Public comments on the "Consultation Paper on draft IFSCA (TechFin and Ancillary Services) Regulations, 2025"

Public Comments on Draft IFSCA (TechFin and Ancillary Services) Regulations, 2025. The consultation paper seeking comments/suggestions from the public on the IFSCA (TechFin and Ancillary Services) Regulations, 2025 was issued by IFSCA on May 9, 2025. The General public, market participants and stakeholders are requested to forward their comments / suggestions latest by 1st June, 2025. The following comments/suggestions were received: Sr. Submi Regulatio Comment / Suggestion Rationale Global Benchmark No. tted by n Reese Schedule Include "Smart contract-powered Reesecure operates programmable vaults and AI Bermuda ILS, MAS cure ii insurance infrastructure" and "AI- triage for climate-triggered risk — critical for regulated Sandbox Plus based underwriting tools" as ecosystems. recognized TechFin services. 2 Reese 10 Permit INR in smart contracts for Required to meet IRDAI obligations under premium RBI–IRDAI–IFSCA cure domestic risk pricing and payouts, localization for Indian insureds, while supporting coordination on digital while maintaining FX settlement international investment via IFSC. insurance vaults for cross-border reinsurers. 3 Reese New Permit API-based integration with Reesecure’s infrastructure serves as a TechFin layer FCA’s RegTech cure Clause licensed brokers, reinsurers, — APIs enable compliant scaling across multiple Sandbox, NAIC US custodians, and fund managers stakeholders. broker ecosystems under audited workflows. 4 Reese Schedule Explicitly include “climate-linked Ensures non-insurance vendors can serve the ASIC (Australia), cure ii ancillary services” such as insurance ecosystem without requiring broker or BaFin (Germany) actuarial pricing engines, oracle insurer licenses. feeds, and IoT-based risk analytics. 5 Reese New Clarify eligibility of structured Supports development of regulated tokenized MAS Project cure Clause climate-linked instruments like insurance and risk products for domestic and global Guardian, Swiss Re ETRBs under TechFin scope and markets. CAT bond index escrow logic. 6 Reese New Offer programmable insurance Enables iterative compliance while promoting MAS Sandbox cure Clause tokenization as a sandbox track; innovation in parametric and tokenized risk transfer Express, IRDAI Reesecure can pilot cross-border tools. Sandbox Cohort 3 reinsurance and settlement logic.7 IQ EQ 4 We humbly submit that existing The existing entities have already submitted the entities shall get an auto- requisite details and documents at the time of transition into the new regulation application. without being subjected to • These entities have also been submitting additional registration process or periodical reports and compliance declarations to the fee Authority. • There is no change with respect to the regulatory authority. • From the perspective of ease of doing business, a fresh certificate of registration shall be issued to existing Ancillary services providers under the proposed regulations, mentioning the permissible activities 8 IQ EQ 8 Given that Ancillary service The Ancillary service providers are generally private providers already have a principal limited companies and also governed by the provisions officer and a designated director of Companies Act 2013. These companies do not as per IFSCA AML KYC accept any public deposit and hence do not warrant Guidelines, we suggest to exempt the need to appoint a Compliance Officer to protect Ancillary service providers from the fiduciary responsibility. appointment of PO and CO in the • The clientele of Ancillary services providers are proposed regulation. usually regulated entities in GIFT IFSC or other jurisdictions. • Ancillary service providers generally provide post- facto services i.e., they are responsible to keep a record of transactions already executed by their clients and not execute any transaction per-se. 9 IQ EQ New Our view is that the proposed The nature of services provided by Techfin entities and Clause regulation shall bifurcate the Ancillary services providers are very distinct from one regulatory and compliance another, hence these must be treated differently from a requirements for Ancillary Service regulatory and compliance perspective providers and Techfin Service providers or provide exemptions to Ancillary service providers.10 IQ EQ New We request to restrict imposition The entities in GIFT IFSC are not mandated to appoint Clause of an additional cost on the a GIFT IFSC based ancillary service provider for their ancillary service providers business requirements. • The Authority has not mandated on outsourcing many functions by entities in GIFT IFSC. • Hence, without an increase in opportunities, introduction of additional cost can be detrimental to existing businesses of Ancillary service providers.11 Teak 8 Exemption for appointment of The proposed regulation requires appointment of a Jasmi Principal Officer in case of captive Principal Officer, who shall be responsible for the ne Trustee Company (‘Trustee’) set- Trustee’s overall activities in IFSC. Further, the up by Sovereign Wealth Funds regulation also requires appointment of a Compliance (‘SWFs’). Officer, who shall be responsible for reporting to the Board of Directors or Chief Compliance Officer of the organisation, as the case may be. The Compliance Officer is also responsible for compliance with policies, procedures, maintenance of records and the implementation of the requirements specified under these regulations and other applicable laws in force. SWFs looking at setting up captive Trustee in IFSC would typically intend for these entities to provide trusteeship services to fund set up in IFSC where the SWF is the sole contributor and would not be involved in providing trusteeship services to trusts holding third party funds. Thus, the activities of such Trustee would be captive in nature. Given the limited business activity of the captive Trustee, the appointment of a Compliance Officer alone should be adequate to ensure regulatory and other compliances. The Principal Officer of the captive Fund Management Entity (‘FME’) set up by the SWF along with the board of directors of the Trustee can undertake and oversee the investment-related decisions and overall activities in GIFT IFSC. Further, given the captive nature of activities to be performed by both the FME and Trustee, there may be overlap between the work to be performed by the Principal Officer of the captive FME and the employee of the Trustee. Further, since the intention of IFSCA is to bring / maintain IFSC platform at par with other offshore fundjurisdictions and international financial centres, it is worthwhile to note that captive trustee companies set up by SWFs in such other jurisdictions (e.g. Abu Dhabi Global Market, Cayman Islands) do not contemplate any conditions for having a minimum of two employees at the trustee company level especially in a captive structure which are ultimately held by SWFs and where the said entities provide trusteeship services to funds where such SWF is the sole contributor. In view of the above, we request that the condition for appointment of Principal Officer be waived for Trustees which are ultimately held by SWFs and are managing funds in GIFT IFSC in which SWF is the sole contributor. In such cases, the appointment of a Compliance Officer should be considered sufficient to meet the regulatory intent. Alternatively, the role of Principal Officer of Trustee may be performed or overseen by the Principal Officer of another IFSCA registered entity of the SWFs, such as the FME in this case. 12 Ohm 4 For the existing Service providers, Already regulated by IFSCA and hence makes it easier do not run a re – registration to transition process. Automatic registration to be granted13 Ohm 8 Why do TAS entity need They are service providers and hence no need for Administrators are compliance officer? compliance officers for such entities not regulated by MAS in Singapore. Dovetail has just started its Administration operations in SG without any regulatory approval and / or requirement of PO and CO. Admin in other financial centres do not need CO. 14 Ohm Schedule Please elaborate what all is Can fund advisory be undertaken here? I believe that -i included in advisory services. Left is not the intention here. very broad 15 Ohm Schedule Ability to offer outsourced Currently there is a dearth of compliance officers at DIFC allows -i compliance services / corporate GIFT IFSC. With these solutions more entities can go outsourcing of compliance services. live quickly. compliance officer. Compliance officer to be based Entity and compliance officer (CO) specializing in They have restricted out of GIFT IFSC certain areas can bring in competence and deep one compliance understanding of the subject matter. officer to offer these For example, a CO which understand IFSCA services to 5 entities. regulations might not understand the fund raise compliances globally This can also be a time bound activity and can be reviewed after maybe 3 years 16 Ohm Schedule ‘Not to undertake financial Admins offer maker and signatory services to the bank -iii transactions on behalf of its accounts. clients’. – typically, a maker right is offered in the bank accounts to the administrator17 Apex 3 Intermediaries' are defined under We believe the intent is to encompass intermediaries, Section 3(1)(v). However, Section and defining them within Section 9 would help 9 may requires the explicit eliminate ambiguity inclusion of 'Intermediaries' as Service Recipients. 18 Apex Schedule There is a list of 25 services, and Suggested Slabs with bundled fee model This will have ease of -i a group like Apex is expected to 0-5 Services doing the business provide 5–10 of these services 5-10 Services now or in the future. Is there a 10-15 Services possibility of bundling them into a 15-25 Services single fee/ registration rather than charging for each service individually?19 Apex Schedule In the First Schedule you have Adding Aircraft Leasing -i mentioned under section (xix) Ship Leasing activities, please add Aircraft Leasing as service as well . 20 Apex Schedule Point (ix) defines 'Fund Clarification -i Administration Services, including Fund Accounting.' We suggest, Accounting for SPV and Lease Accounting for Aircraft/Ship to be included in section (ix). 21 Globe 5 Application for Registration - Requiring all existing entities to re-register without an op Regulation calls for re- automatic transition mechanism could lead to registration; however, it would be operational disruptions and uncertainty, especially for prudent to include a provision for businesses that are already in compliance under the the automatic transition of any current framework. Including a provision for automatic existing regulated ancillary migration or a simplified transition pathway would business licenses to the new promote regulatory certainty and reduce unnecessary framework. Also, The draft administrative overhead. regulations do not clearly outline Moreover, clarity on the fee structure - Transparent the proposed fee structure. It and advance communication of any financial would be helpful to understand implications will help stakeholders prepare adequately how existing fees will be treated and ensure a smooth transition to the revised in relation to re-registration fees regulatory regime. under the new framework.22 Globe 8 Appointment of principal officer All current employees at the location possess the Ops and compliance officer- The necessary qualifications and relevant experience to description of the Principal and effectively carry out the business requirement activities. Compliance Officer’s As such, Imposing strict requirements for a particular responsibilities appears to be formal qualification may not be necessary. insufficiently detailed. We would expect a clearer and more comprehensive outline of these duties. Specifically, it would be helpful to clarify whether the responsibilities include annual, quarterly, or ongoing obligations, and to identify the key policies and procedures that the IFSCA expects us to have in place. Providing this clarity would ensure better alignment with regulatory expectations. 23 Globe 9 Eligibility Criteria for Service A clear and explicit reference within the circular would Ops Recipients- As per our enhance clarity and assist in more effectively understanding on the eligibility strategizing our business operations. criteria for service recipients includes any Group entities servicing BFSI entities outside India is also included. Request you to highlight the same on the draft under section " 9. Eligibility Criteria for Service Recipients"24 Globe 12 Power to relax strict enforcement Clear guidance on the above points would be helpful in ops of the regulations - We seek understanding the practical implications and further clarity on the proposed application process for such relaxations. relaxation of enforcement provisions. Specifically: 1. Scope of Relaxation: What is the intended scope of the enforcement relaxation being proposed? 2. Eligibility Requirements: What criteria or supporting information would an applicant need to provide in order to be considered for such a relaxation? 3. Procedure and Communication: Where will the applicable fee, if any, and the contact details for notifying or applying to the relevant authority be specified? Will these be included in the regulations or communicated separately? 25 Globe 15 Payment of fees - clarity is A clear understanding of the fee structure is essential ops requested on the nature of any for accurate financial planning and compliance. new or additional fees being Uncertainty around potential additional fees, their introduced. Will prior notice be timelines, and communication mechanisms can lead to provided for such fees, and operational and budgeting challenges. Transparent through what mechanism will disclosure will ensure predictability, facilitate effective stakeholders be informed of their cost management, and help stakeholders plan their applicability and due dates? transition to the new regulatory regime in a timely and efficient manner.26 Globe 16 Action in case of default - In Understanding the full spectrum of potential ops relation to enforcement actions in enforcement actions is important for assessing the event of default, the draft compliance risks and establishing appropriate internal primarily refers to suspension or controls. Greater clarity will enable entities to better cancellation of registration. We align their governance and risk management request clarification on whether frameworks with regulatory expectations. any other forms of enforcement actions are envisaged under the proposed framework. 27 Globe 17 Power to inspect- The provision To ensure transparency, fairness, and accountability, ops granting the power to inspect regulatory inspections should be conducted based on should ideally be subject to prior predefined and objective criteria. The absence of such notice and triggered only under criteria may lead to uncertainty or the perception of defined circumstances. It is discretionary enforcement. Requiring prior notice and concerning that the authority to setting out specific grounds for inspection would initiate inspections rests solely provide greater regulatory clarity and allow entities to with the Chairperson, without a maintain readiness without undue operational clearly outlined list of scenarios or disruption. thresholds that would warrant such action.28 GIFT 2 The term ‘making arrangements Its essential to provide an objective criteria on what will CO. for carrying on any of the financial constitute as ‘making arrangements for carrying on any services’ is not defined/ of the financial services’ in order to avoid any ambiguity elaborated and does not seem to in the future. address the core intention. 29 GIFT 3 There is no reference of group entities and CO. intermediaries in the entire TAS Regulations, 2025. Accordingly, IFSCA may provide the references at relevant places, or these definitions may be removed30 GIFT 4 The TAS Regulations, while The existing FinTech Framework includes provisions CO. aiming for simplification, introduce for sandbox registration, allowing TechFin entities to significant ambiguity regarding test innovative solutions in a controlled environment. the treatment of TechFin entities, The TAS Regulations does not mention sandbox particularly concerning sandbox provisions. It's unclear whether these will be provisions and the distinction incorporated into the new regulations, if sandboxed between FinTech and TechFin. TechFin entities will remain under the existing The TAS Regulations should framework, or if the sandbox mechanism is being explicitly address these points to discontinued altogether. This needs explicit ensure clarity and avoid potential clarification. confusion and regulatory overlap. The rationale for consolidation must be strengthened, demonstrating the specific benefits for both TechFin and Ancillary Services and justifying the modification of the existing FinTech framework. 31 GIFT 5 We suggest the TAS Regulations Minor omissions or errors should not automatically lead CO. should revise this provision to to rejection without giving a chance to correct them. explicitly provide an opportunity This aligns with the principles of natural justice, for applicants to complete their ensuring fairness and providing a reasonable applications before rejection is opportunity to be heard considered.32 GIFT 9 The scope of service recipients Indian entities seeking to establish or operate within CO. under the TAS Regulations, IFSCs or foreign jurisdictions, with consideration should be broadened. Currently, received in specified currencies, should have access to Regulation 9 limits recipients to comprehensive legal support, including advisory, entities in GIFT-IFSC, BFSI dispute resolution, arbitration, and mediation services. entities outside India supporting This recommendation is based on the increasing IFSC financial services, and number of Indian entities seeking guidance on the Indian entities setting up GIFT GIFT IFSC regime, particularly in light of recent IFSC offices. This is inconsistent changes to FPI regulations for NRIs, the LRS regime, with both the IFSCA's stated and other advisories concerning ODI norms and direct objective of making GIFT City a listing. Therefore, IFSCA is urged to amend its global financial hub and previous regulations to explicitly allow GIFT IFSC ancillary IFSCA circulars for ancillary service providers to offer advisory services to Indian service provider. Moreover, the entities regarding all aspects of the GIFT IFSC service recipient for the TechFin regulatory regime, not just those limited to operational entities and ancillary service setup. Example 1: Indian FinTech Startup Seeking providers are distinct in nature. Legal Advisory Prior to IFSC Entry Scenario: A Further, a TechFin entity currently Bengaluru-based Legal advisory firm provides legal provides services to BFSI sector and regulatory consulting to Indian startups and VC- clients located outside India. backed FinTech companies. One such client—a However, for ancillary service FinTech startup operating in cross-border payments— providers, the proposed client is exploring the possibility of setting up an Alternative base may also include entities Investment Fund (AIF) and an international treasury within India that are exploring unit in GIFT IFSC. Business Need: Before committing opportunities in the IFSC to avail to establish a presence in GIFT IFSC, the startup permitted services, among others. requires: 1. Guidance on the appropriate legal Accordingly, the list of service structure within the IFSC framework (e.g., LLP vs recipients should be revised. Company vs Branch),2. FDI and FEMA compliance Additionally, as per the IFSCA advisory (in view of recent ODI and LRS regulatory circular dated June 10, 2021, the changes), 3. Evaluation of tax implications under scope of service recipients was Indian and IFSC tax regimes, and 4. Legal opinion on expanded to include ‘entities from dispute resolution mechanisms, including arbitration foreign jurisdictions for various options available within GIFT IFSC. Regulatory Gap: permissible ancillary services in Under current Regulation 9 of the IFSCA (TAS) the IFSCs in India or overseas’. Regulations, the startup is not considered an eligible Furthermore, Clause E(iii) of the service recipient unless it has already begun the IFSCA Framework for enabling process of establishing its office in the IFSC. However, Ancillary Services at IFSCs allows this advice is a prerequisite for making such a decision. service providers to offer Justification for Change: This example highlights thepermissible services to ‘Indian commercial necessity for pre-establishment legal and entities who propose to open, set regulatory advisory. Without amending Regulation 9 to up, or carry out operations in include Indian entities exploring or evaluating IFSC IFSCs or foreign jurisdictions, operations, legal service providers are restricted from provided the consideration is supporting the very businesses the IFSC aims to received in freely convertible attract. Example 2: foreign currency’. It is suggested TechFin Entity in GIFT IFSC Serving Indian BFSI that these provisions be Clients Scenario: A TechFin company registered in incorporated into the current GIFT IFSC offers cloud-based RegTech compliance IFSCA (TAS) Regulations, with an solutions—such as AI-driven Anti-Money Laundering additional allowance for advisory (AML) and Know Your Customer (KYC) tools—to services to Indian entities financial institutions. The company currently serves a intending to establish offices in Dubai-based bank and is now expanding outreach to GIFT IFSC. several Indian NBFCs and digital banks. Business Need: These Indian financial institutions are: • Interested in using the compliance platform to align with international standards, and • Actively considering expansion or participation in GIFT IFSC through treasury operations or capital raising. Regulatory Gap: Under the current Regulation 9, these Indian clients do not qualify as service recipients for the TechFin company unless they are already setting up an office in GIFT IFSC. This blocks the TechFin firm from offering its services to prospective Indian clients during the exploration or evaluation stage. Justification for Change: TechFin and ancillary service providers often support clients in preparing to meet IFSC regulatory requirements before formal entry. The regulation, as currently drafted, limits the reach and utility of GIFT IFSC-based TechFin firms and discourages Indian institutions from onboarding gradually.33 GIFT 11 The Regulation 11 should be This enhanced reporting should encompass The Service CO. enhanced to mandate more the following: Recipients under specific reporting to the IFSCA, (i) the submission of audited annual these regulations, including prescribed timelines. financial statements, with the shall be as follows: required format, a deadline for submission (e.g., within six months of the financial year-end), and the specified currency (e.g., USD); (ii) prompt reporting of any material regulatory actions taken against the registered entity by any regulatory authority, detailing the nature of the action, the authority involved, any penalties imposed, and requiring reporting within a specific timeframe (e.g., within 15 days of the action); and (iii) notification of changes in key personnel, including the principal officer, compliance officer, directors/partners/designated partners, and controlling shareholders. This personnel change notification should detail the specific change and require submission within a defined timeframe (e.g., within 30 days of the change) to facilitate IFSCA's maintenance of accurate records and support ongoing fit and proper assessments. Thus, the more detailed and time-bound reporting requirements will significantly enhance the IFSCA’s ability to supervise, assess, and respond to developments within the IFSC. This, in turn, supports the IFSCA’s mandate to maintain a robust, transparent, and trustworthy financial ecosystem.34 GIFT Schedule We suggest that although the Currently, the First Schedule provides a broad Entities in GIFT-IFSC; CO. -i First Schedule lists permitted categorization of ancillary services, leaving room for ancillary services, greater clarity interpretation and potential confusion among and specificity are needed to applicants. This ambiguity can lead to uncertainty ensure effective implementation during the application process and hinder operational and avoid confusion among efficiency. Therefore, a more elaborated and defined applicants. A more elaborated and list of activities under each service category is crucial. defined list of activities under This detailed list should. build upon the foundation each service category, building established by earlier IFSCA circulars, providing upon the existing framework concrete examples of permissible activities within each established in earlier circulars category, such as (i) Actuarial Services, (ii) Advisory should be considered Services, and so on through (xxiv) Outsourced Services and (xxv) Any other services. This specificity will not only enhance clarity for applicants, ensuring they understand the scope of permissible activities, but also streamline the IFSCA’s review and approval process. A clearly defined scope minimizes the risk of unintentional non-compliance and fosters a more predictable regulatory environment, promoting market integrity and aligning with international best practices. This clarity is essential for the successful implementation of the regulations and the growth of the IFSC ecosystem.35 GIFT new Proposal to Establish a Centre of In alignment with the objective of promoting innovation, Entities located CO. clause Excellence under Section 8 capacity building, and sustainable ecosystem outside India for Company Framework development within the GIFT IFSC, it is proposed that delivery of financial the regulations enable or explicitly recognize the services covered establishment of Centres of Excellence (CoEs) by under clause (e) of Ancillary Service Providers or industry associations. sub- section (1) of These Centres of Excellence may be set up under the section 3 of the Act. framework of a Section 8 Company, which, under the Companies Act, 2013, is a not-for-profit entity established to promote fields such as education, research, commerce, science, environment protection, and similar areas of public interest. CoEs established in this manner could serve as institutional anchors for knowledge sharing, regulatory sandbox support, domain-specific training, ecosystem engagement, and innovation acceleration within the IFSC. This proposal is particularly relevant for domains like Legal / Tech, RegTech, EduTech, Green Finance, and Sustainable Investment Advisory—where ecosystem wide collaboration and capacity development are essential. IFSCA may consider enabling such centres either by recognizing them within the regulatory framework or by including their formation as an eligible ancillary service activity36 Dhruv 6 It is suggested to define the term A structured approach to help determine whether a Indian entities only a "material change" and provide particular event is a material change which have a for the purpose of certain events which shall be bearing on the COR or not and the defined process setting up of their deemed to a "material change" and timeline would enhance clarity, regulatory office in IFSC in India such as change in ownership at oversight, and operational preparedness for entities. or overseas. IFSC entity level as well as at a ultimate parent entity level, change in the management of IFSC entity level, change of address, etc. It is also suggested to lay down a specific procedure / forms / mode of communication, timelines etc. for intimating the IFSCA in relation to any material change. 37 Dhruv 8 It is suggested that the This would assist the IFSC units to avoid duplication of a requirement to appoint a Principal compliances required under the Regulations and at the Officer (PO) and a Compliance same time, it would ensure that the IFSC units meet Officer (CO) under Regulation 8 the specific educational background criteria prescribed shall be deemed to be satisfied if under this Regulation. Full time qualified professionals the IFSC unit has already may add to the cost of compliance. Hence, the appointed a PO and CO pursuant suggestion for part time /consultants to discharge to any other IFSCA Regulations these functions. under which it holds a registration, in addition to the registration obtained under these Regulations; and it meets the requirements prescribed under Regulation 8(3). Further, professionals on a retainer basis or consulting firms may be permitted to discharge such functions until a particular size of operation is reached.38 Dhruv 9 It is suggested that, while Limiting service recipients to only BFSI entities may The Service a retaining the focus on the BFSI unduly restrict the growth potential of IFSC units. Recipient shall be a domain, the scope of eligible non- Broadening the scope would promote a more inclusive non-resident, except resident service recipients be and competitive ecosystem.The potential overlap or in the case of Indian expanded to include non-resident contradiction between the provisions of Regulations entities, which shall entities from non-BFSI sectors as 9(1)(iii) and 9(2) can lead to interpretational confusion / be permitted to act as well, in line with the approach ambiguity. Service Recipients adopted under the existing solely for the limited Ancillary Services FrameworkThe purpose of simultaneous reading of these establishing their two provisions may create an office in an IFSC in ambiguity as to how can an Indian India or at an entity evaluating to set up a unit in overseas. IFSC be regarded as a non- resident. To address this, the language of Regulation 9(2) can be modified to "Subject to Regulation 9(1)(iii), the Service Recipient shall be non-residents." 39 Dhruv 6 It is suggested to define the term A structured approach to help determine whether a The Service a "material change" and provide particular event is a material change which have a Recipient shall not be certain events which shall be bearing on the COR or not and the defined process located in a deemed to a "material change" and timeline would enhance clarity, regulatory jurisdiction which has such as change in ownership at oversight, and operational preparedness for entities. been identified in the IFSC entity level as well as at a public statement of ultimate parent entity level, Financial Action Task change in the management of Force and High-Risk IFSC entity level, change of Jurisdiction – subject address, etc. to call for action. It is also suggested to lay down a specific procedure / forms / mode of communication, timelines etc. for intimating the IFSCA in relation to any material change.41 Dhruv Schedule It is suggested to describe in A detailed explanation of the services permissible IFSCA has provided a -i detail each category of the under each category listed under TAS Regulations detailed description services listed under the First would help address any potential interpretational under the Ancillary Schedule and the Second ambiguities and questions whether a particular kind of Services Framework Schedule (similar to the existing services are covered within the listed categories or not. as well. Ancillary Services Framework). This would enable applicants to better assess their This will give increased clarity to eligibility under the TAS Regulations without the need stakeholders to help determine to seek any formal or informal clarification from the which services are permissible IFSCA. activities under the Regulations.41 Consu 4 Introduce a clause that explicitly Smoother Transition Encourages Compliance: Most Singapore (MAS): lven grants deemed registration status international regulatory transitions adopt a non- Under Section 13 of to existing Ancillary Service disruptive onboarding model. Rather than treating the Payment Services Providers (ASPs) already existing ASPs as new applicants, they are deemed Act 2019, existing authorised by IFSCA, subject to registered and required to submit: payment service submission of a compliance gap providers were analysis, an independent 1. A Gap Analysis between old and new requirements; granted a "Deemed compliance confirmation, and, if Licence" status necessary, an implementation 2. An Independent Compliance Confirmation ; during the transition plan for full alignment with the period, allowing them new regulations. 3. A Remediation/Implementation Plan if full to continue compliance is not immediately feasible. operations while It is recommended that the seeking full licensing. proposed clause to also clarify Risk of Operational Disruption: Many ASPs are still in Source: that no new registration fees will the early stages of establishing operations and may https://sso.agc.gov.sg apply for the remainder of their face disproportionate administrative burdens if required /Act/PSA2019#pr13- initial 5-year approval period. to re-register from scratch, especially without operational traction or established revenue streams. DUBAI (DFSA): In support of this proposal, we The DFSA's General draw attention to the fact that Reduces Regulatory Friction: Existing ASPs like Module (Sc 10.1) existing ASPs have already been Consulven have already been vetted and authorized includes transitional granted a 10-year tax holiday under IFSCA’s onboarding process. Re-registering rules that allow under the IFSCA’s original from scratch adds redundant burden. existing authorised Ancillary Services Framework. firms to continue their This incentive was designed to activities under promote long-term establishment previous and business continuity within authorisations while GIFT IFSC. Requiring these complying with new entities to re-register under a new requirements within regulatory architecture could specified timeframes. undermine the policy stability and predictability underpinning the Source:https://dfsaen. jurisdiction’s initial value thomsonreuters.com/r proposition. ulebook/gen-10- transitional-rules42 Consu 8 For the purposes of these GIFT City’s ability to attract international or even he DFSA allows lven regulations, the Authority may domestic (State) compliance talent is currently authorised person to permit, upon application, the constrained. Payroll or legal employment in IFSC be based outside the Principal Officer and/or provides economic substance, while allowing physical DIFC , particularly for Compliance Officer to be located flexibility increases the available talent pool. Many new or smaller firms, outside IFSC provided they are global financial centres have similar transitional if robust oversight is employed by the IFSC entity and arrangements maintained and the maintain robust oversight arrangement is mechanisms. This is especially justified.SOURCE: relevant during the initial growth https://dfsaen.thomso phase of the IFSC ecosystem. nreuters.com/entirese ction/22847#:~:text= RPP%202%2D2%2D 6,on%20business%2 0in%20the%20DIFC.43 Consu 8 It is recommended to amend Alignment with Leading Financial Centres: Mauritius (FSC) and lven Regulation 8(3)(b) to require at Dubai (DFSA): least five (5) years of relevant Most recognised IFC require at least 5 years’ relevant Require at least 5 experience for the Principal experience for senior role, including Compliance years of relevant Officer and Compliance Officer. Officer. Reflecting the critical role played by these compliance positions in upholding market integrity and regulatory experience for compliance. Compliance Officer: We propose that the Authority Investor and Regulator Confidence: Source: consider applying a proportionate https://www.fscmauriti approach based on the licensee’s A 5-year experience threshold is now widely seen as us.org/media/127924/ annual turnover. Specifically, for the “global minimum” for these roles, supporting robust amendments-to- entities with limited operational governance and demonstrating a credible commitment competency- scale and lower systemic to effective compliance culture. standards-with- exposure—as evidenced by respect-to-money- modest turnover levels laundering-reporting- officer-and- compliance-officer- june-2022.pdf https://dfsaen.thomso nreuters.com/ruleboo k/what-kind- expertise-and- resources-does-dfsa- expect-compliance- adviser- have#:~:text=The%2 0DFSA%20expects% 20key%20employees ,least%205%20years %20relevant%20expe rience. UK (FCA): Requires experience to be proportionate to the firm's risk, size, andcomplexity—market norm is 5+ years for significant roles. Source: https://www.fca.org.u k/firms/approved- persons/heads- compliance-mlros44 Consu 8 Request clarification on the To ensure practical, timely, and effective compliance lven specific compliance timeline for planning in alignment with regulatory expectations and appointment of Principal Officer transitional provisions. and Compliance Officer by existing Ancillary Service Providers such as Consulven, under Clause 8 of the draft regulations. Specifically, should these appointments be made at the point of application for registration, or only upon grant of registration within the 12/24 month window? 45 Consu 9 Reinstate flexibility to serve Indian Allowing IFSC-based service providers to cater to 1. The DFSA in Dubai lven entities engaging in overseas Indian entities with overseas operations fosters allows Ancillary operations, provided continuous engagement, increasing the likelihood of Service Providers to consideration is received in freely these entities considering the IFSC for future activities. offer services to both convertible foreign currency. This approach aligns with the IFSC's objective of local and international becoming a global financial hub and prevents potential clients, without Revise Regulation 9(1)(iii) to business diversion to competing international financial restrictions based on read: centres. the client's jurisdiction "(iii) Indian entities proposing to Source: set up operations in IFSC or in https://dfsaen.thomso foreign jurisdictions, provided the nreuters.com/sites/de consideration for services is fault/files/net_file_stor received in a freely convertible e/DFSA_ASP_VER5. foreign currency." pdf46 Consu 5 Explicitly reinstate foreign Many ancillary and TechFin services operate regionally United Arab Emirates lven incorporated entities' eligibility to or globally through branch structures to maintain (DIFC): The DIFC operate via branch or subsidiary brand, governance control, or consolidated allows foreign firms to in IFSC. compliance. This is particularly relevant in fields like establish a branch or fund administration, risk tech, KYC/AML outsourcing, subsidiary to conduct and compliance process automation—key domains financial services, within the TAS scope.By explicitly enabling foreign regulated by the entities to establish a branch or subsidiary in IFSC, Dubai Financial IFSCA will:-Project itself as a commercially enabling Services Authority and globally integrated regulator-Attract multinational (DFSA). Source: compliance and TechFin players, enhancing domain https://www.difc.com/ depth and ecosystem maturity-Reinforce its strategic business/non-retail- ambition to become a trusted cross-border hub for activities-guide outsourced financial services- Differentiate IFSC from protectionist jurisdictions that inhibit foreign institutional participation47 VSM 8 requirement of PO and CCO While this requirement of PO and CCO is essential for regulated entities (REs) providing products and services to customers, it should not apply to TechFins. TechFins offering software solutions—such as regulatory reporting, Cyber security and fraud detection—may not have dedicated compliance officer roles. Additionally, mandating a physical presence may not be necessary for TechFins in a future-oriented, globally connected business landscape. As a suggestion, the qualification criteria could be expanded to include MBA/PGP holders as well as professionals with 10+ years of experience as a CFO, as an alternative to the existing requirements. 48 VSM Schedule (iv). The Entity shall deploy This should be relaxed for TechFins services This creates a barrier -iii manpower resources and specifically Cyber Security, Fraud Detection, AML/CFT to start a business. adequate infrastructure in IFSC and Regulatory Reporting fintech providers commensurate with the business operations.49 VSM 5 TechFin and Ancillary services Techfin services, as outlined in the Second Schedule— - Singapore apply shall be required to be set up its encompassing Regulatory Technology (RegTech), proportionality office in IFSC, in the form of a Cyber Security and Fraud Detection Technology—may principles, where company lack the necessary resources to fully comply with the compliance proposed requirements. obligations are scaled based on a firm’s Without adequate support or consideration, these size, risk profile, and companies could face an uneven playing field, market impact hindering their ability to deliver high-quality, innovative solutions that Regulatory Entities (REs) rely on. This imbalance may ultimately discourage Techfin providers from offering the cutting-edge technological services essential for efficient and secure financial operations. 50 PwC 3 The definition of Group entities In today's professional services landscape, many firms should be amended to include operate not just as standalone entities or traditional “part of the network”. The IFSCA groups, but as part of broader networks. These BATF regulations recognize "part networks enable firms to pool resources, share of network" as a criterion for technology, and collaborate for mutual benefit. defining group entities. Importantly, it is not always necessary for professional bodies or firms within a network to operate under the same brand name. In fact, certain professional bodies specifically prohibit the use of a common brand or coordinated marketing among member firms. Despite this, these firms still function as a cohesive network, sharing policies, resources, and best practices while maintaining distinct identities.Including networks in the definition of group entities acknowledges the practical reality that collaboration and resource sharing can occur even in the absence of unified branding. By doing so, the definition remains relevant and adaptable to the diverse ways in which professional service firms organize and operate, regardless of branding restrictions imposed by professional bodies.51 PwC 3 It is proposed that Techfin and At present, these services, though essential to the Ancillary services be defined as functioning and support of financial services, are not financial services under the explicitly defined as "financial services" under the Act. IFSCA Act This creates a regulatory gap, as the activities performed by TechFin and Ancillary Service providers are integral to the financial ecosystem but may not be subject to the same oversight or regulatory requirements as core financial services. To address this gap, it is proposed that the definition of financial services under the Act be expanded, similar to the approach taken for BATF (Book-keeping, Accounting, Taxation, and Financial crime compliance) services. The Central Government, exercising its powers under sub-clause (xiv) of clause (e) of sub- section (1) of section 3 of the Act, has the authority to notify additional activities as financial services.52 PwC 3 It is suggested that the service Expanding the definition of "service recipients" to recipients definition be expanded explicitly include intermediaries is a significant to include intermediaries suggestion, particularly in the context of regulatory frameworks governing financial services. Currently, "intermediaries" are defined under the regulations as entities within a group that receive services from a registered Service Provider, with the purpose of delivering those services to a Service Recipient for financial services as specified under the IFSCA Act, 2019. In many cases, professional bodies or service providers enter into Master Service Agreements (MSAs) with intermediaries, rather than directly with the ultimate service recipients. The intermediaries then deliver the services to the end clients. If the definition of "service recipient" does not include intermediaries, such arrangements may fall outside the intended regulatory scope, potentially creating compliance ambiguities. By expanding the definition, the regulations would more accurately reflect the operational realities of service delivery chains in the financial sector53 PwC 3 Explanation to service recipient The current explanation attached to the definition of must be clarified as the current "service recipient" appears to be creating confusion, explanation is unclear particularly regarding the scope and application of the term. The explanation states that the end usage of TechFin and Ancillary Services must have a "close connection/nexus with the financial services or bearing on the decision-making process in the delivery of these financial services." This language introduces ambiguity about what constitutes a sufficient connection or nexus, and may lead to inconsistent interpretations or unnecessary compliance hurdles.The main definition already specifies that the recipient must be receiving services for the purpose of making arrangements for delivery of financial services as covered under the Act.Accordingly, it is suggested to clarify the explanation for better interpretation54 PwC 8 Under the educational Considering, TechFin entities are also allowed in these qualifications mentioned for PO regulations, the PO can be someone who is an and CO in Reg. 8. 3) a, the term engineering or science graduate/post graduate. “IT” can be replaced with term Accordingly, the term “engineering and science” will “engineering and science” allow multiple disciplines in the related filed that may qualify for such post.55 PwC 9 It is proposed to amend the By allowing ancillary service providers to serve non- regulation as follows: resident entities from sectors beyond BFSI, the regulations support the establishment and growth of a Service Recipients under these wider range of businesses within the International regulations shall include: Financial Services Centre (IFSC). This is particularly relevant for global corporations in sectors like IT, (i) Any entities in GIFT-IFSC; logistics, and shipping, which may wish to set up operations or regional headquarters in the IFSC. (ii) Any financial services entity located outside India for the Example – Serving Microsoft US: Under the proposed purpose of making arrangements regulation, an ancillary service provider in the IFSC for delivery of financial services would be restricted from assisting a non-BFSI entity covered under clause (e) of sub- like Microsoft US in establishing a presence in GIFT section (1) of section 3 of the Act. IFSC. (iii) Any entity located outside India for the purpose of setting up The amended clause removes this restriction, enabling their office in IFSC in India. such service providers to facilitate the entry and operations of major global players from any sector. The (iv) Indian entities only for the proposed amendment expands the scope of "service purpose of setting up of their recipient" to include a wider range of non-resident office in IFSC in India entities, thereby supporting the growth and diversity of the IFSC ecosystem. This approach aligns with the For the purposes of clause (ii), a objective of making IFSC a global hub for various "financial services entity" shall sectors, not limited to BFSI, and enhances the ability of mean an entity considered to be professional bodies to serve international clients engaged in the business of effectively. financial services activity if it undertakes an activity which, if The provision for Authority determination allows for carried out by an entity in IFSC, case-by-case assessment, ensuring that unique or would require registration with or complex group structures can be appropriately be regulated by the IFSCA or any classified. other financial regulator in India. This includes its holding, subsidiary, or associate companies, as well as any branch or subsidiary of a holding company to which it is also a subsidiary. In case of any doubtas to whether a group constitutes a "financial services entity" or whether any entity within the group qualifies as such, an application may be made to the Authority for determination, whose decision shall be final. Further, the clause “Service recipients should be non- residents only” to be removed as the above suggested clause also provides the clarity. 56 PwC Misc The Techfin service covered as The techfin activity is not very clear and so if it can be to be inclusei nFAQ “Outsourced Services, which are reworded to bring out the actual permissible activity. not covered above, but are permitted to be outsourced by Regulated Entity of the respective financial sector regulator of its home jurisdiction” needs to be simplified57 Axis Schedule Inclusion of Facility agent in the We have witnessed substantial growth in ECB 1. Globally, Facility Truste -i list of services mentioned in First issuances done and the amount raised through such Agent is appointed for e Schedule of regulation eF. No. issuances by Indian companies, banks and NBFCs in all syndicated loan 1829/IFSCA/ GIC/1/2024 last 2 years. As the rated companies are diversifying transactions. Facility the areas of fund raising, they find ECBs are good Agent activity is being source. We envisage strong growth in ECB market in carried out by banks, next 5 years. 2. All the syndicated loan transactions bank's subsidiary and requires Facility Agent. This is one of the core activity other companies. For required by the global lenders to be performed in such example: A. GLAS | transactions. It facilitates lenders in monitoring the Loan Agency, Debt compliances (CP &CS), fixation of interest period and Administration & calculation of interest. Appropriate distribution of funds Trustee Services B. among the lenders and keeping records. Maintaining Agency services – real time information of lenders and their bank Capital Markets | accounts which helps them to syndicate it further. 3. TMF Group C. This causes high cash inflows in GIFT City jurisdiction Administrative and which otherwise being lost to players outside GIFT Facility Agent City/ India. 4. We will be able to cater to Non India Services | CSC the transactions as well viz. borrower in Singapore is leading players taking loan from lender in HK, we can act as Facility offering these Agent. 5. RBI recognizes Facility Agent as ancillary services globally and service which can be played by Trustee company. having no bank Attach copy of Letter dated 3rdJanuary, 2008 (attached parentage. 2. The as Annex II) issued to Axis Bank giving approval to Facility Agent activity float Trustee Services Subsidiary. You may refer clause is akin to Escrow 3 of such letter giving approval for Facility Agency Agent activity wherein activity.6. Axis Trustee has applied to SEBI for setting we do hold the funds up branch at GIFT City. While applying to SEBI for the benefit of (attached as Annex III), we have mentioned Facility beneficiary and Agent as one of the activity being proposed to carry at release it pursuant to GIFT City. We attach our application filed with SEBI terms of Facility and SEBI approval (attached as Annex I) for setting up Agreement. The term of branch at GIFT City which clarifies SEBI’s approval “Facility Agent” is for carrying out Facility agent activities. 7. All the ECB universally used by transactions being dealt by Indian Facility Agents (via all the global lenders GIFT City) are FEMA compliant transactions and can and is defined under happen only after obtaining Loan Registration Number APLMA format of (LRN) from RBI and after doing all necessary Facility Agreement. compliances. 8. The Facility Agent doesn’t hold any (Ref.:financial asset while doing these functions as the funds https://www.aplma.co are remitted to respective beneficiaries/ lenderson the m/do same date of receipt This is scalable business. We cumentation?topic=6) booked 63 transactions in FY24 and 74 in FY25. We APLMA stands for could cause remittances to the extent of USD 10 Bn in Asia Pacific Loan FY24 and USD 13 Bn in FY25. That has caused Market Association, business to banking system in IFSCA, GIFT City. It the body which works added some allied businesses like hedging, forex to for development of GIFT City based banks. It has accordingly served the loan market in Asia basic purpose of GIFT City formation i.e. onshoring the Pacific region and offshore. have standardized the loan documents for having uniform approach. 3. Globally, Facility Agent also helps lenders to have co-ordinated approach to deal with NOC requests received from borrower in case of ceding of pari passu charge over assets, relaxation in financial covenants, merger/ hive off proposal etc. 58 Cyril 2 The term ‘making arrangements To maintain clarity and prevent ambiguity in the future, for carrying on any of the financial it is imperative to establish well-defined and objective services’ is not defined. criteria outlining what constitutes “making arrangements for carrying on any of the financial services”.59 Cyril 8 For certain ancillary service The mandatory requirement for a PO or CO for certain providers, particularly consulting ancillary service providers, such as law firms is and law firms, the necessity of unwarranted. A comparative analysis of India’s Principal Officer (“PO”) and regulatory framework and FATF standards for Compliance Officer (“CO”) Designated Non-Financial Businesses and Professions requirements should be (“DNFBPs”) indicates that regulatory oversight for such reconsidered and potentially entities is, in fact, limited. waived. Under the Prevention of Money Laundering Act, 2002 (“PMLA”), DNFBPs are subject to reporting obligations only in specific circumstances. For example, Chartered Accountants, Company Secretaries, and Cost and Works Accountants qualify as DNFBPs only when conducting financial transactions such as property dealings, client fund management, or entity formation. Advisory and compliance services alone do not trigger these obligations. Similarly, legal professionals are regulated solely by the Bar Council of India and are not classified as reporting entities under the PMLA. Since they do not manage client funds, their professional fees and services do not typically warrant suspicious transaction reporting. Imposing broad KYC requirements on these professionals, especially when they are not engaged in activities that pose a significant money laundering or terrorist financing risk, creates unnecessary compliance burdens. Such obligations misallocate resources, diverting attention from actual risk areas while increasing regulatory complexity without proportional AML/CFT benefits. A more effective and proportionate approach would be to introduce specific DNFBP categories aligned with the PMLA and FATF guidance, ensuring that compliance obligations are imposed only in relation to relevant activities. This targeted framework wouldensure adherence to international standards while minimizing undue compliance burdens on professionals who do not present a significant AML/CFT risk. It would also enhance regulatory efficiency by focusing oversight and resources on areas of substantive risk.60 Cyril 9 Please clarify the rationale for Such restrictions may be more pertinent to financial restricting ancillary service service providers rather than ancillary service providers, particularly legal providers. Accordingly, we recommend that specific service providers, from ancillary service providers, such as law firms, be onboarding clients from FATF exempted from these limitations and addressed non-compliant or high-risk separately under a distinct chapter or section within the jurisdictions. The IFSCA KYC regulations. AML Guidelines, 2022, already establish comprehensive compliance requirements, enabling appropriate client classification and onboarding based on risk assessment61 Cyril 9 The scope of service recipients Indian entities establishing or operating within IFSCs or under the TAS Regulations should foreign jurisdictions, with consideration received in be expanded. Regulation 9 specified currencies, should have access to currently limits recipients to comprehensive legal support, including advisory, entities within GIFT-IFSC, BFSI dispute resolution, arbitration, and mediation services. entities outside India supporting Given the increasing demand for guidance on the GIFT IFSC financial services, and IFSC regime—particularly in light of recent changes to Indian entities establishing offices FPI regulations for NRIs, the LRS framework, and in GIFT IFSC. This restriction advisories on ODI norms and direct listing—it is contradicts the IFSCA’s goal of essential to broaden the scope of permitted making GIFT City a global services.Therefore, IFSCA is urged to amend its financial hub and prior circulars regulations to explicitly authorize GIFT IFSC ancillary on ancillary service providers. service providers to offer advisory services covering all Moreover, TechFin entities and aspects of the GIFT IFSC regulatory framework, rather ancillary service providers serve than limiting support to operational setup alone. distinct client bases.TechFin entities primarily cater to BFSI sector clients outside India, while ancillary service providers may also serve Indian entities exploring IFSC opportunities. Given this, the list of service recipients should be revised.Additionally, the IFSCA circular dated June 10, 2021, expanded eligibility to foreign entities for permissible ancillary services within IFSCs in India or overseas which further allows service providers to assist Indian entities intending to operate in IFSCs or foreign jurisdictions, provided payments are made in freely convertible foreign currency. To align with these provisions, the TAS Regulations should incorporate these allowances, including advisoryservices for Indian entities establishing offices in GIFT IFSC. 62 Cyril Misc IFSCA may include provision for Introduction of such provision will facilitate consultants/ flexible working provision for employees of TechFin/ Ancillary Service Providers from consultants/ employees of other states in India. Additionally, it will allow them to TechFin/ Ancillary Service hire seasonal consultants/ employees for short term Providers by allowing flexible period or for specific assignments work permit which would include appointment of consultants/ employee for a short-term period or for specific assignment.63 EY 3 The definition of Service recipient It is suggested to simplify the language of definition can be simplified to include as following: “Service Recipient” means the end users which receive services from the Service Provider registered under these regulations for providing services listed at First Schedule and Second Schedule to these regulations Explanation: The end usage of the TechFin and Ancillary Services must have close connection/ nexus with the financial services or bearing on the decision-making process in the delivery of these financial services covered under Section 3 (1) (e) of the IFSCA Act, 2019.64 EY Schedule It is suggested to reduce the The techfin and ancillary entities are not directly -i number of years of experience for engaged into provision of any financial services. compliance officer to 1 years Therefore, it is suggested to reduce the number of instead of 3 years experience to 1 years for compliance officer. This shall increase the ease of doing business in GIFT IFSC.65 EY Schedule First schedule of draft IFSCA The suggested change shall enable ancillary entities in ii (TAS) Regulations, 2025 GIFT IFSC to serve IFSC units (which are otherwise presently does not cover taxation also regulated by IFSCA) with much more flexibility services. The Unit set up in IFSC and lesser restrictions as compared to BATF is resident from Indian Income Regulations. Tax law perspective. Thus, all the IFSC unit shall have to adhere to comply with provisions of Indian Income Tax Act, 1961. Similarly, the IFSC unit is also required to comply with Accounting standards as prescribed by the Companies Act, 2013 and the Institute of Chartered Accountants of India (ICAI) for preparing the books of accounts. Thus, it is requested to cover advisory and compliance services in relation to Indian Income Tax law, Accounting standards (as required by the Companies Act, ICAI) etc. in First schedule of IFSCA (TAS) Regulations, 2025. Additionally, IFSCA may separately notify to cover global taxation, accounting etc. (i.e., other than India) under the BATF Regulations66 EY Misc The TechFin and Ancillary entities Exempting TechFin and Ancillary entities from the registered under the applicable IFSCA (AML, CFT, KYC) Guidelines, 2022, provides regulations are not engaged in regulatory clarity by recognizing their limited role in the direct provision of financial financial services. These entities do not directly offer services. Moreover, these entities financial services or handle client assets, so imposing do not handle or take possession full AML/CFT/KYC requirements would create of any financial instruments, unnecessary compliance burdens. The exemption securities, bank account or cash allows them to focus on providing technological and on behalf of clients. support services to regulated financial institutions already compliant with relevant regulations. This Furthermore, the aforementioned reduces costs and encourages innovation within the TechFin and Ancillary entities IFSC framework. Ultimately, it ensures efficient provide services exclusively to regulation by aligning oversight with actual risk regulated financial institutions exposure while maintaining financial system integrity. located within the IFSC, overseas, or in India, all of which are subject to and compliant with the Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Know Your Customer (KYC) requirements of their respective jurisdictions. In light of the above, it is submitted that TechFin and Ancillary entities registered under the IFSCA (TechFin and Ancillary Services) Regulations should be exempted from the provisions of the IFSCA (AML, CFT, KYC) Guidelines, 2022. 67 Dento 3 It is suggested to insert after the Clarifies that the 20% (twenty percent) threshold is United Kingdom’s ns words “20 per cent and above”: measured on a combined basis, thereby preventing Financial Conduct Link “, computed on an aggregate circumvention where several affiliates each hold < 20% Authority (“FCA”) Legal basis, taking into account any (twenty percent) but collectively exercise ≥ 20% prescribes the direct or indirect holding (alone or (twenty percent) voting / economic interest. “qualifying holding” acting in concert) by one or more test. entities within the group.”68 Dento 5 It is suggested that additional Additional clarification in this regard will help Indian ns clarification should be provided by and foreign businesses to better position themselves Link the authority in this clause as to and choose optimal methods of entering in GIFT IFSC Legal the nature of applicant – whether the applicant can set up an office in the IFSC (in the form of a company or LLP) pursuant to a joint venture agreement between an existing Indian company (outside the IFSC) and a foreign entity? 69 Dento 5 It is suggested to insert in the This will ensure timely risk-mitigation if jurisdictional ns clause: “The promoters and risk escalates post-licensing. Link significant beneficial owner(s) (as Legal defined under the Companies Act, 2013 and the rules made thereunder) of the applicant entity shall be from a jurisdiction which has not been identified in the public statement of Financial Action Task Force as “High Risk jurisdiction-subject to call for action.”It is suggested to insert a clause requiring the licensee to notify the International Financial Services Centres Authority (“IFSCA”) within 10 (ten) business days if any promoter’s / significant beneficial owner’s home jurisdiction is later placed on the FATF high-risk. The IFSCA may impose additional conditions or require divestment.70 Dento 6 The draft implies that once Permanent validity aligns with many professional Many jurisdictions ns granted, the Certificate of registrations and it signals that as long as the provider issue licenses without Link Registration is valid indefinitely plays by the rules, they can operate without an expiry but with Legal unless suspended, cancelled, or bureaucratic hurdles of periodic relicensing. However, annual reporting and surrendered. This open-ended regulators usually tie this to ongoing compliance fee obligations. For validity (no fixed renewal date) (including fee payment, filing requirements, etc.). example, Monetary reduces administrative burden, Authority of which is positive. Singapore (“MAS”) licenses do not expire It would be beneficial to confirm if annually, but the firms there are any ongoing renewal pay annual fees and requirements or fees (Regulation are subject to 15 hints that fees may be continuous specified, possibly including supervision and annual fees). We suggest adding failure to pay or a provision that the registration serious non- remains valid subject to payment compliance can lead of prescribed fees and continued to revocation. compliance.71 Dento 12 Regulation 12 allows the IFSCA, This clause is essentially a safety valve to encourage Many leading ns in the interest of market innovation and not stifle business unnecessarily. In a regulators have Link development, to relax the fast-evolving TechFin landscape, rules can quickly similar powers or Legal application of any provision of become outdated or inadvertently restrictive. Having sandbox frameworks. these regulations for a specific the ability to grant exceptions allows IFSCA to adapt in For example, MAS case, with reasons recorded and real-time and foster novel services in IFSC that might has a FinTech on application with a non- otherwise go elsewhere. It also signals to industry that Regulatory Sandbox refundable fee. This is essentially IFSCA is open-minded and pragmatic which is where certain a regulatory sandbox or important for a new financial centre aiming to attract regulatory exemption clause, which we startups and global firms. By requiring reasons in requirements can be support. It provides needed writing and an application process, it guards against relaxed for sandbox flexibility to accommodate unique arbitrariness. The inclusion of a fee is fine (perhaps to entities to test business models or innovative deter frivolous requests). innovative products. approaches that might not fit squarely in the rules. The process To maintain fairness, the IFSCA will likely use this FCA similarly (written application, decision in 60 sparingly and consistently. Publishing the fact that an operates a sandbox (sixty) days, reasons for exemption was granted (without revealing trade and has Modification grant/refusal) is transparent. secrets) would help other market players understand by Consent - a the regulatory flexibility and perhaps encourage them process where firms One suggestion is to ensure that to apply if they have similar needs. can request waivers any relaxation granted is or modifications of published or at least disclosed in rules in particular some form (perhaps anonymized) circumstances, which to ensure transparency and a the FCA may publish level playing field. IFSCA might for transparency. consider issuing guidance on the criteria for granting exemptions (e.g., genuinely innovative services, or cases where compliance causes undue hardship without undermining regulatory objectives).72 Dento Schedule The Code of Conduct in Schedule Codes of conduct for ns -iii 3 lays down essential obligations, regulated entities Link i.e., compliance with all laws and often include general Legal IFSCA directives, prompt principles of integrity, reporting of material changes, not due care, and misusing the “Registered” status, customer maintaining adequate manpower confidentiality. For and infrastructure in IFSC, example, DIFC obtaining separate licenses if Financial Services doing any regulated financial Authority Rulebook, activity, not handling client assets Ancillary Service or money, notifying Providers Module has commencement of business, principle of Integrity keeping the Letter of Approval and it states that “An valid, and complying with any Ancillary Service other conditions. These are all Provider must excellent and we strongly support observe high them. They ensure providers act standards of integrity within scope and maintain high and fair dealing.” standards. We suggest a few following additions: (a) Add a general principle of integrity and skill: e.g., “The entity shall conduct its operations with integrity, professionalism and due skill, care, and diligence.” This kind of overarching duty, common in many codes, would cover expectations such as honesty, fair dealing, avoidance of misrepresentation, etc. (b) Confidentiality: Include a clause that the provider must maintain confidentiality of client information and data, except where disclosure is required by law. Given these providers will handle sensitive financial data or client business information, aconfidentiality obligation is key (subject to regulatory sharing). (c) Conflict of interest: If applicable, a clause to manage conflicts is suggested. For example, if an entity serves competing clients or is itself part of a group that could have conflicts, they should have policies to handle that. (d) Cybersecurity and risk management: It is suggested to require the provider to have adequate risk management, especially IT/cybersecurity measures, commensurate with their services. 73 Dento Schedule It is suggested to define or issue It will prevent both under- and over-reporting, and FCA Handbook SUP ns -iii a guidance note with an promote consistent regulatory disclosures. 15 prescribes Link illustrative list of “material notifiable events, e.g., Legal changes” requiring prompt change in controller, notification, e.g., changes in senior management, directors, UBOs ≥ 10 %, adverse etc. regulatory findings, etc.74 Cataly Schedule Facility Agent Role exceptionally The regulations should expressly recognize Facility st -i to be added as a separate role Agent services. This role is vital in syndicated loan arrangements and is increasingly being utilized in multi-lender and cross-border loan structures, particularly involving Fund Managers, NBFCs, and FME entities operating through GIFT City and global jurisdictions. “Facility Agent” means a service provider appointed under a financing arrangement to coordinate loan servicing, manage communications between borrowers and lenders, monitor covenants, and ensure adherence to agreed terms under the financing documentation and to accept and remittance of funds as a facility agent 75 Cataly 3 Definition Inclusion in ancillary An explicit definition of “Facility Agent” should be No Comments st services considered in the regulations to clarify the responsibilities and allow for seamless onboarding and regulatory clarity. Suggested inclusion: “Facility Agent” means a service provider appointed under a financing arrangement to coordinate loan servicing, manage communications between borrowers and lenders, monitor covenants, and ensure adherence to agreed terms under the financing documentation and to accept and remittance of funds as a facility agent 76 Cataly Misc Ancillary Activity Recognition: In the final notification or guidance note, the IFSCA No Comments st may list Facility Agent functions (such as coordination, compliance monitoring, payment scheduling, inter- creditor communications) as permissible within the Facility Agent Services to ensure no ambiguity. 77 Cataly Misc Cross-border Flexibility: Given the increasing cross-border transactions No Comments st involving Indian/ GIFT City borrowers and offshore lenders, we suggest allowing Facility Agent services to be rendered to both IFSC-based and foreign financial institutions in compliance with applicable KYC and AML standards to ensure comfort provided to Lenders across borders.78 BDO Misc Introduce risk-based Likely to encourage innovation and ease of entry, FCA (UK) and MAS categorization of service especially for startups and low-risk players. (Singapore) adopt providers (Tier 1/2/3) with proportional risk- proportional compliance based approaches 79 BDO 4 Create a Regulatory Sandbox for Allows new solutions to be tested safely without full MAS (Singapore) has Ancillary Service innovations regulatory burden. expanded sandbox to regtech and support services 80 BDO Schedule Add an illustrative list of permitted Reduces ambiguity and legal risk for applicants; helps SEC (USA) and -i outsourced services with clear standardize submissions. ESMA (EU) provide boundaries detailed outsourcing guidelines 81 BDO 5 Create a Fast-track approval This move will likely encourage reputed firms from the MAS offers fast-track mechanism for globally regulated US, EU, Singapore, UK etc to participate in IFSC. licensing to regulated firms from well rated and ranked entities in trusted jurisdictions jurisdictions 82 BDO 4 Allow dual licensing or cross- Enables operational flexibility and cost efficiency. Similar models exist functional approvals for entities in DIFC (Dubai) and delivering both Ancillary & FCA (UK) for multi- TechFin services licensed firms 83 BDO 8 Expand educational qualifications Reflects current market skillsets and improves access Recognized in to include modern tech to tech-savvy professionals with relevant experiences. Canada, UAE, and certifications and map the Also good for IFSCA in long term. Singapore as part of requirements to the activities regtech/fintech planned for setup at IFSC licenses 84 BDO Schedule Explicitly include ESG advisory, Aligns GIFT-IFSC with global green finance goals and European Union ii climate tech and sustainability- India's COP commitments. Green FinTech linked data services taxonomy and MAS’ Greenprint project 85 BDO 11 Include specific data privacy and Helps avoid regulatory gaps and aligns IFSC with data- GDPR (EU), CCPA cybersecurity obligations sensitive jurisdictions. This also helps in flow of data (California), DPDP across the regulators seamlessly. (India) enforcement 86 BDO 6 Clarify renewal timelines, self- Brings clarity and predictability for long-term operators. SEBI and RBI offer audit/reporting formats, and structured annual mandatory annual compliance renewal/reporting reports templates.87 BDO Misc Establish a client redressal or Builds trust and safeguards against misconduct or Included in DIFC grievance escalation mechanism conflict (Dubai), FCA (UK) for service recipients frameworks for regulated entities 88 BDO Schedule Include governance requirements Aligns with global AI regulatory developments, EU AI Act (2024), ii for AI-driven services (e.g., promotes ethical and accountable AI use in financial HKMA AI Guidelines explainability, bias checks, audit decision-making trails) 89 BDO 11 Permit cross-border data flows Essential for cloud-based TechFin firms and EU GDPR, Singapore with data protection equivalence encourages regional data centre hosting in GIFT IFSC PDPA, India DPDP safeguards Act 90 BDO Schedule Explore explicitly including digital Supports cross-border onboarding, enables digital Singapore NDI, EU ii identity and e-KYC verification public infrastructure for financial inclusion eIDAS 2.0 systems (blockchain, API-based, national ID linked) 91 BDO Schedule Add sustainability and climate risk Encourages development of ESG support services; MAS Greenprint, EU ii tech tools as approved TechFin aligns with global sustainable finance disclosure needs CSRD services 92 BDO Schedule Permit tokenization-related Prepares GIFT-IFSC to support digital assets under EU MiCA, ii support services (custody tech, regulated frameworks HKMA/SFC smart contract audit, issuance tokenization guidance consulting) 93 BDO Schedule Include SupTech tools (regulatory Supports financial regulators globally with tech from HKMA SupTech ii dashboards, AML monitoring GIFT-IFSC; high-value segment Sandbox, EBA platforms) as permitted export- supervisory tech oriented services 94 BDO Schedule Encourage interoperability Prepares service providers for global financial EU SEPA (ISO ii standards support (e.g., ISO messaging and seamless cross-border integration 20022), BIS Project 20022, open banking APIs) Nexus, Singapore MAS interoperability standards 95 BDO Misc Include Open Banking and API Encourages interoperability and innovation in digital UK Open Banking service management as a banking platforms and fintech ecosystems regulations (PSD2), TechFin service Ireland's adoption under EU PSD296 BDO 11 Require Sustainability Impact Brings transparency and credibility to ESG/green Luxembourg Green Metrics reporting (for ESG service service offerings Exchange (LGX), providers) ESG reporting standards in Dublin (Ireland) 97 BDO 8 Allow secondment of senior Attracts global talent for strategic leadership roles in Mauritius FSC professionals from global firms to early-stage IFSC setups rather than bump up costs permits secondment act as temporary Principal upfront from regulated parent Officers / Compliance Officers entities 98 BDO Misc Permit Regional Headquarter Supports global firms establishing hub-and-spoke UK FCA RHQ (RHQ) status recognition for operations across Asia/Africa licenses, global service firms Luxembourg’s cross- border entity rules 99 BDO Misc Mandate Board-level outsourcing Mitigates risks in extensive outsourcing chains and UK SYSC 8, EBA policy and third-party risk enhances governance Guidelines, Central assessment Bank of Ireland outsourcing norms 10 BDO 9 Allow Fund Administrators and Expands permissible scope to cater to global UHNW Ireland & 0 WealthTech firms to serve high- clientele Luxembourg as net-worth clients globally from global WealthTech IFSC and fund admin hubs 10 BDO Misc Add Family Office Support High-value service cluster aligned with IFSC UK HMRC’s Family 1 Services (e.g., estate planning, positioning as a regional wealth hub Office initiatives, trust setup) to Ancillary list Mauritius Global Business framework10 Cogni Misc Retail Banking : Multi-channel 2 zant customer engagement & servicing, account onboarding and maintenance, fraud detection, monitoring, and dispute management, deposit operations, compliance & reconciliation,Lending Operations: Loan processing, underwriting support document verification, payment handling, escrow, customer communications, collections, foreclosure, loss mitigation, reverse mortgage lifecycle managementCapital Markets: Trade processing, fund accounting, NAV calculations, portfolio servicing, compliance, deal lifecycle, KYC/AML, regulatory documentation, clearing, custody, and post-trade reportingInsurance Operations: Property & Casualty, Life & Annuities, Retirement Services, Wealth Management.Cards & Payments ; Risk & Compliance, Retail payments, Merchant acquisitionCorporate Banking: Commercial Lending, Trading, FinanceInvestment Banking: Wealth Management, Mutual Funds10 Deloitt 3 To cover “Intermediaries” in the Intermediaries are defined in the proposed regulation 3 e scope of the definition of “Service at 3(v) which states Recipient” defined in proposed “Intermediaries” for the purpose of these regulations regulation 3(xi). shall mean such an entity within its group entities, Therefore, the following which receives the services from the Service Provider modifications as indicated in registered under these regulations, in order to deliver amber should be made in clause the services to a Service Recipient for the purpose of (xi) of proposed regulation 3: delivery of financial services specified under clause ( e) “Service Recipient” means the of subsection (1) of Section (3) of IFSCA Act, 2019; end users which receive services from the Service Provider Explanation. - The delivery of services by registered under these Intermediaries to Service Recipient shall have close regulations or Intermediaries, for connection with any of the financial services covered the purpose of making under clause (e) of sub- section (1) of section 3 of the arrangements for delivery of Act; financial services covered under clause (e) of subsection (1) of From the definition of Intermediaries in the proposed section 3 of the Act; regulation, it appears that the intent is to permit Intermediaries to offer closely related financial services Explanation: The end usage of within group entities. However, the current definition of the TechFin and Ancillary Service Recipient indicates that only those entities Services must have close explicitly covered can receive services from providers connection/ nexus with the registered under this regulation. financial services or bearing on To fully align with the intended scope, it is the decision making process in recommended that the term "Intermediaries" be the delivery of these financial explicitly included within the definition of Service services covered under Section 3 Recipient. This inclusion would ensure that the (1) (e) of the IFSCA Act, 2019.” regulatory framework effectively supports the provision of intra-group financial services by registered service providers.10 Deloitt 9 The term “Service Recipient” Section 4(4) of the IFSC Act, 2019, empowers the 4 e under these regulation inter-alia Authority, with prior approval from the Central refers: Government, to establish its offices in other parts of India or abroad. “1(i)Any entities in GIFT-IFSC.” Accordingly, the eligibility criteria for “Service We suggest that ‘GIFT-IFSC’ Recipients should not be limited solely to GIFT City should be replaced with IFSC (Gujarat International Finance Tec-City). To avoid restriction, reference to "GIFT" should be omitted from the regulation. 10 Deloitt 9 The term “Service Recipient” The term "BFSI" is currently undefined in the proposed 5 e under the proposed regulation regulation. To ensure clarity and consistency, we inter alia refers: recommend that the term either be clearly defined or replaced with "Financial Services Entities," which 1(ii) Any BFSI Entities located aligns with the terminology used in the existing outside India for the purpose of regulatory framework. making arrangements for delivery Moreover, the IFSC Act, 2019 does not define "BFSI." of financial services covered Therefore, to avoid ambiguity, we suggest substituting under clause (e) of sub- section "BFSI" with "Financial Services Entities". (1) of section 3 of the Act. We suggest BFSI should be replaced with “Financial Services Entities” 10 Deloitt 9 The Service Recipient scope is Under sub-clause (2) of Regulation 9 in the proposed 6 e restricted to Non-resident which regulation, the eligibility criteria for Service Recipients should be expanded and is currently limited to non-residents. We recommend therefore we suggest modification that this scope be expanded to include resident entities in proposed regulation Eligibility as well, ensuring broader applicability and alignment Criteria for Service Recipients as with practical business needs.Additionally, since sub- under:…(1) (2) The Service clause (1)(iii) of Regulation 9 already includes Indian Recipient shall be resident or entities, it is important that sub-clause (2) also explicitly non-resident. references "Residents" to eliminate any ambiguity and maintain consistency across the regulation.10 Deloitt 9 To expand the scope of “Eligibility Definition of Service Recipient as per Existing As per the DFSA 7 e criteria for Service Recipients”, Framework for Ancillary services (F. No. Rulebook Ancillary we suggest below mentioned 206/IFSCA/Anc.Aux/2020-21) dated 10 February 2021 Service Provider changes in amber: states as under: Module (ASP) by 1) The Service Recipients under E. Service Recipients: Dubai Financial these regulations, shall be as Service providers can provide permissible services to Services Authority follows: any one or more of the following: (DFSA), DFSA does (i). Any entities in GIFT-IFSC; (i) Entity(ies) set up in the IFSC; not restrict the scope (ii). Any BFSI Entities located (ii) Financial services entities from foreign jurisdictions of Service Recipient. outside India for the purpose of for various activities in the IFSCs in India or other making arrangements for delivery related activities overseas; of financial services covered (iii) Indian entities who propose to open, set up or carry under clause (e) of sub- section out operations in IFSCs or foreign jurisdiction, provided (1) of section 3 of the Act as well consideration is received in freely convertible foreign as other related activities currency. overseas. It is observed that the eligibility criteria for Service (iii). Indian entities only for the recipient under the proposed regulation has been purpose of setting up of their narrowed down as compared to the existing office as well as carrying out framework. operations of such offices in IFSC Based on the above, it is evident that sub-clause (iii) in India encompasses a broad range of Indian entities as (iv) Indian entities for the purpose Service Recipients. Accordingly, we propose that of setting up of their branch or clause (iv) in the draft regulation should explicitly representative offices as well as include Indian entities for the purpose of establishing carrying out operations of such offices in foreign jurisdictions. offices in foreign jurisdiction. Furthermore, the eligibility criteria defining the scope of Service Recipients should not be unduly restrictive. Instead, they should align with globally accepted practices to ensure consistency and competitiveness. One of the key reasons for broadening the eligibility criteria is that clients typically expect comprehensive service offerings from a single consultant. Therefore, it is suggested that the scope of services be inclusive — covering both IFSC and international (outside India) services.10 Deloitt Schedule We suggest following additional The proposed regulation does not currently include 8 e -i services should be added in List compliance services that are part of the existing of Ancillary Services in First Ancillary Services framework. We recommend that schedule of the proposed these services be explicitly incorporated into the draft regulation: regulation to ensure continuity coverage. At present, the draft regulation only includes managed Compliance Services means compliance services. However, consulting and advisory providing advice, consultancy services related to various laws—which are recognized assistance or other related under the existing framework—are not addressed. To services for fulfilling legal maintain consistency and support the full range of obligations/compliances under compliance-related offerings, these services should various laws for the time being in also be included. force. 10 Saigal Schedule Recommend explicit inclusion of While the scope of such services appears to align with Global maritime 9 ii “Commercial Ship Management existing entries such as advisory, management finance hubs such as Services” covering financial, consulting, risk management, and ship broking, a Singapore, Marshall operational, and performance specific mention would provide regulatory clarity and Islands, and Dubai oversight of vessels under lease, certainty for service providers seeking to operate within formally recognize charter, or pooling arrangements GIFT-IFSC. This clarity would also support the commercial ship operational framework of emerging shipping pool and management as a leasing ecosystems. professional and regulated ancillary function within the offshore leasing and finance architecture. Regulatory alignment with these jurisdictions would further bolster GIFT- IFSC’s competitiveness in the global maritime finance space. Misc. Addition of Global Immigration Centre ServicesIFSCA Response: The above comments/ suggestions received within the prescribed timeline (9th May, 2025 -1st June, 2025) were considered and placed before the Competent Authority. Necessary modifications / changes have been carried out on the Regulations.