• International Financial Services Centres (IFSC) has come out with a policy for providing Framework for FinTech Entity
• Indian fintech can provide banking services, capital market services, and insurance services from GIFT-IFSC
• Under the framework, IFSCA will provide FinTech Regulatory Sandbox which will be Inter- Operable in nature and help in driving fin tech innovations in the country

The GIFT-IFSC (International Financial Services Centres) was established to offers flexibility of providing an offshore jurisdiction to business. It operates as a separate financial jurisdiction within India from FEMA perspective and has limited restrictions on currency convertibility. In order to promote FinTechs in India and create necessary ecosystem conducive to their growth, the International Financial Services Centres (IFSC) has come out with a policy, providing Framework for entities operating in FinTech space. Policy will boost establishment of a world class FinTech Hub at GIFT IFSC and will be at par with the other global International Financial Centres (IFCs).

Under the new framework, Indian fintech can provide banking services, capital market services, and insurance services from GIFT-IFSC. Some of the key services under the Banking Sector relates to Remittance and payments services, Digital lending, Buy Now Pay Later, Crowd Lending and operation of Digital Bank.

International Financial Services Centres Authority (IFSCA) will provide FinTech Regulatory Sandbox which will be Inter- Operable in nature. Under the Sandbox environment, fin tech participant can test fin tech ideas and develop newer ideas. 

On completion of testing, Authority will have the final say whether particular idea can be rolled out to the wider market. If the ideas are allowed to be rolled out, fintech entity will have the obligation to run it as a regulated business duly licensed and registered under IFSCA regulations. Authorities may provide regulatory dispensation to few entities if they have reason to believe that solutions offered by fin techs are reliable and internal control procedures are strong enough to mitigate the identified risks.

Policy will enable all the authorised FinTech Entities (FE), whether Domestic or foreign for participating in the activities, permissible under the framework. Under Insurance sector, fin tech can drive innovations in the services related to Digital innovation for global health insurance cover, creation of Digital platform for settlement of balances between insurance companies, Open insurance, Embedded insurance, Cyber insurance and Innovation in commercial insurance

Government has been considerate about the power of new emerging technologies and keeping in view the eminent nature of technology, players driving innovations in BFSI domain can leverage technologies related to Distributed Ledger Technology, Artificial Intelligence, Machine Learning, Metaverse including Augmented Reality and Internet of Things (IoT).

Staff Galactik Views