The Gujarat International Finance Tec-City GIFT City (GIFT IFSC) is a burgeoning hub for financial technology (FinTech) and technology-driven financial services (TechFin) companies. Regulated by the International Financial Services Centres Authority ( IFSCA Official ) , GIFT IFSC offers a conducive environment for innovative financial solutions to thrive. This article provides an in-depth guide on the steps to proceed for FinTech application, sandbox opportunities, authorization processes, and the IFSCA FinTech Incentive Scheme, 2022.
Steps to Proceed for FinTech Application
Entities offering financial technology solutions that introduce new business models, applications, processes, or products in financial services can apply under IFSCA's regulatory framework. The application process includes two primary routes:
Limited Use Authorization (Sandbox)
Authorization
Limited Use Authorization
A Limited Use Authorization 'Sandbox' allows FinTech entities to experiment with innovative solutions under a controlled environment. This can be done either in a live market (Regulatory Sandbox) or isolated from the live market (Innovation Sandbox). The sandbox environment provides facilities, exemptions, and relaxations for a limited period, typically 12 months, extendable by another 6 months upon request.
Types of Sandboxes of IFSCA
FinTech Regulatory Sandbox: Test FinTech solutions in a live environment with real customers.
IFSCA FinTech Innovation Sandbox: Develop and test solutions in isolation from the live market.
Inter-operable Regulatory Sandbox (IoRS): For foreign FinTechs entering India with IFSCA as the principal regulator.
Overseas Referral Regulatory Mechanism / FinTech Bridges: Governed by MoUs or collaborations between IFSCA and overseas financial sector regulators.
Eligibility
Indian Applicant:
Registered with DPIIT as a start-up related to FinTech. or
Incorporated as a company or LLP in India. or
Branch of an Indian company or LLP in IFSC. or
Entity operating within the ecosystem regulated by RBI, SEBI, IRDAI, or PFRDA.
Foreign Applicant:
From jurisdictions not identified as "High-Risk" by FATF.
Mandatory Requirements
Innovative solution adding significant value. or
Need for live testing. or
Technology-centric core product or service. or
Prior limited offline testing. or
Identifiable benefits to customers or financial sectors. or
No risks to the financial system with a robust risk management strategy. or
Demonstrated testing readiness and deployment intention post-testing.
If eligible, applicants can proceed to apply for Limited Use Authorization under the Regulatory Sandbox or Innovation Sandbox.
Authorization
Authorization is required to conduct business activities within GIFT IFSC. This is applicable to entities with deployable solutions, working products, and a revenue-earning track record in at least one of the last three financial years.
Eligibility
Indian Applicant:
Registered with DPIIT as a start-up related to FinTech. or
Incorporated as a company or LLP in India. or
Branch of an Indian company or LLP in IFSC. or
Entity operating within the ecosystem regulated by RBI, SEBI, IRDAI, or PFRDA.
Foreign Applicant:
From jurisdictions not identified as "High-Risk" by FATF.
Mandatory Requirements
Technology-centric core product or service. and
Presence of a deployable solution/working product. and
Revenue-earning track record in at least one of the last three financial years. and
Security Assessment Report if available.
Fee Structure for Authorization
Application Fee: USD 500
Authorization Fee: USD 1500
Re-Registration Fee: USD 1500
Post Authorization
Once authorized, entities must establish an office in GIFT IFSC and commence operations within 120 days. They can operate as a newly established body corporate, a subsidiary, or a branch of an Indian or foreign body corporate in IFSC.
FinTech
Banking Sector: Remittance and payments, digital lending, buy now pay later, digital banking, open banking.
Capital Markets: Crowdfunding, wealth tech, robo-advisory, sustainable finance products.
Insurance Sector: InsurTech, digital innovation in insurance, embedded insurance.
TechFins
Agri Tech, Regulatory Tech, Space Tech, Climate/Green/Sustainable Tech, DefenseTech.
Solutions for BFSI leveraging AI/ML, Big Data, Biometrics, Cyber security, Digital Identity, Distributed Ledger Technology, IoT, Metaverse, Quantum Tech, Web 3.0.
GIFT IFSC offers a robust and supportive ecosystem for FinTech and TechFin entities. With comprehensive regulatory frameworks, sandbox opportunities, and a variety of financial incentives, it is poised to become a global leader in financial innovation.
Disclaimer: This post is for general informational purposes only and not professional advice. We strive for accuracy but make no warranties about the content's reliability or completeness. Use at your own risk. We are not liable for any loss or damage from using this post. Consult professionals for your specific situation.
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