The International Financial Services Centres Authority (IFSCA) has issued a Circular dated 10 August 2026, reiterating the requirement for all regulated entities operating in an International Financial Services Centre (IFSC) to ensure that they hold valid and subsisting regulatory approvals at all times.
The Circular, issued by the Department of Policy and Legal Affairs, emphasises that a valid Letter of Approval (LoA) issued under the Special Economic Zones Act, 2005 is a prerequisite for an entity to obtain registration, licence, recognition, authorisation, permission, approval or any equivalent regulatory instrument from IFSCA and to undertake permissible activities in the IFSC.
Validity of Letter of Approval
The Circular reiterates the applicable validity periods for an LoA. Where an entity has not commenced business, the LoA remains valid for a period of one year. Where the entity has commenced business, the LoA remains valid for a period of five years.
Further, an application for renewal of the LoA is required to be filed with the Administrator (IFSCA) at least two months prior to its expiry, in accordance with Rule 19(6A) of the Special Economic Zones Rules, 2006.
The Circular also clarifies that regulatory instruments issued to a regulated entity may either be perpetual or remain valid only for the specified period mentioned in the respective instrument.
IFSCA’s Direction to Regulated Entities
IFSCA has observed that certain regulated entities have continued to undertake business activities in the IFSC without holding valid and subsisting LoAs and/or applicable regulatory instruments.
In view of this, all regulated entities have been directed to ensure, at all times, that they:
hold a valid and subsisting Letter of Approval and applicable Regulatory Instrument(s); and
do not undertake any business activities without holding the requisite valid and subsisting approvals and regulatory instruments.
This direction places particular emphasis on the continued validity of regulatory approvals, rather than treating regulatory authorisation as a one-time requirement.
Consequences of Non-Compliance
IFSCA has advised regulated entities to ensure strict compliance with the Circular in order to avoid operational disruptions and regulatory sanctions.
Any breach may constitute a violation of the relevant provisions of the International Financial Services Centres Authority Act, 2019, the Special Economic Zones Act, 2005, and the rules or regulations made thereunder.
Depending on the applicable provisions, enforcement action may include financial penalties, suspension or cancellation of regulatory instruments, in addition to other appropriate penal or enforcement measures.
Immediate Effect
The Circular has been issued in exercise of the powers conferred under Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019. It comes into force with immediate effect and supersedes the earlier Circular titled “Direction for all Regulated Entities” dated 3 April 2025.
Conclusion
The latest direction serves as an important reminder to IFSC-regulated entities of the need to maintain continuous oversight of the validity of their LoA and other applicable regulatory instruments. Entities operating in the IFSC should accordingly ensure timely renewal of their approvals and refrain from undertaking regulated activities where the requisite authorisations are no longer valid.
Source: IFSCA Circular dated 10 August 2026 – Directions to all Regulated Entities.