IFSCA Directions on ISIN Allocation in IFSC and Its Impact on Global Investors and Indian Businesses

The International Financial Services Centres Authority issued a regulatory direction on February 06, 2026, that directly affects how securities are identified and held within India’s International Financial Services Centre. This circular introduces a structured requirement for IFSC units to obtain International Securities Identification Numbers from a recognized depository located within IFSC rather than relying on domestic depositories in India.

This regulatory step plays a critical role in strengthening IFSC as a globally aligned financial ecosystem and brings clarity for international investors and Indian businesses operating through GIFT City.

Understanding the Purpose Behind the IFSCA ISIN Direction

The International Financial Services Centre was created to compete with established global financial hubs. To achieve this objective, regulatory consistency, operational independence, and global compatibility are essential.

IFSCA observed that while some IFSC units were already using IFSC-recognized depositories for ISIN allocation, many continued to rely on domestic Indian depositories. This fragmented approach limited regulatory oversight and weakened IFSC’s independent market infrastructure.

The new direction addresses this gap by ensuring that securities issued or dematerialized within IFSC are governed entirely within the IFSC regulatory framework.

What is an ISIN, and why does it matter in IFSC

An International Securities Identification Number is a globally accepted code that uniquely identifies securities such as equity shares, bonds, debentures, and other permitted financial instruments.

For international investors, ISINs are not just identifiers. They determine settlement efficiency, custody compatibility, compliance reporting, and ease of cross-border transactions. When ISINs are issued outside the IFSC ecosystem, it creates regulatory overlaps that reduce operational efficiency for global capital.

By mandating ISIN issuance through IFSC-recognized depositories, IFSCA ensures that IFSC securities are treated as globally standard instruments rather than extensions of the domestic Indian market.

Key Directions Issued by IFSCA

The circular introduces two clear and binding requirements for IFSC Units.

First, any IFSC unit intending to dematerialize securities or permitted financial products must obtain ISINs exclusively from a depository recognized by IFSCA.

Second, IFSC Units that have already obtained ISINs from domestic depositories in India must transition to new ISINs issued by an IFSC-recognized depository no later than August 31, 2026.

This transition requirement applies across instruments and structures, ensuring a uniform regulatory approach within IFSC.

Transition Timeline and Regulatory Accountability

IFSCA has provided a defined transition window to allow issuers and market participants adequate time to realign systems and processes.

The recognized depository in IFSC is required to coordinate with domestic depositories to ensure smooth onboarding and migration. To support this process, the IFSC depository must issue detailed FAQs and operational notices to guide IFSC units.

Additionally, the depository must submit a compliance confirmation to IFSCA by September 30, 2026, certifying that the transition has been completed in accordance with regulatory directions.

This structured accountability framework reinforces trust among global investors and regulators.

Continued Access to International Central Securities Depositories

The circular also clarifies an important point for global issuers. Issuers may continue to use International Central Securities Depositories for the issuance and listing of debt securities and other permitted financial products, as allowed under the IFSC Listing Regulations 2024.

This clarification ensures that the new ISIN requirement does not restrict global market access or disrupt existing international issuance strategies. Instead, it strengthens regulatory supervision while preserving operational flexibility for global capital markets.

Why This Matters for Global Investors

For international investors, this regulatory direction significantly improves transparency, governance, and confidence in IFSC-issued securities.

When securities are identified, settled, and supervised within IFSC, it reduces jurisdictional ambiguity. This alignment improves risk assessment, enhances compliance clarity, and supports smoother capital inflows from outside India.

Investors benefit from a market infrastructure that mirrors global financial centres, making IFSC a more credible destination for offshore investments, structured products, and cross-border listings.

Strategic Advantages for India-Focused Businesses Using IFSC

Indian businesses that use IFSC to raise foreign capital or issue international instruments gain long-term strategic advantages from this regulatory change.

By issuing securities with IFSC-based ISINs, Indian issuers position themselves within an internationally recognized regulatory ecosystem rather than a domestic framework. This enhances credibility among foreign investors, improves access to global capital pools, and simplifies cross-border settlement.

For businesses expanding internationally or structuring offshore investment vehicles, this change supports smoother fundraising and compliance alignment.

Strengthening IFSC as an Independent Financial Jurisdiction

One of the most significant outcomes of this circular is the reinforcement of IFSC as a standalone financial jurisdiction.

A unified ISIN issuance framework enables IFSCA to exercise comprehensive supervision over securities lifecycle management. This strengthens market integrity, improves data visibility, and enhances regulatory responsiveness.

Over time, this independence supports IFSC’s ambition to function on par with established international financial centers while maintaining regulatory clarity for market participants.

Compliance Considerations for IFSC Units

IFSC units must proactively assess their current ISIN structures and identify whether securities are linked to domestic depositories. Early engagement with IFSC-recognized depositories is essential to avoid last-minute compliance risks.

Operational planning should include system updates, investor communication strategies, and coordination with custodians and exchanges to ensure a seamless transition before the August 31, 2026, deadline.

Non-compliance could expose issuers to regulatory scrutiny and operational disruptions, making early action critical.

Long-Term Impact on Capital Market Development

This regulatory step is not an isolated compliance requirement. It forms part of a broader effort to deepen IFSC’s capital market infrastructure.

A harmonized ISIN framework improves market efficiency, encourages global participation, and supports innovation in financial products. Over time, this strengthens liquidity. enhances investor confidence and reinforces IFSC’s position as a preferred gateway for international capital into India.

Conclusion

The IFSCA direction on obtaining ISINs from recognized depositories in IFSC represents a foundational shift in how securities are structured, supervised, and positioned within India’s international financial ecosystem.

For global investors, it delivers clarity and confidence. For Indian businesses, it enhances access to international capital. For IFSC, it strengthens regulatory independence and global competitiveness.

As the transition deadline approaches, timely compliance and strategic alignment will be crucial for market participants seeking to capitalize on the evolving IFSC framework and its increasing role in global finance.

For more info, connect with CA Gaurav Kanudawala, founder of GIFT CFO.

Call: +919726372715 Email: info@giftcfo.com