks to its functioning in a reasonable manner. 3. Committee on Risk Management Section 28(2)(d) of the IFSCA Act, 2019 provides IFSCA the powers to make regulations in respect The scope of the Committee on Risk Management in terms of Regulation 6 of the PRC Regulations, of Performance Review Committee. Accordingly, IFSCA (Performance Review Committee) requires the Committee to assess whether the Authority is managing risk to its functioning in a Regulations, 2022 (“PRC Regulations”), were notified on March 23, 2022 providing the framework reasonable manner, and it shall be performed by: for constitution, scope, information sharing and reporting relating to functioning of Performance Review Committee (“PRC”). a) reviewing the adequacy and effectiveness of the risk monitoring measures for its activities; Subsequently, IFSCA has constituted the following three Performance Review Committees: b) reviewing whether the risk identification measures are appropriate and assure the safety and soundness of the operations of the Authority while ensuring that any possible harm is mitigated 1. Committee on Compliance and risks are categorised; and The scope of the committee on Compliance is to review whether IFSCA has complied with the c) reviewing the monitoring and evaluation process and maintenance of record of any breach. provisions of the applicable laws while exercising powers or performing functions under the IFSCA Accordingly, with the above mentioned terms of reference, a Performance Review Committee was Act, 2019. constituted by IFSCA with the following members: Accordingly, with the abovementioned terms of reference, a Performance Review Committee was i) Dr. (Ms.) Mamta Suri (Member of IFSCA Authority) constituted by IFSCA with the following members: ii) Ms. Surbhi Jain (Member of IFSCA Authority) i) Shri Saurav Sinha (Member of IFSCA Board) iii) Shri Sriram Balasubramanyam (Independent member) ii) Shri Sujit Prasad (Member of IFSCA Board) iv) Shri G. Srinivasan (Independent member) iii) Shri Bahram N. Vakil (Independent member) In the meeting held on November 29, 2022, the members of the Committee unanimously iv) Shri J. Ranganayakulu (Independent member) nominated Dr. (Ms.) Mamta Suri as the Chairperson of the Committee. 127126 International Financial Services Centres Authority tnemssessA ecnamrofreP ANNUAL REPORT 2022-23 In the meeting held on November 30, 2022, the members of the Committee unanimously nominated Shri Bahram N. Vakil as the Chairperson of this Committee. 2. Committee on Transparency and Best Practices of Governance The scope of the Committee on Transparency and Best Practices of Governance in terms of Regulation 5(2) of the PRC Regulations, requires the Committee to assess whether the regulations made by the Authority: a) reduce compliance burden of stakeholders and promote transparency and best practices of governance; b) are fair and non‐discriminatory to the stakeholders and easily accessible; c) are clear, understandable and provide regulated entities with the predictability and necessary guidance to comply with regulations. PERFORMANCE ASSESSMENT Accordingly, with the abovementioned terms of reference, a Performance Review Committee was constituted by IFSCA with the following members: Section 17(3) of the IFSCA Act, 2019 provides the mechanism to review the performance of IFSCA. i) Shri Ananta Gopal Das (Member of IFSCA Board) IFSCA is required to constitute a Performance Review Committee, consisting of at least two members of the Authority to review the functioning of the Authority, specifically on whether‐ ii) Shri Suchindra Misra (Member of IFSCA Board) a. it has adhered to the provisions of the applicable laws while exercising powers or iii) Dr. M. S. Sahoo (Independent member) performing functions under the Act; iv) Shri M. V. Nair (Independent member) b. the regulations made by the Authority to give effect to the provisions of the Act promote In the meeting held on December 7, 2022, the members of the Committee unanimously nominated transparency and best practices of governance; and Dr. M. S. Sahoo as the Chairperson of the Committee. c. the Authority is managing risks to its functioning in a reasonable manner. 3. Committee on Risk Management Section 28(2)(d) of the IFSCA Act, 2019 provides IFSCA the powers to make regulations in respect The scope of the Committee on Risk Management in terms of Regulation 6 of the PRC Regulations, of Performance Review Committee. Accordingly, IFSCA (Performance Review Committee) requires the Committee to assess whether the Authority is managing risk to its functioning in a Regulations, 2022 (“PRC Regulations”), were notified on March 23, 2022 providing the framework reasonable manner, and it shall be performed by: for constitution, scope, information sharing and reporting relating to functioning of Performance Review Committee (“PRC”). a) reviewing the adequacy and effectiveness of the risk monitoring measures for its activities; Subsequently, IFSCA has constituted the following three Performance Review Committees: b) reviewing whether the risk identification measures are appropriate and assure the safety and soundness of the operations of the Authority while ensuring that any possible harm is mitigated 1. Committee on Compliance and risks are categorised; and The scope of the committee on Compliance is to review whether IFSCA has complied with the c) reviewing the monitoring and evaluation process and maintenance of record of any breach. provisions of the applicable laws while exercising powers or performing functions under the IFSCA Accordingly, with the above mentioned terms of reference, a Performance Review Committee was Act, 2019. constituted by IFSCA with the following members: Accordingly, with the abovementioned terms of reference, a Performance Review Committee was i) Dr. (Ms.) Mamta Suri (Member of IFSCA Authority) constituted by IFSCA with the following members: ii) Ms. Surbhi Jain (Member of IFSCA Authority) i) Shri Saurav Sinha (Member of IFSCA Board) iii) Shri Sriram Balasubramanyam (Independent member) ii) Shri Sujit Prasad (Member of IFSCA Board) iv) Shri G. Srinivasan (Independent member) iii) Shri Bahram N. Vakil (Independent member) In the meeting held on November 29, 2022, the members of the Committee unanimously iv) Shri J. Ranganayakulu (Independent member) nominated Dr. (Ms.) Mamta Suri as the Chairperson of the Committee. 127SECTION‑F 128 International Financial Services Centres Authority 129SECTION‑F 128 International Financial Services Centres Authority 129SOURCE OF FUNDS AND MAJOR AREAS OF EXPENDITURE (FY 2022‑23) Table F.1: Sources of Funds for FY 2022‑23 Sources of Fund – Receipts Amount (INR Lakhs) Annual Fees 1002.87 Application Fees 150.52 Broker Turnover Fees: Capital Markets 986.06 Turnover based fee from Insurance Offices 36.00 Listing Fees 1.65 Registration Fees 1009.47 Other Fees 7.85 Government Grants 7,368.00 Interest income on regulatory fee earned by IFSCA 120.56 Other Miscellaneous Income 143.29 Total 10,826.27 Table F.2: Major Areas of Expenditure for FY 2022‑23 Major Areas of Expenditure – Payments Amount (INR Lakhs) Establishment Expenses 3,011.24 Administrative Expenses 1,567.31 Purchase of Fixed Assets 4,026.52 (including payment made for Headquarter Land/Building) Security Deposit for leased office premises of IFSCA 15.60 Total 8,620.67 130 International Financial Services Centres Authority stnemyaP & stpieceR SECTION‑G 131SOURCE OF FUNDS AND MAJOR AREAS OF EXPENDITURE (FY 2022‑23) Table F.1: Sources of Funds for FY 2022‑23 Sources of Fund – Receipts Amount (INR Lakhs) Annual Fees 1002.87 Application Fees 150.52 Broker Turnover Fees: Capital Markets 986.06 Turnover based fee from Insurance Offices 36.00 Listing Fees 1.65 Registration Fees 1009.47 Other Fees 7.85 Government Grants 7,368.00 Interest income on regulatory fee earned by IFSCA 120.56 Other Miscellaneous Income 143.29 Total 10,826.27 Table F.2: Major Areas of Expenditure for FY 2022‑23 Major Areas of Expenditure – Payments Amount (INR Lakhs) Establishment Expenses 3,011.24 Administrative Expenses 1,567.31 Purchase of Fixed Assets 4,026.52 (including payment made for Headquarter Land/Building) Security Deposit for leased office premises of IFSCA 15.60 Total 8,620.67 130 International Financial Services Centres Authority stnemyaP & stpieceR SECTION‑G 131ANNUAL REPORT 2022-23 ORGANISATIONAL MATTERS Authority Structure Table G.1: Authority Structure Department Divisions Banking Supervision 132 International Financial Services Centres Authority 133 srettaM lanoitasinagrO Department Divisions Development of Financial Market – I Development Development of Financial Market – II & International Affairs Economic Economic Policy and Analysis Policy and Analysis Administration & HR General Administration Treasury, Finance and Accounts IT IT and Fintech Fintech Legal Policy Legal Policy and Legal Affairs Legal Affairs Regulatory Cooperation Risk Based Supervision Regulatory Policy and Regulatory Affairs SupTech FATF Cell Banking Supervision Authority Meetings Finance Company Regulation and Supervision Banking Regulation and Payment and Settlement Table G.2: IFSC Authority Meetings held in FY 2022‑23 Development Banking Regulation Sr. Divisions Date No. Corporate Finance – Equity, Hybrid, and related products 1 Eleventh Authority meeting June 27, 2022 Corporate Finance – Debt and Sustainable Finance Capital Markets Market Infrastructure Institutions – Regulation and Supervision 2 Twelfth Authority meeting September 30, 2022 Investment Funds ‐ I and New Products & Services 3 Thirteenth Authority meeting December 23, 2022 Investment Funds ‐ II and Aircraft Leasing 4 Fourteenth Authority meeting March 24, 2023 Insurance Insurance Strategic Research and Co‐ordination for Market Development & Regulation Regulatory Policy, Risk Management, and Supervision Metals and Commodities Product Regulation Vault Managers and Co‐ordinationANNUAL REPORT 2022-23 ORGANISATIONAL MATTERS Authority Structure Table G.1: Authority Structure Department Divisions Banking Supervision 132 International Financial Services Centres Authority 133 srettaM lanoitasinagrO Department Divisions Development of Financial Market – I Development Development of Financial Market – II & International Affairs Economic Economic Policy and Analysis Policy and Analysis Administration & HR General Administration Treasury, Finance and Accounts IT IT and Fintech Fintech Legal Policy Legal Policy and Legal Affairs Legal Affairs Regulatory Cooperation Risk Based Supervision Regulatory Policy and Regulatory Affairs SupTech FATF Cell Banking Supervision Authority Meetings Finance Company Regulation and Supervision Banking Regulation and Payment and Settlement Table G.2: IFSC Authority Meetings held in FY 2022‑23 Development Banking Regulation Sr. Divisions Date No. Corporate Finance – Equity, Hybrid, and related products 1 Eleventh Authority meeting June 27, 2022 Corporate Finance – Debt and Sustainable Finance Capital Markets Market Infrastructure Institutions – Regulation and Supervision 2 Twelfth Authority meeting September 30, 2022 Investment Funds ‐ I and New Products & Services 3 Thirteenth Authority meeting December 23, 2022 Investment Funds ‐ II and Aircraft Leasing 4 Fourteenth Authority meeting March 24, 2023 Insurance Insurance Strategic Research and Co‐ordination for Market Development & Regulation Regulatory Policy, Risk Management, and Supervision Metals and Commodities Product Regulation Vault Managers and Co‐ordinationANNUAL REPORT 2022-23 Human Resources Table G.4: Consultants at IFSCA as on March 31, 2023 Sr. Table G.3: Sanctioned and Actual strength of employees Position Number Remarks No. Sanctioned strength Actual strength Position 1 Sr. Consultants 4 Full time basis as on 31.03.2023 as on 31.03.2023 Executive Director 6 3 2 Consultants Grade1/Grade2 7 Full time basis Chief General Manager 9 0 3 Young Professionals 4 Full time basis General Manager 12 6 4 Adviser 1 Part‐time basis Deputy General Manager 15 14 IFSCA provides an opportunity for internship to students who wish to pursue a professional career in the financial services market. A student who is pursuing a five‐year or three‐year degree course Assistant General Manager 20 6 in law or post‐graduate course in Economics, Commerce, Finance, Management and has completed the penultimate year or stage of such degree course or post‐graduation course; or a student Manager 26 6 pursuing M. Phil/Ph.D. course in Economics, Commerce, Finance, Management or Law, is eligible to Assistant Manager 30 29 join as an intern with IFSCA. During FY 2022‐23, four students interned at IFSCA. IFSCA organised training programmes for capacity building of officers involved in regulation and Executive Assistant/Senior 20 0 development of financial products, financial services, and financial institutions. The details of the Executive Assistant/ training programmes and various webinars/seminars/meetings organised are as follows: Executive Superintendent Training Programmes and Webinars Multi‐Tasking Staff Grade A/ 10 3 Table G.5: Training Programmes and Webinars Grade B/Grade C* Sr. Name of Programme No. Total 148 67 1 Induction Programme at National Institute of Bank Management, Pune *Requirements are being met partially through contractual appointments on outsourcing basis 2 Induction Programme at National Institute of Securities Market, Mumbai Being a unified financial sector regulatory Authority, IFSCA requires the expertise and skill set of Young Professionals/Consultants/Sr. Consultants in the fields of Capital Market, Banking, 3 Induction Programme at National Insurance Academy, Pune Insurance, Bullion, Funds Management, FinTech, etc. In accordance with the guidelines for engagement of consultants on a contractual basis, the Authority has engaged the consultants as 4 Induction Programme at Arun Jaitley National Institute of Financial mentioned in the table below: Management, Faridabad 5 Capacity Building Program on Sustainable Finance Disclosure Requirements for Corporate Issuers by IOSCO and ISSB 6 Refreshers Programme for supervisors of IFSCs, College of Supervisors, RBI, Mumbai 134 International Financial Services Centres Authority 135ANNUAL REPORT 2022-23 Human Resources Table G.4: Consultants at IFSCA as on March 31, 2023 Sr. Table G.3: Sanctioned and Actual strength of employees Position Number Remarks No. Sanctioned strength Actual strength Position 1 Sr. Consultants 4 Full time basis as on 31.03.2023 as on 31.03.2023 Executive Director 6 3 2 Consultants Grade1/Grade2 7 Full time basis Chief General Manager 9 0 3 Young Professionals 4 Full time basis General Manager 12 6 4 Adviser 1 Part‐time basis Deputy General Manager 15 14 IFSCA provides an opportunity for internship to students who wish to pursue a professional career in the financial services market. A student who is pursuing a five‐year or three‐year degree course Assistant General Manager 20 6 in law or post‐graduate course in Economics, Commerce, Finance, Management and has completed the penultimate year or stage of such degree course or post‐graduation course; or a student Manager 26 6 pursuing M. Phil/Ph.D. course in Economics, Commerce, Finance, Management or Law, is eligible to Assistant Manager 30 29 join as an intern with IFSCA. During FY 2022‐23, four students interned at IFSCA. IFSCA organised training programmes for capacity building of officers involved in regulation and Executive Assistant/Senior 20 0 development of financial products, financial services, and financial institutions. The details of the Executive Assistant/ training programmes and various webinars/seminars/meetings organised are as follows: Executive Superintendent Training Programmes and Webinars Multi‐Tasking Staff Grade A/ 10 3 Table G.5: Training Programmes and Webinars Grade B/Grade C* Sr. Name of Programme No. Total 148 67 1 Induction Programme at National Institute of Bank Management, Pune *Requirements are being met partially through contractual appointments on outsourcing basis 2 Induction Programme at National Institute of Securities Market, Mumbai Being a unified financial sector regulatory Authority, IFSCA requires the expertise and skill set of Young Professionals/Consultants/Sr. Consultants in the fields of Capital Market, Banking, 3 Induction Programme at National Insurance Academy, Pune Insurance, Bullion, Funds Management, FinTech, etc. In accordance with the guidelines for engagement of consultants on a contractual basis, the Authority has engaged the consultants as 4 Induction Programme at Arun Jaitley National Institute of Financial mentioned in the table below: Management, Faridabad 5 Capacity Building Program on Sustainable Finance Disclosure Requirements for Corporate Issuers by IOSCO and ISSB 6 Refreshers Programme for supervisors of IFSCs, College of Supervisors, RBI, Mumbai 134 International Financial Services Centres Authority 135ANNUAL REPORT 2022-23 IFSCA Headquarters Building Project Sr. Name of Programme No. As GIFT IFSC is being developed as an international jurisdiction with truly world class & modern 7 Fintech, Reg Tech & Sup Tech Technological Foundations and Building Blocks, infrastructure, the proposed IFSCA Headquarters building (herein after referred to as IFSCA College of Supervisors, RBI, Mumbai Tower) has been designed and conceptualised as an iconic structure which is reflective of the growing prominence and stature of GIFT IFSC as a leading International Financial Centre. The 8 Online Training programme on financial derivatives, NIBM, Pune IFSCA Tower has been designed to become a highly efficient and sustainable structure in line with the Smart City concept. It has been designed to have a highly energy efficient and functional façade 9 Supervisory Evaluation of ALM and Liquidity Risk, College of Supervisors, RBI, and 360‐degree view with services at central core. It will have two levels of basement and G+26 floors. Proposed to be completed in the year 2024, IFSCA Tower will symbolise the dreams and Mumbai aspirations of a new and Aatma Nirbhar Bharat. 10 Operational Risk Management and Resilience, Euromoney The foundation stone of the IFSCA Headquarters Building was laid by the Hon’ble Prime Minister of India on July 29, 2022. The Hon’ble Prime Minister on the occasion remarked, “I believe this 11 Supervisory evaluation of operational risk, College of Supervisors, RBI, Mumbai building is going to be grand in its architecture and it will also create unlimited opportunities to make India an economic superpower. " 12 Identify and managing financial risk of climate change, College of Supervisors, RBI, Mumbai IFSCA Celebrates International Yoga Day 2022 13 Macroprudential Policy formulation‐implementing financial stability mandate, The International Day of Yoga (IDY) is being celebrated across the world annually on June 21 since 2015, following its inception in the United Nations General Assembly in 2014. Yoga is an ancient College of Supervisors, RBI, Mumbai physical, mental, and spiritual practice that originated in India. The word ‘yoga’ derives from Sanskrit and means to join or to unite, symbolising the union of body and consciousness. The 14 Internal Credit risk Modelling for ECL provisioning and capital estimation by theme of IDY 2022 was “Yoga for Humanity.” NIBM, Pune IFSCA celebrated the IDY 2022 with the adoption of Common Yoga Protocol which is a 45‐minute sequence of Yoga exercises designed by Yoga exponents in the country with the objective of 15 Use and Application of Basic Statistics & Econometrics in Supervisory Analysis, maximising the well‐ being of the people. College of Supervisors, RBI, Mumbai 16 Study of Economics Regulators and Supervisors, College of Supervisors, RBI, Mumbai 17 Early Warning Mechanism for managers of Financial Risk and Macro–Financial Risk, College of Supervisors, RBI, Mumbai Right to Information Table G.6: Status of RTI applications during FY 2022‑23 Image G.1: Celebration of IDY 2022 at IFSCA Total number of RTI requests received Total number of RTI requests replied ‘Har Ghar Tiranga’ Campaign at IFSCA ‘Har Ghar Tiranga’ is a campaign under the aegis of Azadi Ka Amrit Mahotsav to encourage people 18 18 to bring the Tiranga home and to hoist it to mark the 75th year of India’s independence. Our relationship with the flag has always been more formal and institutional than personal. Bringing 136 International Financial Services Centres Authority 137ANNUAL REPORT 2022-23 IFSCA Headquarters Building Project Sr. Name of Programme No. As GIFT IFSC is being developed as an international jurisdiction with truly world class & modern 7 Fintech, Reg Tech & Sup Tech Technological Foundations and Building Blocks, infrastructure, the proposed IFSCA Headquarters building (herein after referred to as IFSCA College of Supervisors, RBI, Mumbai Tower) has been designed and conceptualised as an iconic structure which is reflective of the growing prominence and stature of GIFT IFSC as a leading International Financial Centre. The 8 Online Training programme on financial derivatives, NIBM, Pune IFSCA Tower has been designed to become a highly efficient and sustainable structure in line with the Smart City concept. It has been designed to have a highly energy efficient and functional façade 9 Supervisory Evaluation of ALM and Liquidity Risk, College of Supervisors, RBI, and 360‐degree view with services at central core. It will have two levels of basement and G+26 floors. Proposed to be completed in the year 2024, IFSCA Tower will symbolise the dreams and Mumbai aspirations of a new and Aatma Nirbhar Bharat. 10 Operational Risk Management and Resilience, Euromoney The foundation stone of the IFSCA Headquarters Building was laid by the Hon’ble Prime Minister of India on July 29, 2022. The Hon’ble Prime Minister on the occasion remarked, “I believe this 11 Supervisory evaluation of operational risk, College of Supervisors, RBI, Mumbai building is going to be grand in its architecture and it will also create unlimited opportunities to make India an economic superpower. " 12 Identify and managing financial risk of climate change, College of Supervisors, RBI, Mumbai IFSCA Celebrates International Yoga Day 2022 13 Macroprudential Policy formulation‐implementing financial stability mandate, The International Day of Yoga (IDY) is being celebrated across the world annually on June 21 since 2015, following its inception in the United Nations General Assembly in 2014. Yoga is an ancient College of Supervisors, RBI, Mumbai physical, mental, and spiritual practice that originated in India. The word ‘yoga’ derives from Sanskrit and means to join or to unite, symbolising the union of body and consciousness. The 14 Internal Credit risk Modelling for ECL provisioning and capital estimation by theme of IDY 2022 was “Yoga for Humanity.” NIBM, Pune IFSCA celebrated the IDY 2022 with the adoption of Common Yoga Protocol which is a 45‐minute sequence of Yoga exercises designed by Yoga exponents in the country with the objective of 15 Use and Application of Basic Statistics & Econometrics in Supervisory Analysis, maximising the well‐ being of the people. College of Supervisors, RBI, Mumbai 16 Study of Economics Regulators and Supervisors, College of Supervisors, RBI, Mumbai 17 Early Warning Mechanism for managers of Financial Risk and Macro–Financial Risk, College of Supervisors, RBI, Mumbai Right to Information Table G.6: Status of RTI applications during FY 2022‑23 Image G.1: Celebration of IDY 2022 at IFSCA Total number of RTI requests received Total number of RTI requests replied ‘Har Ghar Tiranga’ Campaign at IFSCA ‘Har Ghar Tiranga’ is a campaign under the aegis of Azadi Ka Amrit Mahotsav to encourage people 18 18 to bring the Tiranga home and to hoist it to mark the 75th year of India’s independence. Our relationship with the flag has always been more formal and institutional than personal. Bringing 136 International Financial Services Centres Authority 137ANNUAL REPORT 2022-23 the flag home collectively as a nation in the 75th year of independence thus becomes symbolic of not only an act of personal connection to the Tiranga but also an embodiment of our commitment to nation‐building. The idea behind the initiative is to invoke the feeling of patriotism in the hearts of the people and to promote awareness about the Indian National Flag. IFSCA implemented the Har Ghar Tiranga Campaign as a part of Azadi ka Amrit Mahotsav to mark the 75th Independence Day. Two kilometers walkathon with participants from regulated entities namely NSE IFSC, IBUs, IIBX and officers of IFSCA was also conducted as part of this initiative. Image G.2: Walkathon organised by IFSCA as part of ‘Har Ghar Tiranga’ campaign Image G.3: ‘Har Ghar Tiranga’ campaign at IFSCA PoSH Act Internal Complaints Committee An Internal Complaints Committee (ICC) was constituted on July 27, 2021, by the Competent Authority in compliance with Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (PoSH Act). The members of ICC include an External Member, along with Internal Members and the senior‐most lady officer as the Presiding Officer. Activities during Financial Year 2022‐23 During the Financial Year 2022‐23, the ICC has not received any complaint. The ICC had four meetings, one in each quarter, during the year. Awareness programmes were also conducted for sensitising IFSCA employees regarding the POSH Act and the mechanisms available for resolution of any complaints. A session was also conducted by the External Member on the PoSH Act for the new employees. 138 International Financial Services Centres Authority 139ANNUAL REPORT 2022-23 the flag home collectively as a nation in the 75th year of independence thus becomes symbolic of not only an act of personal connection to the Tiranga but also an embodiment of our commitment to nation‐building. The idea behind the initiative is to invoke the feeling of patriotism in the hearts of the people and to promote awareness about the Indian National Flag. IFSCA implemented the Har Ghar Tiranga Campaign as a part of Azadi ka Amrit Mahotsav to mark the 75th Independence Day. Two kilometers walkathon with participants from regulated entities namely NSE IFSC, IBUs, IIBX and officers of IFSCA was also conducted as part of this initiative. Image G.2: Walkathon organised by IFSCA as part of ‘Har Ghar Tiranga’ campaign Image G.3: ‘Har Ghar Tiranga’ campaign at IFSCA PoSH Act Internal Complaints Committee An Internal Complaints Committee (ICC) was constituted on July 27, 2021, by the Competent Authority in compliance with Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (PoSH Act). The members of ICC include an External Member, along with Internal Members and the senior‐most lady officer as the Presiding Officer. Activities during Financial Year 2022‐23 During the Financial Year 2022‐23, the ICC has not received any complaint. The ICC had four meetings, one in each quarter, during the year. Awareness programmes were also conducted for sensitising IFSCA employees regarding the POSH Act and the mechanisms available for resolution of any complaints. A session was also conducted by the External Member on the PoSH Act for the new employees. 138 International Financial Services Centres Authority 139International Financial Services Centres Authority Annual Report 2022‑23 Annual Report Team Nitin Jain, DGM Amit Prajapati, DGM Vaibhav Sattavan, AM Kanika Singh, AM Translator Ashok Kumar Chawla Printer Print Vision Private Limited, Ahmedabad © 2023 International Financial Services Centers Authority 140 International Financial Services Centres Authority