Understanding IFSCA's Latest Regulatory Updates: How They Strengthen the Financial Ecosystem at GIFT IFSC

GIFT CFO
Mar 27
3 min read

Introduction

The International Financial Services Centres Authority (IFSCA) recently held its 23rd Authority meeting on March 26, 2025. Several key regulatory updates were approved, aimed at enhancing the financial ecosystem at GIFT IFSC. These developments are expected to improve market transparency, ease of doing business, and investor confidence.

In this article, we will break down the key regulatory changes, their implications, and what they mean for businesses, investors, and financial service providers in GIFT IFSC.

1. Introduction of IFSCA (Capital Market Intermediaries) Regulations, 2025

The new Capital Market Intermediaries (CMI) Regulations, 2025 replace the existing 2021 regulations and introduce a more robust framework for the registration, regulation, and supervision of capital market intermediaries.

Key Highlights:

✅ New Category of Intermediaries:

Introduction of "Research Entity" as a separate intermediary.
Removal of the "Account Aggregator" category.
Incorporation of Distributors & ESG Ratings and Data Products Providers (ERDPP) into formal regulations.
Credit Rating Agencies (CRA) can undertake ESG ratings only after obtaining separate registration.

✅ Regulations for Principal Officers & Compliance Officers:

Defined minimum qualification and experience requirements.
Companies with multiple registrations must appoint separate officers for each function, though exceptions apply.

✅ Revised Net Worth Requirements:

A company operating as a branch in IFSC must earmark its home jurisdiction net worth for IFSC operations.
Specific minimum net worth requirements have been set:
- Credit Rating Agencies (CRA): USD 200,000
- Investment Advisers: USD 25,000
- Investment Bankers: USD 100,000
Only "liquid assets" will be considered for net worth calculation.

✅ Annual Compliance Audit Requirement:

All intermediaries must submit an annual compliance audit to IFSCA by September 30th each year.

Impact on GIFT IFSC:

✔ Strengthens investor protection and ensures global best practices.

✔ Streamlines compliance for financial intermediaries, reducing operational risks.

✔ Enhances credibility and attracts foreign investments in the IFSC ecosystem.

2. IFSCA (KYC Registration Agency) Regulations, 2025

To enhance KYC compliance and customer due diligence, IFSCA has approved a framework to regulate KYC Registration Agencies (KRAs) in IFSC.

Key Features:

🔹 Defines eligibility, registration, and operational requirements for KRAs.

🔹 Sets qualification criteria and functions for KRAs.

🔹 Establishes a Code of Conduct for KRAs.

🔹 Mandatory KYC record uploads by all IFSCA-regulated entities.

🔹 The authority has the power to exempt certain entities from compliance.

Impact on GIFT IFSC:

✔ Simplifies customer onboarding & due diligence.

✔ Reduces repetitive KYC processes for financial institutions.

✔ Enhances transparency and ensures regulatory compliance with international standards.

3. Transition to IFSCA (Fund Management) Regulations, 2025

IFSCA has introduced a one-time opportunity for extending the validity of expired private placement memoranda (PPM), subject to conditions.

Key Benefits:

Ensures seamless transition for fund managers under the new regulations.
Clarifies the process for updating PPMs as per regulatory changes.
Helps in aligning fund management activities with global standards.

Impact on GIFT IFSC:

✔ Provides fund managers with regulatory clarity.

✔ Enhances the ease of doing business for fund management companies.

✔ Strengthens India’s alternative investment fund ecosystem at IFSC.

Final Thoughts: Strengthening GIFT IFSC as a Global Financial Hub

These regulatory updates mark a significant step forward in making GIFT IFSC a globally competitive financial hub. The new framework promotes compliance, transparency, and ease of doing business, ensuring that financial services in GIFT IFSC align with international standards.