A Step-by-Step Guide to IFSCA’s New Informal Guidance Scheme

The International Financial Services Centres Authority (IFSCA) has introduced the Informal Guidance Scheme, 2024, to streamline and support the unique regulatory environment within India's International Financial Services Centres (IFSC). Effective from January 1, 2025, the Scheme is a significant initiative to assist financial institutions, business entities, and individuals intending to engage in the IFSC ecosystem.

1. Objective of the Scheme

The primary goal of the Scheme is to provide clarity and guidance on the legal and regulatory framework governing IFSC. With IFSC being a burgeoning global financial hub, businesses often encounter complexities in interpreting applicable rules. By addressing these challenges, the Scheme ensures:

• Informed Decision-Making: Clear understanding of the legal framework for business activities.

• Regulatory Compliance: Support for transactions and operations to meet IFSC regulations.

• Enhanced Business Efficiency: Reduction of uncertainty in navigating regulatory challenges.

2. Key Features

The Informal Guidance Scheme introduces two core methods to seek regulatory advice:

1. No-Action Letters: These letters indicate whether the Department would recommend enforcement action if a proposed activity or transaction is undertaken. It provides assurance to applicants that their plans align with IFSC regulations.

2. Interpretive Letters: These offer interpretations of specific legal provisions, such as rules, regulations, circulars, or guidelines administered by the IFSCA. These letters clarify how regulatory norms apply to specific transactions or factual scenarios.

3. Eligibility and Applicability

The Scheme is available to:

• Entities licensed, registered, or authorized by IFSCA.

• Individuals or entities intending to transact in financial products/services regulated by IFSCA.

• Businesses planning to establish operations in IFSC.

• Any other person as permitted by the Authority.

By opening this opportunity to a broad range of stakeholders, IFSCA encourages proactive compliance and greater participation in IFSC activities.

4. Application Process

To request informal guidance, applicants must:

1. Submit Electronically: Applications should be filed via the Single Window IT System (SWITS) or, until operational, through email to the IFSCA nodal cell at igdesk@ifsca.gov.in.

2. Include Details: The application must clearly specify whether the request is for a No-Action or Interpretive Letter. It should also:

3. Pay Fees: A fee of $1,000 USD is charged, with 75% allocated as guidance fees and 25% as processing fees. Payment confirmation must accompany the application.

4. Timelines: The Department endeavors to respond within 30 days of receiving a complete application, excluding any time taken by applicants to provide clarifications.

5. Exclusions

Requests may not be entertained if they:

• Are general or hypothetical in nature.

• Lack sufficient disclosure of factual details.

• Involve issues pending before courts (sub-judice).

• Do not cite applicable legal provisions.

• Duplicate previously issued guidance on substantially similar issues.

6. Confidentiality and Transparency

To balance transparency with business sensitivity, the Scheme includes provisions for confidentiality:

• Guidance letters are uploaded to the IFSCA website for public dissemination.

• Upon specific request, applicants may receive 90 days of confidentiality for sensitive guidance.

• Applicants can request redaction of specific details before public disclosure.

7. Non-Binding Nature

It is important to note:

• Guidance issued under the Scheme is non-binding and does not constitute a conclusive legal decision.

• The Authority reserves the right to take a different stance in future regulatory matters.

8. Safeguards and Actions

IFSCA ensures that guidance obtained through fraudulent means is invalidated. Such cases may lead to penalties or regulatory actions against the applicant.

Relevance for Stakeholders

This scheme is a crucial step in enhancing the ease of doing business within the IFSC. By providing interpretive clarity and regulatory assurance, it simplifies navigation for entities, fostering confidence and compliance in their operations.

Detailed Regulations: 

International Financial Services Centres Authority | Informal Guidance Scheme

Disclaimer: This post is for informational purposes only and does not constitute professional advice. While efforts are made to ensure accuracy, we do not guarantee the completeness or reliability of the information provided. Any reliance is at your own risk. Consult professionals for specific advice.