🚨IFSCA Update: Key Amendments to ITFS Guidelines – What Financiers & Operators Must Know
- GIFT CFO
- 4 days ago
- 2 min read
📅 Circular Date: April 11, 2025🏛️ Issued By: IFSCA – Department of Banking📄
🔍 Background
IFSCA introduced the International Trade Finance Service (ITFS) Platform to revolutionize cross-border trade financing from India’s GIFT City IFSC. It allows exporters and importers to access financing from global financiers in a seamless and tech-driven environment.
Over the last few months, feedback from ITFS operators and market participants revealed some practical challenges around eligibility and compliance for financiers.
In response, IFSCA has amended Clause 12(2) of the original guidelines to bring clarity, strengthen risk management, and promote global participation — while ensuring alignment with international standards.
🧾 What’s Changed in Clause 12(2)? Let’s Break It Down:
✅ 1. Definition of AUM Introduced
An Explanation is added to clarify the term AUM (Assets Under Management):
“AUM refers to the total market value of all financial assets owned by the financier or managed by it on behalf of its clients.”
📌 Why This Matters: Financiers now have a clear benchmark for reporting AUM, bringing consistency across applications and evaluations.
✅ 2. Credit Recovery Capability – Now Flexible
Old Wording: Required in-house capability. New Wording (Substituted Item iii):
“The financier should have proven capability (either on its own or through outsourcing arrangements) for credit/debt recovery.”
📌 Why This Matters: Outsourcing of recovery functions is now explicitly permitted. This is great news for fintechs, NBFCs, and smaller financial players who can now rely on third-party recovery experts.
✅ 3. Factoring Business Mandate for Financiers
New Wording (Substituted Item iv):
“The financier shall be an incorporated entity carrying out the business of factoring.”
📌 Why This Matters: Only registered, incorporated entities engaged in factoring are eligible. This filters out informal or unregulated financiers and ensures only legitimate players participate.
✅ 4. FATF Compliance Requirement Introduced
New Clause (v) Added:
“The financier including any shareholders holding more than 10% of its share capital shall be from a jurisdiction which has not been identified in the public statement of FATF as ‘High Risk Jurisdiction – subject to call for action.’”
📌 Why This Matters: IFSCA is aligning ITFS operations with global anti-money laundering (AML) and terrorism financing norms. Jurisdictions flagged by FATF are now strictly barred, even for minority shareholders with 10%+ holdings.
💼 Implication for Stakeholders:
👨💼 For ITFS Operators:
Ensure all registered financiers meet the new criteria.
Review and update onboarding processes accordingly.
🏦 For Financiers:
Confirm jurisdictional compliance (FATF check).
Ensure factoring registration and recovery capabilities are documented.
🌐 For Global Investors and Trade FinTechs:
The updates reflect IFSCA’s commitment to risk-sensitive regulation, transparency, and market openness — building further trust in the GIFT IFSC ecosystem.
📌 Final Word
These amendments represent another proactive step by IFSCA to fine-tune regulations in response to market realities, while also embedding global best practices. The focus is clear: enabling secure, scalable, and compliant cross-border trade finance through GIFT City.
📢 Whether you’re a Financier, TradeTech founder, or IFSC-focused professional – staying on top of these updates is crucial as India builds the next-generation global financial gateway.
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