Capital Market and Securities Laws · International Financial Services Centres Authority (IFSCA)

IFSCA Act 2019: Penalties and Miscellaneous Provisions

Updated 11 October 2026 · Fact-checked

These are the Act's supporting provisions: Section 13 applies the penalty and enforcement machinery of other financial laws in the IFSC, Section 21 allows policy directions, Section 22 supersession, Section 23 delegation, Sections 27 and 28 rule and regulation making, Section 29 laying before Parliament, and Section 32 removal of difficulties. Learn who acts, under which section, and with what limits.

Understand Offences, Penalties and Miscellaneous Provisions

The IFSCA Act, 2019 creates one regulator for the International Financial Services Centres (IFSC). Besides establishing the Authority, the Act has provisions that decide how it enforces rules, how the Government controls it, and how it makes subordinate law. You must know these as a set.

Penalties and enforcement. The Act does not write a fresh penalty code. Under Section 13, powers of the regulators listed in the First Schedule (such as SEBI, RBI, IRDAI and PFRDA) under their respective Acts are exercised by the Authority in the IFSC, as far as they relate to regulating financial products, financial services or financial institutions. The provisions of those Acts on filing applications, inspection, investigation, prosecution, settlement, compounding, adjudication, appeals, and fixing and recovering fees, fines and penalties apply mutatis mutandis. So the penalty rules of the parent Act travel into the IFSC.

There are two IFSC-specific twists. Penalties, fines, fees and settlement amounts are collected in the foreign currency equivalent of what is imposed. The exchange rate is the one notified by the RBI on the date of the order. All sums realised as penalties or fines are credited to the Consolidated Fund of India in Indian rupees.

Government control. Under Section 21, the Authority is bound by written policy directions from the Central Government. It should, as far as practicable, get a chance to express its views first. The Central Government's decision on whether a question is one of policy is final. Under Section 22, the Government can supersede the Authority for up to six months on specified grounds, after giving it a reasonable opportunity to make representations.

Delegation, rules and regulations. Under Section 23, the Authority can delegate powers to a Member or officer, or to committees of Members, but never its regulation-making power under Section 28. The Central Government makes rules (Section 27) and the Authority makes regulations (Section 28). Both must be laid before Parliament (Section 29). Section 32 lets the Government remove difficulties by order, but only within five years of commencement.

Key rules to remember

Section 13: enforcement powers: Powers of First Schedule regulators in IFSC → exercised by IFSCA; enforcement provisions apply mutatis mutandis; Covers application, inspection, investigation, prosecution, settlement, compounding, adjudication, appeals, fees and penalties.
Section 13(5) and (6): penalty currency: Collected in foreign currency equivalent (RBI rate on date of order); credited to Consolidated Fund of India in rupees; Two steps: collect in foreign currency, credit in rupees.
Section 13(2) and (3): First Schedule amendment: Central Government amends First Schedule by notification; notification laid before each House; It can include or omit a regulator and the law it administers.
Section 21: policy directions: Authority bound by written directions on questions of policy; Central Government decides finally if a question is policy; Authority gets an opportunity to express views as far as practicable.
Section 22: supersession: Maximum 6 months; grounds: (a) unable to function, (b) persistent default, (c) public interest; Reasons in the notification; reasonable opportunity to the Authority first; reconstitute by end of period.
Section 23: delegation: Delegate to Member or officer by written order, except powers under Section 28; committees of Members under sub-section (2); The regulation-making power cannot be delegated.
Sections 27 and 28: subordinate legislation: Rules: Central Government (s.27). Regulations: Authority (s.28), consistent with the Act and rules; Both are laid before Parliament under Section 29.
Section 29: laying before Parliament: 30 days in total, one session or successive sessions; both Houses may modify or annul; Modification or annulment does not affect anything previously done.
Section 31: modifying other Acts: Central Government notification: non-application or application with modifications; draft laid for 30 days; Provisions on making rules or regulations are excluded from this power.
Section 32: removal of difficulties: Order by Central Government, not inconsistent with the Act; no order after 5 years from commencement; Every order is laid before each House.

How to solve Offences, Penalties and Miscellaneous Provisions questions

Most questions ask who holds a power, what limits it, and what happens next. Use the same route each time.

1Identify the power in question: enforcement, direction, supersession, delegation, rule or regulation making, or removal of difficulties.
2Name the section and the authority that acts: the IFSCA or the Central Government.
3State the rule in plain words, including its conditions, such as the six-month cap or the five-year limit.
4State the safeguard: opportunity to be heard, laying before Parliament, or the carve-out.
5Apply it to the facts given, step by step.
6Close with a clear conclusion that answers the exact question asked.

Quickest way: Who, which section, what limit

When to use it: Short-answer or case-based questions where time is tight.

Write the section number and the actor in one line.
Add the single most testable limit: 6 months, 30 days, 5 years, or the Section 28 exclusion.
Add the safeguard, such as the hearing or Parliament.
Finish with a one-line conclusion.

Common mistakes in Offences, Penalties and Miscellaneous Provisions

Saying the IFSCA Act contains its own full penalty schedule.
Students assume every regulator's Act lists offences.
Fix: Say that Section 13 gives IFSCA the powers of the First Schedule regulators and applies their enforcement provisions mutatis mutandis.
Saying penalties are collected in rupees.
Students merge sub-sections (5) and (6).
Fix: Collected in foreign currency equivalent at the RBI-notified rate on the date of the order; credited to the Consolidated Fund of India in rupees.
Saying the Authority can delegate any power.
Students remember delegation but forget the exception.
Fix: Powers under Section 28 (regulation making) cannot be delegated under Section 23(1).
Mixing up rules and regulations.
The two words sound alike.
Fix: Rules come from the Central Government (Section 27); regulations come from the Authority (Section 28).
Stating supersession as indefinite or without a hearing.
Students recall only the Government's power.
Fix: Maximum six months, reasons in the notification, prior reasonable opportunity to make representations, and reconstitution by the end of the period.
Writing that the removal of difficulties power has no time limit.
Students recall only the power to make orders.
Fix: No order may be made after five years from commencement, and every order is laid before each House.

Worked examples

Example 1

The Central Government issues a written direction to IFSCA on a policy matter. IFSCA argues that the matter is not one of policy and refuses to comply. Is IFSCA correct?

Show the solution

Provision: Section 21(1) binds the Authority by written directions on questions of policy given by the Central Government.
The proviso says the Authority should, as far as practicable, get an opportunity to express its views before a direction is given.
Under Section 21(2), the Central Government's decision on whether a question is one of policy is final.
Application: IFSCA can raise its objection only as its views before the direction. It cannot decide the question of policy itself.

Answer: IFSCA is not correct. The Central Government's decision on whether the matter is policy is final under Section 21(2), so IFSCA must comply with the direction.

Example 2

IFSCA imposes a penalty on an entity in the IFSC. In what currency is it collected, and where is it credited?

Show the solution

Provision: Section 13(1) lets IFSCA exercise the powers of the relevant regulator, and Section 13(4) applies that Act's penalty and recovery provisions mutatis mutandis.
Section 13(5): the penalty is collected in the foreign currency equivalent of the penalty imposed.
The exchange rate is the one notified by the RBI on the date of the order imposing the penalty.
Section 13(6): all sums realised as penalties or fines are credited to the Consolidated Fund of India in Indian rupees.

Answer: The penalty is collected in the foreign currency equivalent, using the RBI rate on the date of the order. The amount realised is credited to the Consolidated Fund of India in rupees.

Exam tips

Link each limit to its section: six months (22), 30 days (29), five years (32).
In theory answers, use the format provision, analysis, conclusion, and cite the section.
Be ready for the contrast question: rules by the Central Government, regulations by IFSCA.
For comparison questions with SEBI, stress that Section 13 transfers SEBI's powers for the IFSC and applies SEBI's enforcement provisions mutatis mutandis.
Learn the Section 23 exception word for word: powers under Section 28 cannot be delegated.

Practice questions from International Financial Services Centres Authority (IFSCA)

Offences, Penalties and Miscellaneous Provisions in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Offences, Penalties and Miscellaneous Provisions: frequently asked questions

Does the IFSCA Act list its own offences and penalties?

The text supplied does not contain a separate penalty schedule. Section 13 gives IFSCA the powers of the First Schedule regulators and applies their enforcement and penalty provisions mutatis mutandis in the IFSC.

What is the difference between IFSCA and SEBI powers?

In the IFSC, IFSCA exercises the powers that SEBI and other listed regulators have under their Acts, so far as they relate to regulating financial products, services or institutions. Outside the IFSC, SEBI continues to exercise its powers.

Who makes regulations under the IFSCA Act?

The Authority makes regulations by notification under Section 28. They must be consistent with the Act and the rules. The Central Government makes rules under Section 27.

For how long can the Authority be superseded?

For a period not exceeding six months, under Section 22. The Government must give reasons in the notification and a reasonable opportunity to the Authority first. It must reconstitute the Authority by the end of that period.