The International Financial Services Centers Authority (IFSCA) has issued the Payment and Settlement Systems Regulations, 2024, to establish a framework for the authorization and operation of payment systems in international financial services centers ( IFSC). These regulations, issued under the International Financial Services Centers Authority Act 2019 and the Payment and Settlement Systems Act 2007, outline procedures for applying for authorization to operate financial services systems. payment, requirements for obtaining approval in principle and the issuance of certificates of authorization. They also detail the requirements for compliance with international standards, such as the Principles for Financial Market Infrastructures (PFMI), as well as the rules for presenting financial statements and other necessary information. The regulations provide guidance on finding exemptions, relaxing enforcement, and addressing procedural issues. Additionally, the new regulations repeal the RBI Regulations, 2008 on Payment and Settlement Systems for IFSCs, but the actions taken under the earlier regulations remain valid. This regulation came into force upon its publication in the Official Journal on October 14, 2024.

INTERNATIONAL FINANCIAL SERVICES CENTERS AUTHORITY

NOTIFICATION

Gandhinagar, October 14, 2024

International Financial Services Centers Authority (Payment and Settlement Systems) Regulations, 2024

F. No. IFSCA/GN/2024/009.—In exercise of the powers conferred by paragraph (1) of Article 28 read with paragraph (1) of Article 12 and subsection (1) of the section 13 of the International Financial Service Centers Authority Act, 2019 (50 of 2019); and section 34 B read with subsection (1) and clauses (b) to (f) of subsection (2) of section 38 of the Payment and Settlement Systems Act, 2007 (51 of 2007 ), the International Financial Services Act The Centers Authority hereby makes the following regulations, namely: –

CHAPTER ONE

PRELIMINARY

1. Short title and beginning. –

(1) These regulations may be called the International Financial Services Centers Authority (Payment and Settlement Systems) Regulations 2024.

(2) They enter into force on the date of their publication in the Official Journal.

2. Objective. –

These regulations define the process for authorizing and operating payment systems in international financial services centers.

3. Definitions. –

(1) In these Regulations, unless the context otherwise requires, terms defined herein shall have the meanings assigned to them below and their related expressions and variations shall be construed accordingly:

(a) “Act” means the Payment and Settlement Systems Act 2007 (51 of 2007);

(b) “Certificate of Authorization” means the certificate containing the authorization issued by the Authority under subsection (1) of section 7 of the Act;

(c) “Authority” means the International Financial Services Centers Authority established under subsection (1) of section 4 of the International Financial Services Centers Authority Act, 2019 (50 of 2019);

(d) “Board” means the committee of the Authority known as the Payment and Settlement Systems Regulatory and Oversight Board, constituted under paragraph (2) of section 3 of the Act;

(e) “International Financial Services Centre” has the meaning assigned to it under clause (g) of subsection (1) of section 3 of the Service Centers Authority Act, 2019 international financiers (50 of 2019);

(2) Words and expressions used and not defined in these regulations but defined in the Act or the Reserve Bank of India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 1949) or international financial service centers. Authority Act, 2019 (50 of 2019) or any rules or regulations made thereunder shall have the same meaning respectively assigned to them in such laws, rules or regulations or in any statutory amendment or reconstitution thereof, as the case.

CHAPTER II

AUTHORIZATION OF PAYMENT SYSTEMS

4. Request for authorization to start or operate a payment system. –

(1) Any person wishing to start or operate a payment system in an international financial services center (hereinafter referred to as “applicant”) must submit an application under paragraph (1) of Article 5 of the Law to the ‘Authority for grant of authorization under subsection (1) of section 7 of the Act.

(2) The application under sub-regulation (1) must be made in the form and manner specified by the Authority.

(3) The application under sub-regulation (1) must be accompanied by a non-refundable application fee of USD 1,000.

5. Grant of approval in principle. –

(1) After considering the application for the grant of authorization under sub-regulation (1) of rule 4, the Authority may issue an “approval in principle” requiring the applicant to satisfy the conditions of sub-section (1) of section 7 of the Act and any other conditions that may be stipulated by the Authority.

(2) The grant of an “approval in principle” by the Authority does not automatically entitle the applicant to obtain authorization.

6. Granting of the certificate of authorization. –

(1) After considering the application, if the Authority is satisfied that the conditions of subsection (1) of section 7 of the Act are met, it may issue a certificate of authorization in the form specified by the Authority , the applicant to start a payment system and specify the date on which the authorization will take effect.

(2) The certificate of authorization shall be issued upon receipt of such non-refundable fee as may be specified from time to time by the Authority for each subcategory of payment systems operators.

(3) The Authority, in granting permission, may impose such additional conditions as it considers appropriate, and the permission so granted is effective subject to those conditions being satisfied.

(4) The Authority may, if it considers it necessary for the proper functioning of the payment system, require the applicant to furnish a security deposit under clause (d) of subsection (2) of section 7 of the law in an amount as may be specified by the Authority.

7. Exemption from authorization. –

(1) A request for exemption under clause (d) of subsection (1) of section 4 of the Act must include the justification for which such exemption is requested.

(2) The Authority, after due consideration of the information provided in the application and any other information available with it, decide whether to accept, with or without conditions, or reject the application for exemption and communicate it to the applicant within following deadlines. a period of ninety days from the date of the request.

CHAPTER III

COMPLIANCE WITH STANDARDS

8. Compliance with the Financial Market Infrastructure Principles (PFMI). –

Each system provider must comply, on an ongoing basis and to the extent applicable, with the principles relating to financial market infrastructure issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) as well as any other standards that may be specified by the Authority from time to time.

CHAPTER IV

PAYMENT INSTRUCTIONS AND DETERMINATION OF STANDARDS

9. Each participant in the system, with respect to the format of payment instructions and other matters specified in clauses (a) to (f) of subsection (1) of section 10 of the Law, will be governed by regulations, guidelines, instructions or directives, which may be issued by the Authority.

CHAPTER V

RETURNS, DOCUMENTS AND OTHER INFORMATION

10. Submission of declarations, documents or other information, etc. –

Each system provider shall submit to the Authority such declarations, documents and other information as the Authority may require from time to time and in the form specified by the Authority.

11. Submission of accounts and balance sheet. –

(1) Each system provider must provide to the Authority, within three months from the date of closure of its annual accounts, a copy of its audited balance sheet as at the last date of the year concerned together with a copy profit and loss account as well as a copy of the auditor’s report.

Provided that the Authority may, at the request of the system provider, extend the said three-month deadline for the provision of declarations by a further period not exceeding three months.

(2) The system provider must also publish a copy of its balance sheet, profit and loss account and auditor’s report submitted to the Authority under sub-regulation (1), on its website.

CHAPTER VI

MISCELLANEOUS

12. Power to relax the strict application of regulations

(1) The Authority, for reasons to be recorded in writing, may, in the interest of the development of the financial market of the International Financial Services Centre, relax the strict application of any requirement of these regulations.

(2) To request a relaxation under sub-regulation (1), an application giving the details and reasons why such a relaxation has been requested must be lodged with the Authority together with a non-refundable fee which may be specified by the Authority.

(3) The Authority shall process such application within sixty (60) days from the date of receipt of the application, complete in all respects, including responses to requested clarifications, and shall record the reasons for acceptance or refusal of the relaxations requested by the applicant.

13. Power to specify standards, procedures, issue clarifications and resolve difficulties

(1) For the purposes of implementing this Regulation and matters related to it, the Authority may specify additional standards, procedures, processes, requirements, etc. by means of circulars, guidelines or instructions.

(2) In order to remove any difficulty in the interpretation or application of the provisions of these Regulations, the Authority may issue directions by means of guidance notes or circulars.

(3) For the purposes of implementing these regulations and matters related thereto, the Authority may specify standards, procedures, processes, etc. by means of circulars, guidelines or instructions.

14. Repeal and savings

(1) From the commencement of these Regulations, the Payment and Settlement Systems Regulations, 2008, issued by the Reserve Bank of India, shall not apply in a financial services center international.

(2) Notwithstanding anything contained in sub-regulation (1), any action taken or purported to have been taken under the said regulations, including any guidelines, circulars or instructions issued thereunder, before the The entry into force of these regulations will be deemed to have been effected or taken under the corresponding provisions of this regulation.

(3) Any guidelines, circulars, instructions or any other instructions issued by the Reserve Bank of India, under the regulations mentioned in sub-regulation (1) and to the extent of their applicability, shall be deemed to have been issued under those regulations. regulations unless and until they are replaced or modified by the Authority.

K. RAJARAMAN, President

(ADVT.-III/4/Exty./592/2024-25)