IFSCA Bulletin Apr-Jun 2023

The IFSCA Bulletin is issued by the Department of Economic Policy and Analysis, International Financial Services Centres Authority. The source of data/ information is the periodic reports submitted by the regulated entities to IFSCA. IFSCA has no objection to the material published herein being reproduced, provided an acknowledgement of the same is made. The soft copy of IFSCA Bulletin in PDF format can be freely downloaded from Reports and Publications section in IFSCA website (https://ifsca.gov.in) Any comments and suggestions on any of the features/ sections may be sent to the email id: dept-epa@ifsca.gov.inContents __________________________________________________________________________________ Highlights of the Quarter .......................................................................................................... 2 India International Bullion Exchange (IIBX) ............................................................................ 2 Sustainable Finance ................................................................................................................ 2 Fintech .................................................................................................................................... 2 Regulatory Updates ................................................................................................................... 3 Banking/ Finance companies ................................................................................................. 3 Insurance ................................................................................................................................ 3 Aircraft Leasing ....................................................................................................................... 4 International Trade Financing Platform (ITFS) ........................................................................ 4 Ancillary Services .................................................................................................................... 4 Supervision ................................................................................................................................ 5 Implementation of Risk-Based Supervision (RBS) at IFSCA .................................................... 5 Consultation Papers .................................................................................................................. 6 Current Statistics ....................................................................................................................... 7 Banking ................................................................................................................................... 7 Capital Markets .................................................................................................................... 10 Insurance .............................................................................................................................. 12 Fund Management ............................................................................................................... 12 Finance Companies/ Finance Units ...................................................................................... 13 Metals and Commodities ..................................................................................................... 13 FinTech .................................................................................................................................. 14 Ancillary Services .................................................................................................................. 14IFSCA BULLETIN | APR-JUN 2023 Highlights of the Quarter 2 Highlights of the Quarter __________________________________________________________________________________ India International Bullion Exchange climate and sustainability risk” published as part of work related to G20 (IIBX) SFWG. ▪ IFSCA participated in panel discussions • GIFT SEZ became the first SEZ in the related to social impact investments and country to implement the ICEGATE. The capacity building during the G20 migration from SEZ Online system to Domestic outreach event at Chennai. ICEGATE was completed in May 2023. ▪ IFSCA provided its inputs for scaling up • Commencement of Tariff Rate Quota adoption of social impact investment for (TRQ) imports under India-UAE one of the priority areas of G20 SFWG. Comprehensive Economic Partnership ▪ IFSCA shared case studies at IFSC as Agreement (CEPA) through IIBX. instruments for financing Sustainable • Execution of 30 minutes Settlement Development Goals (SDGs) for Cycle for Bullion Depository Receipts consideration to be part of compendium (BDRs) on IIBX approved by IFSCA. of best practices for financing SDGs. • Direct payout of BDRs to end-clients on IIBX approved by IFSCA. Fintech • Constitution of Precious Metal Advisory Committee (PMAC) by IFSCA to obtain • IFSCA participated in Inclusive FinTech inputs on strategic and operational Forum (IFF) 2023 held at Kigali, Rwanda aspects for precious metals ecosystem in (June 20-22, 2023) and took part in the IFSC. Roundtable at IFF 2023 on invitation • The total number of Qualified Jewelers from Monetary Authority of Singapore exceeded the mark of 100 in June 2023. (MAS) and Elevandi. • IFSCA and on IHub-Data, IIIT Hyderabad Sustainable Finance have signed an MoU on April 28, 2023, for cooperation in niche deep-tech IFSCA contributed towards India’s G20 domains. This MoU aims to put in place a Presidency by being a domestic knowledge framework for cooperation and partner of G20 Sustainable Finance Working understanding between IFSCA and IHub- Data, IIIT- Hyderabad to collaborate in Group (SFWG), in alignment to IFSCA’s supporting and facilitating FinTech and ambition of developing GIFT IFSC as a global TechFin entities. hub for sustainable finance. Some of the • IFSCA Partners with GFIN for significant contributions are highlighted Greenwashing TechSprint Launched on below: June 05, 2023. TechSprint aims to ▪ IFSCA is one of the lead authors for develop a tool or solution that can India’s Presidency Input paper on effectively help regulators and the “Building capacities to accelerate market tackle the risks of greenwashing sustainable finance and manage in financial services.IFSCA BULLETIN | APR-JUN 2023 Regulatory Updates 3 • IFSCA associated with the PICUP Fintech Entity Framework) and jurisdiction were Awards 2023 that was Launched on May granted direct entry into IFSCA 04, 2023. The PICUP award winners who Regulatory/ Innovation Sandbox, and the are aligned with IFSCA’s focus areas (as winners had access to various incentives per Annexure 1 of the IFSCA FinTech and grants from IFSCA (subject to IFSCA’s terms and conditions). Regulatory Updates __________________________________________________________________________________ Banking/ Finance companies submission of abstract of actuarial report by an IIOs, who are permitted to transact Guidance framework for sustainable and General, Health and Re-insurance business. sustainability linked lending by financial institutions IFSCA (Management Control, Administrative This circular provided guidance on the Control and Market Conduct of insurance methodology to be adopted for the purpose business) Regulations, 2023 of computing the ESG targets by the IFSC The regulations aim to put in place the Banking Units (IBUs) and FCs/ FUs regulatory framework related to undertaking lending activity, in IFSC. Management Control, Administrative Control and Market Conduct of insurance business Insurance carried out by an IIO or IFSC Insurance Intermediary Office (IIIO). IFSCA (Re-insurance) Regulations, 2023 The regulations provide a framework on oversight and regulation of inward and A brief on outward arrangement of re-insurance insurance business by the IFSC Insurance Offices (IIOs). ecosystem in the IFSC IFSCA (Assets, Liabilities, Solvency Margin and Abstract of Actuarial Report for Life Insurance Business) Regulations, 2023 The regulations aim to specify the requirements related to capital, solvency, and submission of abstract of actuarial report by The regulatory an IIOs, who are permitted to transact Life framework Insurance Business. applicable for insurance IFSCA (Assets, Liabilities, and Solvency Margin business from the of General, Health and Re-insurance IFSC business) Regulations, 2023 The regulations aim to specify the requirements related to capital, solvency, andIFSCA BULLETIN | APR-JUN 2023 Regulatory Updates 4 Aircraft Leasing Ancillary Services Utilisation of office space or manpower or Addendum to the Circular titled both by entities undertaking aircraft leasing “Framework for enabling Ancillary services activity in the IFSC at International Financial Services Centres” Issued circular enabling an aircraft leasing • The Ship broking a well-recognised global entity registered in IFSC to share its office professional service in shipping business and Ship Brokers are specialist space and/ or its manpower with its group intermediaries between two principals in entity(ies) in IFSC, set up for undertaking the a contract related to Ship. IFSCA vide permissible activities under the ‘Framework circular dated April 6, 2023, has enabled for Aircraft Lease’. Ship broking services to facilitate Ship lessors/ lessees and to undertake Amendment to the IFSCA circular titled permissible activities as per the 'Framework for Aircraft Lease' - Enabling lease framework of Ship leasing. of Aviation training simulation devices • For completing the market for Enabled leasing of ‘Aviation training intermediaries to provide support simulation devices’ as a permissible activity in services to IBUs and other financial IFSC under the ‘Framework for Aircraft Lease’. institutions in IFSC and Considering the The amendment also broadened the scope of voice broker as an entity that brings Asset Management Support Services (AMSS) together buyers and sellers of a financial wherein an aircraft lessor is now permitted to assets for the purpose of executing a transaction in such financial Assets, the undertake AMSS for its group entities as well IFSCA vide circular dated April 6, 2023, without the need for a separate registration has enabled “Voice Broking services to under the Ancillary services framework. This entities in IFSCs or from outside India in was introduced as a measure of ease of doing relation to their business of banking”. business for the aircraft leasing entities in IFSC. International Trade Financing Platform (ITFS) Two of the four registered ITFS platform entities with IFSCA i.e., Kredx Ventures IFSC Pvt. Ltd. and Vayana IFSC Pvt. Ltd. were granted permission to commence their commercial operations in IFSC. Vayana IFSC commenced its commercial operations on June 14, 2023, making it the first ITFS platform entity to operationalise from the IFSC.IFSCA BULLETIN | APR-JUN 2023 Supervision 5 Supervision __________________________________________________________________________________ Implementation of Risk-Based Supervisory Review: A review of the risk management systems and controls Supervision (RBS) at IFSCA implemented by financial institutions to mitigate the identified risks. The International Financial Services Centres Authority (IFSCA) is responsible for the Supervisory Response: A supervisory regulation and development of the financial response that is proportionate to the level of ecosystem in the IFSC, which includes risk posed by the financial institution. This banking, capital markets, insurance, and could include on-site inspections, off-site pension funds. As part of its mandate to monitoring, and other supervisory actions. ensure the safety and soundness of the IFSC Reporting and Communication: Regular financial ecosystem, IFSCA has decided to reporting and communication with financial implement a Risk-Based Supervision (RBS) institutions to ensure that they are aware of framework. the supervisory assessment and Objectives of RBS: expectations. Proactive Risk Identification: To identify and Implementation Plan and present status: assess risks in the financial ecosystem The implementation of the RBS framework at proactively rather than reactively. IFSCA will involve the following key steps: Optimal Resource Allocation: To allocate Development of the RBS Framework: supervisory resources optimally by focusing Development of a detailed RBS framework, on institutions and areas that pose the including the risk assessment methodology, highest risk. supervisory review process, and supervisory Holistic Supervision: To adopt a holistic response guidelines. IFSCA has already approach to supervision that considers not developed the RBS framework. only financial risks but also non-financial Training and Capacity Building: Training of risks. IFSCA staff and other stakeholders on the RBS Promoting Compliance: To encourage framework and its implementation. IFSCA has financial institutions to develop robust prepared Guidance Notes on all the aspects internal risk management systems and of RBS and is in the process of imparting promote compliance with regulations and training to supervision staff for capacity guidelines. building. Key Components of RBS: Pilot Implementation: On a select group of Risk Assessment: A comprehensive financial institutions. Pilot test run in all assessment of the inherent risks faced by verticals has been started with twenty five financial institutions, including credit risk, percent of entities in all verticals. market risk, operational risk, liquidity risk, and other relevant risks.IFSCA BULLETIN | APR-JUN 2023 Consultation Papers 6 Full Implementation: IFSCA expects RBS will The implementation of the RBS framework be implemented across all regulated entities will play a critical role in enhancing the safety and verticals from April 1, 2024, Across all and soundness of the financial. It will enable regulated financial institutions. IFSCA to proactively identify and assess risks, allocate supervisory resources optimally, and Review and Refinement: Regular review and adopt a holistic approach to supervision. refinement of the RBS framework to ensure Ultimately, the RBS framework will contribute its continued effectiveness. to the development of a robust and resilient financial ecosystem in the IFSC. Consultation Papers __________________________________________________________________________________ Consultation paper on proposed IFSCA Consultation paper on proposed IFSCA (Banking)(Amendment) Regulations, (Payment Services) Regulations, 2023 2023 Section 3(1)(d)(xi) of the IFSCA Act, 2019 This consultation paper sought comments/ (“the act”) lists “providing payment services” views/ suggestions from the public on the as a financial service under the act. Several proposed amendments to the IFSCA projects currently in the IFSCA Fintech (Banking) Regulations, 2020. The proposed sandbox and some being considered for amendments to the banking regulations, inclusion in the sandbox are payment services inter alia, propose to permit the Banking Unit as they support the process of payments. For in IFSC to be set up as a subsidiary company such systems to go live after successfully of the parent bank. The IFSCA (Banking) exiting the sandbox, due legal recognition of Regulations, 2020 (as amended) currently their role as a supporting service for enabling permits a parent bank to set up only one payments needs to be ensured. A Banking Unit in an IFSC and only as a branch. consultation paper on the draft IFSCA Banking business in IFSC has witnessed (Payment Services) Regulations, 2023 was steady growth since these regulations were issued on June 13, 2023, seeking comments/ first notified on November 20, 2020. While views/ suggestions from the public. The draft the branch model is a useful starting point for regulations addressed issues like definition of commencement of banking operations, payment services, authorization of a payment especially in new jurisdiction like GIFT-IFSC, service provider, capital requirements of a future growth of the sector requires payment service provider etc. At the request consideration of other models including of market participants, the period for operating as subsidiary company of the providing comments was extended from July parent bank. 5, 2023, to July 26, 2023.IFSCA BULLETIN | APR-JUN 2023 Current Statistics 7 Current Statistics __________________________________________________________________________________ Banking Table 1: Number of IBUs Particulars As on March 31,2023 As on June 30,2023 No. of IBUs 20 22 Table 2: Liabilities of IBUs Month ended Apr'23 May'23 Jun'23 Particulars USD Mn Demand deposits 521.63 620.99 586.19 Time deposits 2481.12 2549 2454.83 Interbank/Interbranch borrowings 23471.34 23983.55 26546.68 Bilateral Borrowings 4779.59 4742.72 4921.5 Multilateral Borrowings 53.83 53.83 53.94 Medium Term Notes 1421.69 1421.7 1571.59 Others 3833.74 4060.79 4577.98 Total 36562.94 37432.58 40712.72 Table 3: Assets of IBUs Month ended Apr'23 May'23 Jun'23 Particulars USD Mn Investments 1936.78 2029.89 1993.34 Sovereign securities 1089.22 1126.59 1060.91 Other investments 847.56 903.3 932.43 Trade Finance 8350.24 7477.47 10621.01 Commercial Loans 15001.64 14525.22 16245 Interbank/Interbranch placements 8913.58 10129.04 9856.22 Retail loans 81.61 81.71 80.63 Others 2279.09 3189.25 1916.52 Total 36562.94 37432.58 40712.72IFSCA BULLETIN | APR-JUN 2023 Current Statistics 8 Table 4: Derivative Outstanding of IBUs (USD Mn) (Notional) Month ended Apr'23 May'23 Jun'23 Non-Deliverable Derivative Contracts (FCY- 13793.41 18224.99 19886.61 INR) (including NDF, Fx-Swaps and options) FCY-FCY Derivatives (to be settled in FCY 4681.60 4531.61 5053.69 INR Interest rate swap (IRS) (including 25167.47 25700.85 25452.15 overnight indexed swaps (OIS) FCY Interest rate swap (IRS) (including 72129.35 83543.57 88867.22 overnight indexed swaps (OIS)) Total 115771.83 132001.01 139259.67 Table 5: Country wise exposure of IBUs Apr'23 May'23 Jun'23 %age of %age of %age of total Name of the total Name of the Name of the total country country country country country country exposure exposure exposure India 68.81% India 62.80% India 71.79% USA 7.15% USA 7.30% USA 6.14% UK 5.58% UK 6.71% UK 5.70% Singapore 3.75% UAE 4.97% UAE 3.35% Mauritius 3.67% Singapore 3.20% Mauritius 2.97% UAE 3.35% Mauritius 2.73% Singapore 2.68% Netherlands 1.97% Netherlands 1.98% Bahrain 1.15% Hong Kong 0.93% Bahrain 1.94% Hong Kong 1.14% Bahrain 0.74% Canada 1.80% Netherlands 1.02% Bangladesh 0.59% Australia 0.71% Bangladesh 0.82% Other Other Other 3.46% 5.86% 3.24% countries Countries countriesIFSCA BULLETIN | APR-JUN 2023 Current Statistics 9 Table 6: Industry wise credit exposure of IBUs Amount Outstanding Apr'23 May'23 Jun'23 Sector Industries USD Mn Automobile 616.37 602.79 636.43 Auto Components 64.34 77.05 118.10 Electronic Systems 56.52 89.47 179.38 Food Processing 204.50 248.17 267.16 Metals 2076.69 2119.54 2139.59 Manufacturing Paper and Packaging 42.57 44.28 40.33 Glass 19.68 19.64 19.62 Fuel 1.20 1.20 3.20 Fertilizers 8.48 10.50 1.69 Capital Goods 93.60 136.42 131.59 Petrochemicals 1769.76 1756.50 2268.97 Healthcare 79.55 78.73 77.76 Education 185.40 180.12 173.02 Retail and E-commerce 159.81 146.90 148.30 Services Tourism and Hospitality 197.94 197.59 188.77 Banking and Finance 8071.46 8060.24 9526.75 IT and Software Industry 318.30 317.22 325.15 Construction 94.85 113.35 85.42 Mining 27.95 46.66 20.49 Oil and Gas 1280.44 1402.72 1406.95 Ports and Shipping 427.28 415.05 432.42 Infrastructure Railways 0.00 0.00 0.00 Renewable Energy 123.47 121.71 141.07 Roads and Highways 37.46 36.59 392.69 Power Sector 991.04 917.07 1031.98 Agriculture and 319.96 329.01 553.20 Forestry Aviation 155.99 158.63 175.28 Pharmaceuticals 872.22 784.10 682.93 Chemicals 826.02 872.24 914.02 Jewelry 436.74 375.51 418.28 Other Sectors 5550.03 5516.55 5827.65 Total 25109.62 25175.55 28328.19IFSCA BULLETIN | APR-JUN 2023 Current Statistics 10 Capital Market Table 7: IFSC Stock Exchanges Turnover (Traded Value in USD Mn) Month Apr-23 May-23 Jun-23 Total No. of Traded No. of Traded No. of Traded No. of Traded Particulars contracts Value contracts Value contracts Value contracts Value Commodity 11,459 739 11,822 756 10,457 655 33,738 2,150 Futures Currency 15,671 263 19,091 315 17,877 292 52,639 870 Futures Index Futures 7,51,153 22,531 8,25,062 25,081 11,18,467 37,425 26,94,682 85,036 Index Options 38,06,697 310 54,85,653 406 48,69,754 303 1,41,62,104 1,019 Total 45,84,980 23,842 63,41,628 26,558 60,16,555 38,675 1,69,43,163 89,075 Table 8: Aggregate Open Interest (OI) of all derivatives contracts on IFSC Stock Exchanges Month Ended Open Interest (no. of contracts) Value (USD Mn) Apr-23 1,662 38.04 May-23 5,881 203.35 Jun-23 2,37,858 9,157.30 Table 9: India INX Global Access April-June 2023 As on June Particulars (Accounts Opened) 30, 2023 Total no. of accounts 207 3352 Table 10a: Trading in Global Exchanges through India INX Global Access (Apr-Jun 2023:USD Mn) Entity Type Particulars April-June 2023 Till Jun 30, 2023 Equity, ETFs, Funds, Bonds, and other LRS (Residents) 2.19 7.4 products Equity, ETFs, Funds, and other products 42.97 441.32 IFSC Entities Derivatives Products 892.34 27439.28 Non-residents Equity, ETFs, Funds, and other products 0.26 6.4 outside IFSC Derivatives Products 5.36 163.44 Total 943.11 28057.85IFSCA BULLETIN | APR-JUN 2023 Current Statistics 11 Table 10b: Trading in Global Exchanges through India INX Global Access (Apr-Jun 2023:USD Mn) Total Trading Trading in Trading in Non- Exchanges Value Derivatives Derivatives Chicago Mercantile Exchange 349 349 0 Singapore Exchange 250 250 0 Chicago Board of Trade 173 173 0 New York Mercantile Exchange 115 115 0 ARCA 37 0 37 NASDAQ 5 0 5 NYSE 2 0 2 Other Exchanges 12 11 1 Total 943 898 45 Table 11: Capital Market Intermediaries as on June 30, 2023 Type of Entity No. of entities Broker-Dealer 69 Clearing Member 19 Custodian 5 Depository Participants 9 Investment Banker 2 Investment Advisers 6 Debenture Trustee 3 Distributors of Capital Market Products & Services 4 Table 12a: Listing of debt securities at IFSC Exchanges during Q1 of FY 2023-24 As on March 31, As on June 30, Particulars 2023 (USD Bn) 2023 (USD Bn) Cumulative debt listings 50.6 52.7 Cumulative ESG labelled bond listings 9.28 10.18 Table 12b: Listing of debt securities at IFSC Exchanges during Q1 of FY 2023-24 Name of Issuer Label Amount (USD Mn) REC limited Green 750 Bank of Baroda 300 International financial corporation Green 150 State bank of India 750 HDFC bank 150 Total 2100IFSCA BULLETIN | APR-JUN 2023 Current Statistics 12 Insurance Table 13: Written/ Transacted premium by IFSC Insurance Offices and Intermediary Offices During FY 2022-23 During the Quarter (April-June 2023) Written/Transacted Written/Transacted Particulars No. of No. of Premium Premium Offices Offices (USD Mn) (USD Mn) IIOs 6 84 6 39 IIIOs 17 227 21 54 Fund Management Table 14: Number of Fund Management Entities (FMEs) and Funds Particulars As on 31st March 2023 As on 30th June 2023 FMEs 65 63* Funds 50 60 *3 Funds and 2 FME registrations have been canceled in the period April 2023 to June 2023 Table 15: Investments by Fund Management Schemes at GIFT IFSC as on March 31, 2023 In USD Mn Investments Complaints/ No. of Total Total Total Investments made in Legal Particulars Schemes Investments Commitments funds into India Foreign Disputes Registered made raised raised Jurisdiction outstanding (A) (B) (A+B) Venture Capital Schemes 3 23.24 3.96 1.6 0.4 2 0 (including Angel Schemes) Category I 24 4551.95 1,083.77 919.13 134.31 1,053.44 0 and II AIFs Category 23 153.58 77.5 73.44 0 73.44 0 III AIFs Total 50 4728.77 1,165.23 994.17 134.71 1,128.88 0IFSCA BULLETIN | APR-JUN 2023 Current Statistics 13 Finance Companies/ Finance Units Table 16: Finance Companies/ Finance Units as on June 30, 2023 Type of Finance Company Aircraft Lease Ship Lease FC (Core) Total Registration till March’ 23 15 02 1 18 Applications received 1 2 1 4 Provisional Registration NIL 1 1 2 Granted Table 17: Asset Leased by Finance Companies/ Finance Units Number of Aviation Asset leased Sr. Type of aviation asset As on 31st As on 30th During the Quarter No. March 2023 June 2023 (April-June 2023) 1 Aircraft 12 14 2 2 Engines 1 54 53 3 Ground Support Equipments 13 13 0 Total 26 81 55 Metals and Commodities Table 18: Participants and Intermediaries on India International Bullion Exchange (IIBX) Participants As on March 31, 2023 As on June 30, 2023 Qualified Jewelers 84 101 - Clients 45 58 - Limited Purpose Trading Members 39 43 Qualified Suppliers 15 16 - Clients 14 15 - Limited Purpose Trading Members 1 1 Intermediaries As on March 31, 2023 As on June 30, 2023 Bullion Trading Members 4 4 Bullion Trading Cum Self Clearing Members 1 1 Bullion Trading Cum Clearing Members 5 5 Bullion Professional Clearing Members 2 2IFSCA BULLETIN | APR-JUN 2023 Current Statistics 14 Table 19: Product-wise summary of trades on IIBX during the Q1 (Apr-Jun) 2023 Product Traded Volume (In kgs) Traded Value (in USD) UAEGDGOLD995 10.00 644,487 UAEGDTRQ GOLD 995 50.00 3,181,885 GOLD KG 995 0.00 0 UAEGDGOLD999 102.80 6,488,434 UAEGDTRQ GOLD 999 7.00 428,577 GOLD GRAMS 999 0.00 0 Total 169.80 1,07,43,384 FinTech Table 20: Grants under FinTech Incentive Scheme As On June 30, Particulars 2023 Number of Applications Received (under FE Regulatory Framework) 76 Number of FinTech Entities Registered 39 Number of Grant Applications Received under Incentive Scheme 10 Number of FinTech Entities approved under Incentive Scheme 5 Grants approved under Incentive Scheme (In INR) 1.1 crore Ancillary Services Table 21: Activity‑wise break up of ancillary services entities as on June 30, 2023, including in-principal approval S. No. Core Activity No. of Authorized Entities 1 Legal, Compliance and Secretarial 8 2 Professional & Management Consulting Services 18 Auditing, Accounting, Bookkeeping and Taxation 3 7 Services Administration, Asset Management Support 4 18 Services and Trusteeship Services Total 51