IFSCA's Draft TechFin and Ancillary Services Regulations, 2025: A New Era for Global BFSI Services from GIFT City

The International Financial Services Centres Authority: A New Era of Financial Innovation

In this blog, we break down what this regulation means, who it affects, and why it matters—especially if you're a financial services provider, a tech company, or a global investor eyeing India’s first IFSC.

🔍 What Are TechFin and Ancillary Services?

TechFin refers to technology-led services that support financial institutions and products. These include AI-driven compliance tools, cybersecurity platforms, cloud-based KYC solutions, and more.

Ancillary Services include vital support functions like:

• Legal, accounting, and auditing services

• Risk and compliance services

• Fund administration

• HR, payroll, valuation, and secretarial support

• Marketing and business consulting

  
  

These services play a critical role in supporting BFSI (Banking, Financial Services, Insurance) operations globally. Together, they help regulated financial entities operate efficiently, stay compliant, and innovate.

🎯 Why Is IFSCA Introducing These New Regulations?

The new regulations aim to:

• 📌 Provide a single, unified registration and compliance system for TechFin and Ancillary Service Providers.

• 🤝 Facilitate international service providers' operations within GIFT-IFSC.

• 🌏 Attract global players and support cross-border financial services.

• 🛠️ Encourage outsourcing permissible financial functions to GIFT City, bringing business back to India.

  
  

In essence, this framework enables "India for the world" in financial services. The intent is to create a supportive environment for both domestic and international players.

🏛️ Who Can Register Under the New Framework?

Entities wishing to provide these services must:

• ✅ Set up a presence in GIFT IFSC (as a company, LLP, or branch).

• ✅ Apply via IFSCA's Single Window IT System (SWIT).

• ✅ Meet “fit and proper” criteria for promoters, key persons, and compliance heads.

• ✅ Have principal and compliance officers with professional qualifications and a minimum of 3 years of relevant experience.

  
  

Good news for existing Ancillary and TechFin entities in IFSC: You have 12 months (extendable to 24 months) to migrate to the new regime.

🌐 Who Can Receive These Services?

The approved service recipients include:

• GIFT IFSC entities

• Overseas BFSI companies

• Indian entities setting up a presence in IFSC

  
  

The recipients must be non-residents and not based in any high-risk FATF-identified jurisdictions.

💸 Currency & Compliance

• All operations must be conducted in “Specified Foreign Currencies” (like USD), although INR accounts can be maintained for administrative expenses.

• Financial reports to IFSCA must be submitted in USD unless otherwise specified.

  
  

📊 Reporting, Inspections & Enforcement

TAS providers must comply with:

• Periodic reporting to IFSCA

• A code of conduct and operational disclosures

• Inspections and information requests

• Penalties for non-compliance, which may include suspension or cancellation of registration

  
  

✅ What’s Allowed Under These Regulations?

🧾 First Schedule – Ancillary Services:

This schedule encompasses:

• Risk management support

• Compliance and governance services

• Fund administration

• Legal and auditing services

• Secretarial, valuation, and HR/payroll functions

  
  

💻 Second Schedule – TechFin Services:

This schedule includes:

• Cybersecurity, RegTech, and SupTech solutions

• Cloud and data infrastructure

• Blockchain, AI/ML, and Quantum Tech in BFSI

• Digital identity and fraud prevention

• ERP systems, digital banking support, and much more

  
  

❌ Fourth Schedule – What’s Not Allowed?

Certain services are not permitted under these regulations, including:

• Facility management or building services

• Transport and logistics

• Regulated core activities that cannot be outsourced

  
  

📌 Why It Matters for GIFT City

This regulation is essential for GIFT IFSC’s mission to:

• Become a regional and global financial capability hub.

• Offer a plug-and-play ecosystem for global BFSI outsourcing.

• Promote tech-led financial innovation with robust governance.

  
  

📝 The Impact on Global Finance

The introduction of these regulations positions India as a competitive player in the global financial landscape. By fostering innovation and compliance, it attracts investments and enhances the credibility of the IFSC.

The emphasis on tech-driven solutions encourages a modern approach to finance. Companies can leverage technology to streamline operations and ensure compliance, ultimately benefiting the economy.

For those involved in the financial world, understanding these developments is crucial. Keeping an eye on how IFSCA rolls out these regulations will provide insights into future trends in financial services.

📥 Want to Give Feedback?

IFSCA is seeking public comments on this draft until 🗓️ June 1, 2025. Submit your inputs via email to:

📧 ancillary@ifsca.gov.in

📧 cc: kalpesh.mehta@ifsca.gov.in

📎 Subject: “Comments on draft IFSCA (TechFin and Ancillary Services) Regulations, 2025”

📄 Format: Word or Excel, with rationale and global comparisons

✨ Final Thoughts

With this draft regulation, IFSCA is setting the stage for a vibrant ecosystem of tech-driven, compliance-backed service providers in GIFT City. If you're part of the BFSI or tech sector—whether domestic or global—this is your gateway into the next big financial revolution from India.

The development of a cohesive regulatory framework is essential. It not only simplifies the process for new entrants but also encourages existing firms to innovate.

📍 Stay tuned with GIFTCFO for more insights into how this regulation unfolds and how your business can benefit from India’s growing IFSC landscape.