GIFT City Financial Regulations 2026 Clarify PSP E-Wallet Usage for Investments

The International Financial Services Centres Authority (IFSCA) has issued an important informal guidance clarifying how Payment Service Provider (PSP) e-wallet accounts may be used for investment transactions within GIFT IFSC. The clarification addresses a key operational question surrounding the acceptance of customer e-wallet accounts for subscription and redemption of investment products while reinforcing compliance with applicable AML, CFT and KYC requirements.

The latest GIFT City Financial Regulations 2026 provide greater regulatory clarity for Fund Management Entities (FMEs), Payment Service Providers and investors by confirming the acceptable use of authorised PSP-issued accounts in specific investment transactions. The guidance supports digital financial innovation while maintaining strong regulatory safeguards across the IFSC ecosystem.

Why Was This Clarification Needed?

With the rapid growth of digital payment solutions, several regulated entities operating within GIFT IFSC sought clarity on whether customer e-wallet accounts issued by IFSCA-authorised Payment Service Providers could be used for subscription and redemption of investment products.

While earlier regulatory provisions had recognised PSP accounts for certain capital market activities, there was uncertainty regarding their application to investment products such as fund subscriptions and redemptions. This operational ambiguity prompted a request for interpretative guidance under the IFSCA Informal Guidance Scheme, 2024.

The resulting clarification strengthens confidence across the financial ecosystem by establishing a consistent regulatory interpretation.

What Has IFSCA Clarified?

According to the informal guidance, Fund Management Entities may accept subscription amounts from customer e-wallet accounts issued by an IFSCA-authorised Payment Service Provider. Likewise, redemption proceeds from investments may also be credited back to the same customer e-wallet account.

However, this is subject to one important condition—the authorised PSP must have completed all applicable Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT) and Know Your Customer (KYC) requirements in accordance with IFSCA regulations.

This clarification enhances operational flexibility while preserving regulatory compliance for investment transactions within GIFT IFSC.

Regulatory Position of PSP Accounts

The guidance further explains the regulatory equivalence of customer accounts issued by authorised Payment Service Providers.

Under the IFSCA (Payment Services) Regulations, 2024, account issuance is recognised as one of the permitted payment services. While both IFSC Banking Units and authorised PSPs may provide account issuance services, PSP-issued accounts are considered equivalent only to the extent of activities permitted under the applicable regulations.

This clarification provides greater certainty regarding how authorised PSP accounts may be used for investment-related payment activities.

Impact on Fund Management Entities

The clarification provides several operational advantages for Fund Management Entities operating within GIFT IFSC.

These include:

• Simplified subscription process for investors.

• Digital payment flexibility.

• Faster investment onboarding.

• Greater clarity regarding redemption mechanisms.

• Improved regulatory certainty.

• Enhanced customer experience.

For organisations offering investment advisory services in Gift City, these developments contribute towards a more efficient and digitally enabled investment ecosystem.

Strengthening Digital Finance in GIFT IFSC

Digital payment infrastructure continues to play an increasingly important role in modern financial markets.

The latest clarification under GIFT City Financial Regulations 2026 supports innovation by enabling regulated entities to leverage authorised PSP infrastructure without compromising compliance standards.

As GIFT City Global Financial Hub expands its international financial ecosystem, clear regulatory guidance surrounding payment mechanisms becomes essential for encouraging investor participation and improving operational efficiency.

The clarification also aligns with IFSCA's broader objective of promoting technology-driven financial services while maintaining transparency, accountability and investor confidence.

What This Means for Investors

For investors, the guidance simplifies how funds move between authorised payment accounts and investment products.

Subject to applicable compliance requirements, investors can now use authorised PSP-issued e-wallet accounts for:

• Investment subscriptions.

• Redemption proceeds.

• Digital payment convenience.

• Faster transaction processing.

• Secure fund movement.

This contributes towards a more seamless investment experience while ensuring compliance with applicable regulatory safeguards.

Business Implications

The clarification is expected to benefit multiple participants across the IFSC ecosystem.

These include:

• Fund Management Entities.

• Payment Service Providers.

• Capital Market Intermediaries.

• Investment Advisors.

• Digital payment providers.

• Domestic and international investors.

Businesses considering GIFT City Business Setup should view this development as another step towards creating a technology-enabled financial ecosystem capable of supporting modern digital investment services.

Why This Matters for GIFT IFSC

Regulatory certainty plays a critical role in attracting global investors and strengthening financial markets.

The clarification reinforces GIFT City Financial Regulations 2026 by reducing ambiguity surrounding digital payment mechanisms while ensuring regulated entities continue to comply with applicable AML, CFT and KYC obligations.

As gift city ifsc rules 2026 continue to evolve, practical regulatory guidance such as this helps improve operational efficiency, encourage innovation and strengthen confidence across India's International Financial Services Centre.

Key Industry Insights on PSP E-Wallets in GIFT IFSC Investment Transactions

The IFSCA informal guidance clarifies how authorised PSP e-wallets can be used for investment subscriptions and redemption transactions within GIFT IFSC. The following table summarises the major regulatory highlights and their business significance.

Industry Insight	Business Significance
Subscription through PSP e-wallets	FMEs may accept subscription amounts from authorised PSP e-wallets subject to applicable AML/CFT/KYC compliance.
Redemption mechanism	Investment redemption proceeds may be credited back to the customer's authorised PSP e-wallet.
AML/CFT/KYC obligations	Digital payments remain subject to mandatory regulatory due diligence requirements.
Regulatory equivalence	PSP-issued accounts are recognised for permitted payment service activities under the applicable regulations.
Operational clarity	The guidance removes ambiguity for Fund Management Entities and regulated financial institutions.
Digital investment ecosystem	Supports faster and more convenient digital investment transactions.
Investor confidence	Clear regulatory guidance improves transparency and confidence in digital payment infrastructure.
GIFT IFSC growth	The clarification supports continued innovation and operational efficiency within GIFT IFSC.

How Gift CFO Can Help

Gift CFO helps businesses, financial institutions and investors navigate evolving GIFT City Financial Regulations 2026 through expert regulatory advisory, investment advisory services in Gift City, business structuring, GIFT City Business Setup, compliance management and strategic consulting. Our experienced professionals assist organisations in understanding new IFSCA developments while supporting sustainable business growth within GIFT IFSC.

Conclusion

IFSCA's latest informal guidance provides valuable regulatory clarity regarding the use of authorised PSP e-wallet accounts for investment subscriptions and redemption transactions within GIFT IFSC. By recognising the role of digital payment infrastructure while maintaining strict AML, CFT and KYC requirements, the guidance strengthens confidence among regulated entities and investors alike.

As GIFT City Financial Regulations 2026 continue to evolve, businesses that remain aligned with regulatory developments will be better positioned to deliver secure, efficient and innovative financial services within India's premier international financial centre.

DISCLAIMER: This article is published for informational, educational, and analytical purposes only. It does not constitute legal advice, regulatory guidance, trade compliance advice, or a solicitation of any kind.

All information in this article is based on IFSCA Circular No. IFSCA-PMTS/10/2023-Precious Metals/2026/2 dated 15th June 2026, issued under Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019, read with Regulation 78 of the IFSCA (Bullion Market) Regulations, 2025. This circular amends the original Circular dated 10th October 2025 on import of gold or silver by Qualified Jewellers and valid India-UAE CEPA TRQ holders through IIBX, as previously updated on 2nd January 2026.

References to DGFT Notifications 17/2026-27 (dated 16th May 2026) and 19/2026-27 (dated 2nd June 2026) are based on information contained within the IFSCA circular. Readers should independently verify the full text of these DGFT notifications for complete details.

A separate, updated Consolidated Circular incorporating these amendments is being issued by IFSCA. Readers should refer to the official, most current Consolidated Circular available at www.ifsca.gov.in under Legal Framework → Circulars for authoritative and up-to-date compliance requirements.

Eligibility for Qualified Jeweller notification, import authorisation requirements, and applicable policy conditions may vary based on entity type, SEZ status, ITC(HS) classification, and other factors specific to each applicant. Entities are strongly advised to consult qualified legal, customs, trade compliance, and tax professionals before undertaking any bullion import transaction through IIBX.

The publisher is not a law firm, customs broker, or IFSCA-regulated entity. Nothing in this article constitutes legal or regulatory advice