In a bid to develop and regulate financial products and services, the government-controlled International Financial Services Centres Authority (IFSCA) on April 27 issued a framework for fintech entities across the spectrum of banking, insurance, securities, and fund management.
As per the framework, there will be a dedicated Regulatory Sandbox for fintech products or solutions. IFSCA has defined Regulatory Sandbox as a live environment with a limited set of real customers for a limited timeframe wherein entities operating in the capital market, banking, insurance and other financial services space in International Financial Services Centres (IFSC) shall be granted certain exemptions and relaxations from the applicability of certain regulatory provisions for experimenting fintech ideas and solutions.
“The framework issued by IFSCA, a unified regulator for Banking, Capital Markets, Insurance and Funds Management in IFSC, would enable FinTech firms having innovative ideas or solutions across the banking, capital or insurance sector to have seamless interaction with a single regulator,” stated IFSC Authority in its release.
Banking areas and activities linked to financial services regulated by IFSCA that will come under this regulatory framework will include remittance and payments, digital lending, buy now pay later, crowdlending, digital bank (neo banking and challenger bank) and open banking.
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.
Finance Minister Nirmala Sitharaman on April 22 interacted with the representatives of 14 distinguished US universities and invited them to set up foreign universities and institutions at IFSC in Gandhinagar.
"Recognising the inherent potential of the IFSC, the Budget announcement paved the way for allowing world-class foreign universities to offer courses in Financial Management, FinTech, Science, Technology, Engineering and Mathematics in @GIFTCity_IFSC," the Ministry of Finance has tweeted.The regulatory framework came in accordance with the proposal made in the recent budget. Budget 2022-23 proposed the setting-up of world-class foreign universities in Gandhinagar's GIFT City, which will be free from domestic regulations, to facilitate the availability of skilled manpower in the financial services space.