HomeeducationIFSCA Releases FinTech Entity Framework in International Financial Services Centers (IFSCs)

IFSCA Releases FinTech Entity Framework in International Financial Services Centers (IFSCs)

The International Financial Services Centers Authority (IFSCA), in furtherance of its mandate to develop and regulate financial products, financial services and financial institutions at International Financial Services (IFSC) institutions and to promote the promotion of financial technology (‘FinTech’) internationally. The spectrum of banking, insurance, securities, and fund management at IFSC has released a detailed “FinTech Entity Framework for IFSCs”.

The “FinTech Entity Framework for IFSCs” aims to empower the establishment of a world-class FinTech Hub in the GIFT IFSC compared to other International Financial Institutions (IFCs). The framework proposes to cover (i) financial technology solutions (FinTech) leading to new business models, applications, processes or products in areas / activities linked to IFSCA-regulated financial services and (ii) advanced / innovative technology solutions that assist and facilitate operations. in respect of financial products, financial services and financial institutions (TechFin).

The framework provides Dedicated Control Sandbox for FinTech products or solutions namely IFSCA FinTech Regulatory Sandbox and empowers IFSCA to provide Limited Use Authorization within FinTech Regulatory Sandbox to eligible financial technology companies at IFSC. This will allow them to use and receive Grants under IFSCA FinTech Incentive Scheme 2022.

In addition, it empowers other categories / categories of technology companies (i) with an advanced / innovative technology solution that assists and assists activities related to financial products, financial services, financial institutions and, (ii) a reliable record of financial performance,  to obtain Direct Entry (IFSCA Authorization) via IFSCA without access to the Control Sandbox.

The framework also integrates with the Inter Operable Regulatory Sandbox (IoRS) system. IoRS is a proposed way to facilitate the evaluation of new mixed financial products / services that fall within the control system of more than one financial sector regulator. IFSCA will make it easier for Indian FinTech to gain access to foreign markets and seek the entry of foreign FinTech into India.

The framework proposes a Regulatory transfer procedure that will be governed by the provisions of the Memorandum of Understanding (MoU) or a special partnership or arrangement between the IFSCA and the corresponding overseas regulators.

IFSCA strives to support FinTech firms to obtain intellectual property (PoC), low-performance product (MVP), prototype development, product testing, trade, and access to global markets etc.

GIFT-IFSC offers the unique advantage of being a separate financial institution within India treated as an offshore jurisdiction site from the FEMA angle that has no limit on currency conversion. The framework released by IFSCA, the joint regulator of Bank Management, Financial Markets, Insurance and Financial Management at IFSC, will enable FinTech firms to come up with new ideas or solutions across the banking, financial or insurance sector to have seamless collaboration with one regulator.

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