One Regulator, Fourteen Statutes: How the IFSCA Act, 2019 Allocates Regulatory Power in GIFT IFSC

GIFT IFSC is often described as having a “unified regulator”. That is accurate but incomplete. The International Financial Services Centres Authority (IFSCA) did not receive a new, self-contained code of financial regulation. What Parliament did in the International Financial Services Centres Authority Act, 2019 (the IFSCA Act) was more technical, and more consequential: it moved the powers of four Indian financial regulators under fourteen existing statutes to a single authority, but only within a defined territory and only for a defined subject-matter. Those two limits frame almost every legal question in GIFT IFSC.

Where the IFSCA Act, 2019 Applies: The Territorial Link to the SEZ Act

Section 2 of the IFSCA Act applies it to International Financial Services Centres set up under section 18 of the Special Economic Zones Act, 2005 (SEZ Act). Section 18(1) of the SEZ Act allows the Central Government to approve an IFSC in a Special Economic Zone, with a proviso that only one IFSC may be approved in any one SEZ.

Two consequences follow. First, IFSCA’s authority is territorial: it attaches to financial activity carried on by units in the IFSC, not to a financial activity simply because it is cross-border or denominated in foreign currency. Second, GIFT IFSC remains part of an SEZ. The SEZ Act, which under its section 51 also has overriding effect, continues to govern matters such as approval of units and their SEZ obligations. (Article 2 of this series examines what that dual character means for the legal status of an IFSC unit.)

The Transfer Mechanism: Section 13 and the First Schedule

The core of the IFSCA Act 2019 is section 13(1). “Notwithstanding anything contained in any other law”, all powers exercisable by an “appropriate regulator” under the Acts listed against it in the First Schedule are, in the IFSCs, to be exercised by IFSCA, in so far as they relate to the regulation of financial products, financial services or financial institutions.

The First Schedule lists four appropriate regulators and fourteen statutes:

Section 33 and the Second Schedule close the loop from the other side. Each parent statute was amended to insert a provision (for example, section 51A of the Banking Regulation Act, section 28C of the SEBI Act and section 44A of FEMA) stating that the parent regulator’s powers under that Act “shall not extend” to an IFSC and “shall be exercisable by” IFSCA, in so far as the regulation of financial products, services and institutions permitted in the IFSC is concerned. Both provisions came into force on 1 October 2020 under a Ministry of Finance notification of 29 September 2020.

The drafting is deliberate. IFSCA does not simply acquire a parallel power; within the IFSC, the parent regulator’s power is withdrawn to the same extent.

Procedure Travels with Power

Section 13(4) ensures that procedure follows substance. It provides that the provisions of the First Schedule statutes on:

• the manner of applying for, or withdrawing, recognition or registration, and furnishing information;
• inspection, investigation, prosecution, settlement, compounding, adjudication, and the filing of appeals arising from these; and
• the determination and recovery of fees, fines and penalties,

apply mutatis mutandis to financial products, services and institutions under the IFSCA Act.

In practice, this means the enforcement architecture of the parent statute generally follows the activity. A question about how a penalty on a securities-market intermediary in the IFSC is adjudicated or appealed is therefore answered by reading the relevant parent statute through section 13(4), together with IFSCA’s own regulations. It is not answered by the IFSCA Act alone. (Article 4 considers enforcement and appeals in detail.)

Section 13(5) adds a distinctly IFSC feature: penalties, fines, fees and settlement amounts are collected in the foreign-currency equivalent. The conversion uses the RBI reference rate on the date of the order. Under section 13(6), sums realised as penalties or fines are credited to the Consolidated Fund of India in rupees.

Defining the Perimeter: “Financial Product” and “Financial Service”

The subject-matter limit is set by section 3(1). “Financial product” covers securities, contracts of insurance, deposits, credit arrangements, certain foreign currency contracts, and anything the Central Government notifies. “Financial service” is defined through fourteen sub-clauses, from dealing and deposit-taking to advice and payment services, again with a residual power of notification.

That residual power has been used to widen the perimeter well beyond conventional finance. Examples include:

• aircraft leases (including operating, financial and hybrid leases) as a financial product, and Global In-house Centres as a financial service (notifications of 16 October 2020);
• book-keeping, accounting, taxation and financial crime compliance services as financial services (notification of 18 January 2024). These are subject to conditions that the providing units must not be formed by splitting up, reconstructing or reorganising a business already in existence in India, and must not take over existing contracts or work arrangements from group entities in India;
• operating leases of specified oilfield equipment, specified by IFSCA through a notification dated 5 January 2026 issued under an earlier Central Government notification of 14 December 2021 that enabled operating leases of products or equipment.

Whether IFSCA regulates an activity can therefore turn on a Gazette notification rather than on the Act itself.

What the IFSCA Act, 2019 Does Not Do?

Three limits deserve emphasis, because commercial summaries often blur them.

It does not displace Indian law generally. Section 30 gives the IFSCA Act overriding effect only against inconsistent provisions. Laws outside the First Schedule continue to apply in the IFSC unless they are modified. Examples include company law, income-tax, GST, insolvency, arbitration, anti-money-laundering and data-protection legislation. Section 31 lets the Central Government disapply or modify other Central Acts for IFSC financial products, services and institutions. That power has a parliamentary safeguard: a draft of the notification must be laid before both Houses for thirty days. Absent such a modification, or a modification under the relevant Act’s own enabling power, the general law governs.

It transfers the powers of regulators, not of the Central Government. Section 13 and the Second Schedule speak of powers exercisable by the RBI, SEBI, IRDAI and PFRDA. Rule-making powers that a parent statute vests in the Central Government are not, on the text, transferred to IFSCA. FEMA is the most significant example.

Its carve-out is limited to the IFSC. Each Second Schedule provision withdraws the parent regulator’s powers only “in so far as” the regulation of financial products, services and institutions permitted in the IFSC is concerned. On the text, the parent regulator’s jurisdiction over persons outside the IFSC is not displaced merely because those persons deal with an IFSC entity. For example, rules governing an Indian resident’s outward remittance continue to come from the RBI and the Central Government. Several articles in this series (notably Articles 12, 13 and 50) turn on this boundary.

Other Structural Provisions Worth Knowing

• Currency (section 20): financial-services transactions in an IFSC are to be in the foreign currency IFSCA specifies by regulations, in consultation with the Central Government.
• Policy directions (section 21): IFSCA is bound by the Central Government’s written directions on questions of policy.
• Parliamentary oversight (sections 28–29): every IFSCA regulation must be laid before Parliament, which may modify or annul it.
• Composition (section 5): the RBI, SEBI, IRDAI and PFRDA each nominate an ex officio member of IFSCA.

Commencement

The Act received assent on 19 December 2019 but commenced in stages: IFSCA was established on 27 April 2020 (head office, Gandhinagar); sections 12, 17–26, 28, 31 and 32 commenced on 21 August 2020; and sections 13 and 33 on 1 October 2020.

A working Method

For any GIFT IFSC question, three steps usually locate the governing law:

1. Is the activity a notified or defined financial product or service carried on by an IFSC unit? If so, IFSCA regulations, and the parent statute as applied through section 13, are the first port of call.
2. Is a Central Government instrument involved? If so (for example, FEMA rules or a section 31 modification), the Government instrument governs, not IFSCA.
3. Is the question outside the First Schedule altogether? Tax, company, insolvency and arbitration questions are examples. If so, the general Indian statute applies unless it has been specifically modified for the IFSC.

As of 17 September 2026, the statutory text described above remains unamended. Much of the regulatory substance, however, now sits in IFSCA’s regulations, which change frequently.

Frequently Asked Questions

1. What is the IFSCA Act, 2019?

The IFSCA Act, 2019 establishes a unified regulator for financial products, services and institutions operating in International Financial Services Centres (IFSCs).

2. What are the main powers of IFSCA under the Act?

Under Section 13, IFSCA exercises specified regulatory powers of the RBI, SEBI, IRDAI and PFRDA within IFSCs.

3. Does the IFSCA Act override all Indian laws?

No. It overrides inconsistent provisions only to the extent provided by the Act. Other Indian laws continue to apply unless specifically modified.

4. Which laws fall under IFSCA’s regulatory authority?

The First Schedule covers 14 statutes relating to banking, securities, insurance, pensions and other financial activities.

5. Does IFSCA regulate all cross-border financial transactions?

No. Its jurisdiction depends on the activity, the IFSC territorial boundary and whether the activity falls within the defined or notified financial products and services.