🏦 New IFSCA Update: Compliance Boost for GIFT City Foreign Currency Accounts

On June 23, 2025, the IFSCA Official issued a crucial amendment to its earlier guidelines on the operation of GIFT City foreign currency account (FCA) maintained by Indian Resident Individuals (RIs) under the Liberalised Remittance Scheme (LRS).

This amendment is particularly important for IFSC Banking Units (IBUs) and individual investors utilizing financial services/products in GIFT City through their FCAs.

🔍 Background:

The original guidelines, issued on December 13, 2024, aimed to regulate how RIs utilize foreign remittance funds via FCAs to ensure alignment with the permitted purposes under LRS. The June 2025 amendment refines this compliance process further.

🏦 What Has Changed in GIFT City foreign currency account?

The IFSCA has amended two key paragraphs in the original directions:

✅ 1. For spending from the FCA in IFSC:

Old Requirement (Para 3(ii)) – required vague declaration.

New Amendment: The IBU must now:

“Obtain a declaration from the RI, confirming that the amount being spent from its FCA for availing financial services or financial products in IFSC is for the purpose declared while remitting the money to the FCA under LRS or is for a purpose permitted under LRS.”

👉 Impact: Strengthens the traceability of fund usage and ensures better alignment with the original intent of the remittance.

✅ 2. For further outward remittance from FCA:

Old Requirement (Para 4(ii)) – insufficient validation.

New Amendment: The IBU must now:

“Obtain a declaration from the RI, confirming that the amount being remitted from its FCA is for the purpose declared while remitting the money under LRS or is for a purpose permitted under LRS.”

👉 Impact: Prevents any misuse or deviation from declared LRS remittance purposes, both within and outside GIFT IFSC.

📘 Legal Basis & Enforcement:

• Issued under Section 12 & 13 of the IFSCA Act, 2019

• Comes into force immediately from June 23, 2025

• Applicable to all IBUs operating in GIFT IFSC

• Full circular available at: https://ifsca.gov.in/Legal/Index

📌 Why This Matters:

• Enhances regulatory compliance for all transactions routed through GIFT City

• Builds investor trust by ensuring that financial services/products are aligned with regulatory intent

• Strengthens India’s image as a clean international financial jurisdiction

📣 Final Thoughts:

This is another step toward making GIFT IFSC a globally compliant, trusted hub for cross-border finance and wealth management. Both banks and resident individuals must review and update their documentation and declarations immediately.