IFSCA Amends Corporate Governance Guidelines for GIFT IFSC Finance Companies, Exempts Treasury Centres

The International Financial Services Centres Authority (IFSCA) has recently updated its Corporate Governance and Disclosure Requirements for finance companies operating within the Gujarat International Finance Tec-City (GIFT IFSC). In a significant development dated April 4, 2025, IFSCA carved out finance companies registered as Global/Regional Corporate Treasury Centres (GRCTCs) from the full applicability of its corporate governance framework, aiming to streamline regulations and enhance ease of doing business for these specialized entities.

The original framework, designed to ensure transparency, accountability, and robust management practices, lays down comprehensive governance and disclosure standards. These standards cover critical areas such as “fit and proper” criteria for management, detailed risk management policies, compliance functions, comprehensive disclosure requirements, and robust grievance redressal mechanisms.

Key Changes and Their Implications

The recent amendment specifically exempts finance companies operating as GRCTCs from both Part I (Generic Guidelines) and Part II (Detailed Guidelines) of the comprehensive governance framework. This revision is particularly notable given the unique operational nature of treasury centers.

• Tailored Regulation for GRCTCs: By exempting GRCTCs from the general governance framework, IFSCA acknowledges their distinct role within corporate structures. GRCTCs primarily serve as in-house banks for multinational corporations, centralizing fund management, intercompany lending, and financial risk management for their group entities. Their operations, while critical, differ significantly from those of traditional finance companies offering services to external clients.
• Reduced Compliance Burden: This exclusion is expected to significantly reduce the compliance burden on GRCTCs. Instead of adhering to the broader governance requirements designed for diverse finance companies, GRCTCs will now operate under a more specific and streamlined regulatory framework tailored to their treasury functions. This will allow them to focus more on their core activities of optimizing group-wide liquidity, managing financial risks, and facilitating inter-company transactions.
• Encouraging GRCTC Setup in GIFT IFSC: The move is a strategic step by IFSCA to make GIFT IFSC an even more attractive destination for multinational corporations looking to set up their global or regional treasury operations. By offering a more agile regulatory environment for these specialized units, IFSCA aims to draw more such centers to the IFSC, bolstering its position as a competitive international financial hub.
• Continued Focus on Prudence: While exempting GRCTCs from the general governance framework, it’s understood that IFSCA will continue to maintain appropriate prudential oversight to ensure the safety and soundness of these entities, in line with their specific risk profiles and activities. This reflects a balanced approach to regulation – one that is both facilitative and prudent.

This proactive regulatory update by IFSCA demonstrates its commitment to adapting the regulatory landscape to the evolving needs of the global financial industry. It aims to foster a more business-friendly environment within GIFT IFSC, attracting specialized financial activities and contributing to the growth of India’s international financial services ecosystem.

For companies considering establishing a finance company or a corporate treasury center in GIFT City, understanding these updated guidelines is crucial for efficient setup and operations.

Link to amendment circular: https://ifsca.gov.in/Viewer?Path=Document%2FLegal%2F02-guidelines-on-corporate-governance-and-disclosure-requirements-for-a-finance-company04042025061002.pdf&Title=Amendment%20to%20the%20%E2%80%98Guidelines%20on%20Corporate%20Governance%20and%20Disclosure%20Requirements%20for%20a%20Finance%20Company&Date=04%2F04%2F2025 

If you’re considering setting up a finance company or treasury centre in GIFT City, feel free to reach out at dhairya.c@treelife.in for a discussion.

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Dhairya Chaniyara

Senior Associate | Financial Advisory | dhairya.c@treelife.in

Focuses on direct tax and regulatory services with a specialization in GIFT IFSC. Brings experience from various industries, including manufacturing, FMCG, IT-ITES, and healthcare, to deliver impactful tax solutions.