Unlocking Global Connectivity – IFSCA’s Circular on PSPs in International Payment Systems

Date: June 6, 2025

Issued by: International Financial Services Centres Authority (IFSCA)

For: All Payment Service Providers (PSPs) operating within GIFT IFSC

🔍 Overview

In a significant move to enhance cross-border financial connectivity, the IFSCA has issued a new circular outlining the regulatory framework for the participation of (Payment Service Providers) PSPs in International Payment Systems. This initiative aligns with IFSCA’s broader objective of promoting efficient and regulated payment infrastructure for both domestic (within IFSC) and international transactions.

📌 Key Highlights of the Circular for PSPs in International Payment Systems

1. Prior Approval Requirement

   PSPs must seek prior approval from IFSCA to participate as members of international payment systems, especially for facilitating payments to/from banks or financial institutions outside the IFSC.

2. Authorization for Systems Impacting Domestic IFSC Transactions

   If an international payment system enables transactions within IFSC (i.e., among PSPs or financial institutions located in IFSC), such a system must obtain authorization from IFSCA under Section 7(1) of the PSS Act.

3. Compliance Conditions for Domestic IFSC Linkages

   PSPs engaging in international systems that facilitate transactions with other PSPs or financial institutions within IFSC must ensure:

   • The system has IFSCA’s authorization (as above), and

   • The PSP has secured prior approval for such participation.

4. Reporting and Compliance Timeline

   PSPs must review their current participation in international systems and submit a compliance status report to the Department of Banking Supervision within 30 days (i.e., by July 6, 2025), along with a list of all such systems as of May 31, 2025.

🧭 Implications for PSPs in GIFT City

This circular is a progressive step toward strengthening regulatory oversight and ensuring that the PSP ecosystem in IFSC remains globally integrated yet domestically secure. PSPs now have a cl#ear compliance roadmap to expand their cross-border capabilities while remaining within IFSCA’s regulatory guardrails.

📥 Action Required by PSPs

• Review all international system participations.

• Verify authorizations for any IFSC-impacting transactions.

• Seek prior approvals where needed.

• Report compliance and system list to IFSCA by July 6, 2025.

🗣️ Final Word

This circular underscores IFSCA’s commitment to building a future-ready, internationally connected, and well-regulated payments ecosystem within GIFT IFSC. For PSPs looking to scale globally while operating from India’s premier international financial hub, this regulatory clarity offers both opportunity and responsibility.

📌 Circular Reference: E.File.No. IFSCA-FMPP0BR/3/2023-Banking📄 Read the Full Circular

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