The International Financial Services Centres Authority (IFSCA) has issued a comprehensive directive to all regulated entities operating in the International Financial Services Centre (IFSC), mandating continuous validity of their regulatory approvals. According to reports from Business Standard, the circular was issued on August 10, establishing clear compliance requirements for entities operating in India's financial services hub.
As reported by Business Standard, possessing a valid Letter of Approval (LoA) under the Special Economic Zones Act, 2005 is now a prerequisite for obtaining any registration, licence, recognition or permission to undertake permissible activities in the IFSC. The regulator has established specific validity periods - one year for entities that have not commenced operations and five years for those that have commenced operations, with renewal applications required at least two months before expiry.
According to the circular reported by Business Standard, IFSCA has warned that any breach would constitute a violation of provisions under the IFSCA Act, 2019, the Special Economic Zones Act, 2005, and related rules, attracting enforcement action. The authority specifically stated that such violations could result in financial penalties, suspension or cancellation of approvals, emphasizing the serious nature of non-compliance with regulatory requirements.
The directive follows observations that certain entities were continuing business activities in the IFSC without holding valid LoAs or applicable regulatory instruments, as reported by Business Standard. In response to these findings, IFSCA has mandated that all regulated entities must ensure continuous validity of both LoAs and regulatory approvals and refrain from undertaking any business activity without them, establishing clear compliance standards for the financial services sector.
