IFSCA Corporate Governance Guidelines for Finance Companies in GIFT IFSC: Revised Applicability Explained
The International Financial Services Centres Authority (IFSCA) has established a dedicated regulatory framework for Finance Companies operating in India’s International Financial Services Centre (IFSC). Corporate governance forms an important part of this framework, particularly as Finance Companies undertake lending, leasing, factoring, treasury and other financial activities with domestic and international counterparties.
IFSCA originally issued the Guidelines on Corporate Governance and Disclosure Requirements for a Finance Company on August 9, 2021, under the IFSCA (Finance Company) Regulations, 2021. Subsequently, through a circular dated April 4, 2025, IFSCA amended the applicability provisions of these guidelines to align them with amendments to the Finance Company Regulations and the separate framework introduced for Global/Regional Corporate Treasury Centres.
The amendment is particularly relevant for existing and prospective Finance Companies in GIFT IFSC because the extent of corporate governance requirements now depends upon the nature of activities proposed to be undertaken.
What Has Changed Under the April 2025 IFSCA Circular?
The April 4, 2025 circular principally replaces Clause 3 – Applicability of the Corporate Governance and Disclosure Guidelines.
The revised framework creates a clearer distinction between:
- Part I – Generic Corporate Governance Guidelines, applicable broadly to Finance Companies; and
- Part II – Detailed Corporate Governance Guidelines, applicable to specified categories of Finance Companies undertaking core activities.
The amendment also expressly excludes Finance Companies undertaking the activity of a Global/Regional Corporate Treasury Centre from the applicability provisions contained in the revised Clause 3.
Accordingly, Finance Companies need to first determine their regulatory classification and permitted activities before identifying the corporate governance requirements applicable to them.
Applicability of Part I – Generic Corporate Governance Guidelines
Under revised Clause 3.1, the generic guidelines contained in Part I are applicable to every Finance Company registered with IFSCA under Regulation 3 of the IFSCA (Finance Company) Regulations.
However, an important exception has been provided for a Finance Company registered for undertaking the activity of a Global/Regional Corporate Treasury Centre. Such entities are excluded from the applicability of Part I under the amended provision.
Therefore, for a Finance Company undertaking activities under the general Finance Company framework, Part I effectively operates as the baseline corporate governance framework.
From a compliance perspective, Finance Companies should therefore identify their authorised activities and ensure that their governance policies, internal processes and disclosure framework are aligned with the applicable provisions of Part I.
Applicability of Part II – Detailed Corporate Governance Guidelines
IFSCA has prescribed a higher level of governance applicability for Finance Companies undertaking specified core financial activities.
Revised Clause 3.2 provides that Part II of the Corporate Governance Guidelines applies to a Finance Company registered under Regulation 3 and intending to undertake activities specified at Sr. No. 2 of the Schedule to the Finance Company Regulations.
This broadly covers a Finance Company undertaking one or more core activities, with or without non-core activities.
Again, Finance Companies undertaking Global/Regional Corporate Treasury Centre activities are expressly excluded from this provision.
The distinction is significant because entities undertaking core financial activities may be subject not merely to the generic governance framework under Part I but also to the more detailed requirements prescribed under Part II.
Accordingly, the governance framework of an IFSC Finance Company should be assessed based on the activities for which registration or authorisation has been obtained.
Part I vs Part II: Understanding the Applicability
The revised framework can be understood broadly as follows:
| Category of Finance Company | Part I | Part II |
|---|---|---|
| Finance Company registered under Regulation 3 | Applicable | Depends on activities undertaken |
| Finance Company undertaking one or more core activities | Applicable | Applicable |
| Finance Company undertaking core and non-core activities | Applicable | Applicable |
| Global/Regional Corporate Treasury Centre | Excluded under revised Clause 3.1 | Excluded under revised Clause 3.2 |
The practical takeaway is that registration as a Finance Company alone does not determine the complete corporate governance framework. The nature of the authorised financial activities is equally important.
Finance Companies should therefore map their permitted activities against the Schedule to the Finance Company Regulations before determining their governance obligations.
Special Treatment for Global/Regional Corporate Treasury Centres
One of the key changes introduced through the April 2025 circular is the separate treatment of Global/Regional Corporate Treasury Centres (GRCTCs).
The amendment was issued alongside IFSCA’s Framework for Finance Company/Finance Unit undertaking the activity of Global/Regional Corporate Treasury Centres, dated April 4, 2025. The corporate governance circular expressly refers to this framework while explaining the rationale for the amendments.
Consequently, GRCTCs should not automatically apply the same corporate governance framework as Finance Companies undertaking other core financial activities.
This distinction is particularly relevant for multinational groups considering GIFT IFSC as a location for centralised treasury operations, including group financing, liquidity management and other permitted treasury activities.
Such entities should independently evaluate the governance, operational and compliance requirements prescribed under the specific GRCTC framework.
What Does the Amendment Mean for Existing Finance Companies?
Existing Finance Companies in GIFT IFSC should consider undertaking an applicability assessment following the revised framework.
The assessment should begin with identifying the activities for which the Finance Company is registered with IFSCA. These activities should then be classified as core, non-core or treasury-related activities under the applicable regulatory framework.
Based on this classification, the Finance Company should determine whether:
- only the generic provisions under Part I are relevant;
- both Part I and Part II apply; or
- it falls under the separate Global/Regional Corporate Treasury Centre framework.
The outcome should then be reflected in the company’s corporate governance policies, compliance manuals, internal control framework, Board-level processes and regulatory compliance matrix.
For Compliance Officers and senior management, this activity-based assessment can also help avoid both under-compliance and unnecessary application of requirements that may not be relevant to the entity.
Conclusion
The April 2025 amendment brings greater clarity to the applicability of IFSCA’s Corporate Governance and Disclosure Guidelines for Finance Companies in GIFT IFSC.
The framework is now clearly linked to the nature of activities undertaken by the Finance Company, rather than adopting a completely uniform approach for every registered entity.
Finance Companies undertaking core activities may need to comply with both the generic requirements under Part I and detailed requirements under Part II, while Global/Regional Corporate Treasury Centres are specifically carved out from these applicability provisions.
For existing Finance Companies as well as businesses proposing to establish operations in GIFT IFSC, it is therefore important to determine the regulatory classification of proposed activities before designing the governance and compliance framework.
An activity-based regulatory assessment at the outset can help ensure that the entity’s governance structure remains aligned with the applicable IFSCA requirements while supporting efficient and compliant operations in the evolving GIFT IFSC ecosystem.
