IFSCA Debenture Trustee Registration in GIFT City: A Comprehensive Regulatory, Governance, and Compliance Framework

Introduction & Regulatory Framework

GIFT City IFSC has rapidly evolved into India’s gateway for international capital markets, enabling global issuances, cross-border investments, and sophisticated debt market structures. A critical pillar supporting the credibility and investor confidence of IFSC’s debt market ecosystem is the role of Debenture Trustees.

To establish a robust and globally aligned regulatory environment, the International Financial Services Centres Authority (IFSCA) has notified the IFSCA (Capital Market Intermediaries) Regulations, 2025, supplemented by the Master Circular for Debenture Trustees in IFSC, issued in August 2025. This framework governs the registration, regulation, governance, and supervision of Debenture Trustees operating in GIFT IFSC.

The IFSCA Debenture Trustee Registration in GIFT City lays down a clear pathway for entities intending to act as trustees for debt securities issued or listed in IFSC or permitted foreign jurisdictions. The regulations aim to ensure investor protection, transparent monitoring of issuers, effective enforcement of security, and high standards of governance comparable to leading international financial centres.

Permissible Activities & Business Scope for Debenture Trustees

A Debenture Trustee registered with IFSCA is authorised to undertake trusteeship responsibilities in respect of debt securities issued or listed in IFSC or foreign jurisdictions, as permitted under the Capital Market Intermediaries Regulations, 2025.

Core Permissible Activities

Registered Debenture Trustees may:

• Act as trustee for secured and unsecured debenture issuances.
• Safeguard the interests of debenture holders throughout the lifecycle of the issuance.
• Execute and monitor debenture trust deeds and security creation documents.
• Undertake continuous monitoring of issuer compliance with financial and non-financial covenants.
• Facilitate communication between issuers, debenture holders, credit rating agencies, and regulators.

Due Diligence & Security Creation

A central responsibility of Debenture Trustees lies in independent due diligence, particularly for secured debt securities. Trustees are required to:

• Verify ownership, encumbrance status, and adequacy of security.
• Obtain necessary consents from existing charge holders.
• Engage professionals such as chartered accountants, company secretaries, registered valuers, or legal counsel for independent verification.
• Ensure proper creation and perfection of security before listing of debt securities.

Continuous Monitoring & Default Handling

Debenture Trustees must conduct:

• Periodic and continuous monitoring of covenant compliance.
• Timely verification of interest and principal repayments.
• Immediate reporting to IFSCA in case of defaults.
• Enforcement of security and appointment of nominee directors in specified default scenarios.

The regulatory framework positions Debenture Trustees as active guardians of investor interest, rather than passive documentation custodians.

Governance, Compliance & Technology Framework

IFSCA places strong emphasis on governance integrity, compliance discipline, and operational resilience for Debenture Trustees operating in GIFT IFSC.

Governance Structure

Every registered Debenture Trustee must appoint:

• A Principal Officer, responsible for overall operations and regulatory accountability.
• A Compliance Officer, responsible for continuous adherence to IFSCA regulations and circulars.

Both officers must be based in IFSC and meet the prescribed qualification and experience requirements. Where entities are also registered as ancillary service providers, common officers may be appointed, subject to regulatory compliance.

Compliance Obligations

Debenture Trustees are subject to extensive compliance requirements, including:

• Adherence to KYC, AML, and CFT Guidelines issued by IFSCA.
• Mandatory registration on the FIU-IND FINGate portal.
• Implementation of internal policies for outsourcing of activities.
• Maintenance of robust grievance redressal mechanisms.
• Submission of quarterly regulatory reports.
• Conduct of an annual compliance audit by eligible professionals.
• Prior approval or intimation to IFSCA in case of change in control.

These obligations reinforce a high level of transparency and regulatory oversight.

Technology & Cyber Security

Given the increasing digitisation of debt markets, Debenture Trustees are required to implement a cyber security and cyber resilience framework proportionate to:

• Scale and complexity of operations.
• Nature of trusteeship activities.
• Exposure to systemic and cyber risks.

This ensures protection of sensitive issuer and investor data and continuity of critical trustee functions.

Key Takeaways for Market Participants

The IFSCA framework for Debenture Trustees offers several strategic insights:

• Debenture Trustees play a central investor-protection role in IFSC’s debt market ecosystem.
• Governance, independence, and avoidance of conflicts of interest are core regulatory expectations.
• Due diligence and continuous monitoring obligations significantly elevate trustee responsibilities.
• Foreign trustees and global financial institutions gain a structured, credible entry route into India’s IFSC debt markets.
• Strong internal controls, professional support, and technology readiness are essential for sustainable operations.

For banks, trust companies, professional trustees, and financial institutions, the Debenture Trustee regime presents a significant opportunity aligned with global best practices.

Conclusion

The Master Circular for Debenture Trustees in IFSC, read with the IFSCA Capital Market Intermediaries Regulations, 2025, establishes a comprehensive and globally aligned regulatory framework for trusteeship services in GIFT City. It reinforces investor confidence, enhances transparency, and strengthens the credibility of IFSC as an international debt listing and issuance hub.

Entities seeking IFSCA Debenture Trustee Registration in GIFT City must adopt a disciplined approach encompassing governance, compliance, due diligence, and cyber resilience. With the right regulatory alignment and operational readiness, Debenture Trustees can play a pivotal role in supporting the growth and integrity of IFSC’s evolving capital markets ecosystem.