Transformative Reforms: IFSCA's 2025 Framework

🧭 Why This New Framework?

To understand the new proposal, let’s go back to 2021. That year, IFSCA introduced a process for public consultation before making any regulations. This move was seen as a global best practice that promotes transparency, stakeholder participation, and better policy-making.

By 2025, the need to expand and strengthen this framework became clear. Here's why:

• The financial ecosystem in GIFT City has grown rapidly.

• Regulations now need to cover a wider set of instruments, not just formal laws.

• Stakeholders demanded more involvement in not only regulations but also in operational guidelines.

  
  

Hence, IFSCA is proposing a comprehensive new framework that goes beyond just regulations — and introduces the concept of “Subsidiary Instructions.”

🔍 What Are Subsidiary Instructions?

“Subsidiary Instructions” refer to any directive issued by the IFSCA in the form of a circular, guideline, framework, or any similar document that impacts how financial products, services, or institutions operate.

Think of them as:

• How-to guides, clarifications, or rulebooks

• Not laws, but essential for operational clarity

• Often used to implement or explain the main regulations

  
  

For example, if a regulation mandates risk-based capital requirements, a subsidiary instruction might explain how exactly to calculate risk weightings for different asset classes.

✅ Why Was There a Need for a Consultation Paper to Regulate Subsidiary Instructions?

Previously, subsidiary instructions were not always subject to public consultation, even when they had a major impact on businesses and investors. This caused concern among stakeholders who wanted more say in how these operational details are framed.

Hence, IFSCA felt the need to:

1. Clearly define what counts as a subsidiary instruction.

2. Mandate public consultation for those that involve substantive policy changes.

3. Provide transparency and predictability in how these instructions are made.

   
   

🔄 Key Features of the New 2025 Framework

Let’s break down what this new regulation brings to the table:

1. Expanded Public Consultation

• Both regulations and key subsidiary instructions must undergo a minimum 21-day public comment period.

• Comments are to be reviewed and responded to publicly.

• Any major change based on feedback might trigger a second round of consultation.

  
  

2. Structured Procedure

• Drafts will be published with:

- Global benchmarks

- Specific problems being addressed

- Objectives of the regulation/instruction

• Comments will be summarized and published before final notification.

  
  

3. Flexibility for Urgent Situations

• In cases of emergencies, market integrity concerns, or international obligations, IFSCA can skip the consultation process but must record reasons.

  
  

4. Mandatory 5-Year Review

• All regulations must be reviewed every 5 years for relevance, effectiveness, and alignment with global best practices.

  
  

5. New Engagement Channels

• IFSCA may use expert committees or alternative consultation methods to reach a wider stakeholder base.

  
  

🚫 What’s Exempt from This Process?

Certain internal matters or procedural circulars that don’t change policy direction are not subject to public consultation, including:

• Internal rules for IFSCA staff

• Emergency directives

• Joint decisions with other regulators

• Obligations under international treaties

  
  

💼 What Does It Mean for Businesses in GIFT City?

This draft framework will:

• Empower stakeholders with a voice in policy-making.

• Improve predictability of regulations and instructions.

• Support the goal of Ease of Doing Business in IFSCs.

• Set a new benchmark for governance and transparency in India’s financial regulatory space.

  
  

📢 How You Can Participate

IFSCA has invited public comments on the draft by June 11, 2025.

👉 You can submit your feedback to: 📧 sreekara.rao@ifsca.gov.in 📝 Format: MS Word/Excel 🗓 Deadline: June 11, 2025

🧩 Final Thoughts

With this forward-looking regulatory process, IFSCA is creating a mature, transparent, and globally-aligned ecosystem for financial services. The inclusion of “Subsidiary Instructions” in the formal regulatory process is a crucial step that ensures greater consistency and stakeholder trust. This reform is essential as GIFT City evolves into a world-class financial center.

In conclusion, the new framework is not just a change in policies but a transformation that promises long-term benefits for all stakeholders involved. Stakeholders can make their voices heard, supporting continuous improvement in regulations through effective feedback mechanisms. Embracing these changes is vital as we collectively aim for a robust financial future in GIFT City.