IFSCA Issues a New Framework for Fintech Entities in IFSC

BANKING AND ECONOMY

A new ‘Framework for FinTech Entity in the IFSCs’ was issued by the International Financial Services Centres Authority (IFSCA) in accordance with the proposal made in the recent budget 2022-23.

The framework was issued to develop and regulate financial products, financial services and financial institutions in the International Financial Services Centres (IFSC) and to encourage the promotion of financial technologies (‘FinTech’) across the spectrum of banking, insurance, securities, and fund management in IFSC.

The framework is aimed at giving a boost to the establishment of a world-class FinTech Hub at GIFT IFSC comparable with other International Financial Centers (IFCs) - as per the Union budget 2022-23. 

The framework proposes to cover;

  1. Financial technology (FinTech) solutions resulting in new business models, applications, processes, or products in areas/activities linked to financial services regulated by IFSCA. Advanced/innovative technological solutions which aid and assist activities in relation to financial products, financial services, and financial institutions (TechFin). 
  2. The framework provides for a dedicated Regulatory Sandbox for FinTech products or solutions namely IFSCA FinTech Regulatory Sandbox and empowers IFSCA to grant Limited Use Authorization within FinTech Regulatory Sandbox to the eligible financial technology entities in IFSC.

The framework also incorporates the Inter Operable Regulatory Sandbox (IoRS) mechanism.

The framework also proposes a regulatory referral mechanism which shall be governed as per the provisions of the Memorandum of Understanding (MoU) or collaboration or special arrangement between IFSCA and corresponding overseas Regulators.

   Important points for the exam:

  • A new “Framework for FinTech Entity in the IFSCs” was issued by the International Financial Services Centres Authority (IFSCA) in accordance with the proposal made in the recent budget 2022-23.
  • The framework was issued to develop and regulate financial products, financial services and financial institutions in the International Financial Services Centres (IFSC) and to encourage the promotion of financial technologies (‘FinTech’) across the spectrum of banking, insurance, securities, and fund management in IFSC.
  • The framework is aimed at giving a boost to the establishment of a world-class FinTech Hub at GIFT IFSC comparable with other International Financial Centers (IFCs) - as per the Union budget 2022-23. 

   Facts to know:

  • Headquarters of the International Financial Services Centres Authority (IFSCA): Gandhinagar, Gujarat.
  • Composition of IFSCA: 9 members for a term of three years.
  • IFSCA was established to regulate all financial services in International Financial Services Centres (IFSCs).

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