IFSCA - Regulations, Listing and Compliances · IFSCA Ecosystem and Regulatory Framework

IFSCA Regulatory Framework and Role of Other Regulators

Updated 11 October 2026 · Fact-checked

The IFSCA regulatory framework is a layered system. The IFSCA Act, 2019 creates a single authority for IFSCs set up under the SEZ Act, 2005. The Central Government makes rules, IFSCA makes regulations, and section 30 gives the Act overriding effect. RBI, SEBI, IRDAI and PFRDA sit on the Authority and their laws apply only as modified under section 31.

Understand Regulatory Framework and Role of Other Regulators

Start with the problem the Act solves. Before 2019, a unit in an International Financial Services Centre (IFSC) could face RBI for banking, SEBI for securities, IRDAI for insurance and PFRDA for pensions. The IFSCA Act, 2019 brings these under one Authority for financial products, financial services and financial institutions in an IFSC.

The Act applies to IFSCs set up under section 18 of the Special Economic Zones Act, 2005 (section 2). Section 3(1)(g) defines an IFSC the same way, and it covers centres set up before or after the Act commenced. So the SEZ Act creates the physical centre, and the IFSCA Act regulates the financial business done in it.

The law works in layers. The Act is the top layer. Under section 27 the Central Government makes rules (for example, the Selection Committee, Members' service terms, the form of accounts and returns). Under section 28 IFSCA makes regulations, which must be consistent with the Act and the rules (for example, meeting procedure, staff terms, delegation, foreign currency for IFSC transactions). Every rule and regulation must be laid before Parliament after it is made, for a total of thirty days (section 29). If both Houses agree to modify it, or agree that it should not be made, it then has effect only in the modified form or has no effect. Anything done earlier under it stays valid.

Two sections connect IFSCA to other laws. Section 30 says the provisions of the Act have effect despite anything inconsistent in any other law or in an instrument having effect under any other law. That override belongs to the Act itself. A regulation does not get it; it must stay consistent with the Act and the rules. Section 31 lets the Central Government, by notification, direct that a provision of another Central Act, or of rules and regulations under it, does not apply in an IFSC, or applies with exceptions, modifications and adaptations. The draft notification must be laid before Parliament for thirty days. Section 34 saves existing rules, regulations and notifications under other Central Acts on these matters unless inconsistent, until IFSCA supersedes them.

The other regulators are not shut out. Section 5(1)(b) puts one Member each from RBI, SEBI, IRDAI and PFRDA on the Authority, nominated ex officio. They shape IFSCA's decisions from inside. Their parent laws apply in the IFSC only to the extent IFSCA, the Act and section 31 notifications allow. Definitions follow the same chain: words not defined in the IFSCA Act take the meaning in the Acts listed in the First Schedule (section 3(2)).

Key rules to remember

Application: IFSCA Act applies to IFSCs set up under section 18 of the SEZ Act, 2005 (section 2); SEZ Act creates the centre; IFSCA Act regulates financial business in it.
Overriding effect: Section 30: the provisions of the Act prevail over inconsistent provisions of any other law or of any instrument having effect under any other law; The override is given to the Act's own provisions. A regulation does not carry it; a regulation must be consistent with the Act and rules (section 28).
Rules vs regulations: Rules: Central Government (section 27). Regulations: IFSCA, consistent with Act and rules (section 28); Each is laid before Parliament after it is made, for 30 days (section 29). If both Houses agree to modify or annul it, it takes effect only in modified form or is of no effect, without affecting anything done earlier.
Modification of other enactments: Section 31: notification may disapply, or apply with exceptions, modifications and adaptations, other Central Acts in an IFSC; Draft must be laid before each House for 30 days; excludes provisions on making rules or regulations.
Savings: Section 34: existing rules, regulations and notifications under Central Acts continue if relating to matters in this Act and not inconsistent, until superseded; Explains why older SEBI or RBI instruments can still apply in an IFSC.
Other regulators on the Authority: One Member each from RBI, SEBI, IRDAI, PFRDA, ex officio (section 5(1)(b)); Plus a Chairperson, two finance Ministry officials and two other Members.
Definition fallback: Undefined terms take the meaning in the Acts in column (3) of the First Schedule (section 3(2)); Appropriate regulator means a regulator specified in the First Schedule.

How to solve Regulatory Framework and Role of Other Regulators questions

Use this method for any question on the framework or on how IFSCA relates to other regulators.

1Identify the issue: is it about the source of power, a conflict of laws, or the role of RBI, SEBI, IRDAI or PFRDA?
2Place the instrument in the hierarchy: SEZ Act, IFSCA Act, rules, regulations, notifications.
3State the provision: section 2 for application, section 30 for override, section 31 for modification, section 34 for savings, section 5 for composition.
4Apply it to the facts: check the entity is in an IFSC, the activity is a financial product or service under section 3, and whether a section 31 notification exists.
5Say how the other regulator fits in: its Member sits on the Authority, and its law applies only as modified or saved.
6Conclude in one clear sentence and add a practical point, such as checking the applicable IFSCA regulation before filing.

Quickest way: Hierarchy and override check

When to use it: Short-answer or case questions where you have little time and need a safe structure.

Write: SEZ Act creates the IFSC; IFSCA Act regulates financial services in it.
Write the chain: Act, rules (Central Government), regulations (IFSCA).
Add section 30 for override and section 31 for the notification route.
Add one line: RBI, SEBI, IRDAI and PFRDA each nominate a Member under section 5.
Link to the facts and conclude.

Common mistakes in Regulatory Framework and Role of Other Regulators

Saying section 30 means RBI, SEBI, IRDAI and PFRDA laws never apply in an IFSC.
Students read 'overriding effect' as total exclusion.
Fix: Section 30 overrides only inconsistent provisions. Other laws apply unless inconsistent, and section 31 and section 34 decide the detail.
Saying IFSCA makes rules and the Central Government makes regulations.
The two words are mixed up.
Fix: Rules come from the Central Government (section 27). Regulations come from IFSCA (section 28).
Treating the IFSCA Act as the law that sets up IFSCs.
The names sound alike.
Fix: IFSCs are set up under section 18 of the SEZ Act, 2005. The IFSCA Act applies to them.
Claiming the Central Government can amend other Acts in an IFSC without Parliament.
Section 31 is read as a plain notification power.
Fix: The draft notification must be laid before each House for thirty days, and Parliament can disapprove or modify it.
Saying RBI, SEBI, IRDAI and PFRDA are only outside regulators with no link to IFSCA.
Students ignore the composition section.
Fix: Each nominates one Member ex officio under section 5(1)(b).
Forgetting that earlier rules and notifications survive.
Section 34 is skipped as a minor provision.
Fix: Existing instruments continue if consistent, until superseded by instruments under the IFSCA Act.

Worked examples

Example 1

Meridian Securities IFSC Ltd, a unit in GIFT City, finds that a provision of a Central Act conflicts with an IFSCA regulation. Advise how the conflict is resolved and whether the Central Government can adapt that Central Act for IFSCs.

Show the solution

Provision: section 30 gives the provisions of the IFSCA Act effect notwithstanding anything inconsistent in any other law. It does not give regulations that effect.
Analysis: an IFSCA regulation is made under section 28 and must be consistent with the Act and the rules. So the regulation does not override the other Central Act just because it is an IFSCA regulation. Two questions decide the matter: is the regulation valid, as being consistent with the Act and rules, and has the Central Government issued a section 31 notification for that Central Act?
Section 31 allows the Central Government, by notification, to direct that the other Act does not apply, or applies with exceptions, modifications and adaptations, to financial products, services or institutions in an IFSC.
The draft notification must be laid before each House for thirty days, and cannot be issued if both Houses agree in disapproving it.
Conclusion and practical point: if the conflict is between a provision of the IFSCA Act itself and the other Central Act, section 30 makes the IFSCA Act prevail. If it is with a regulation, the answer turns on the regulation's validity under the Act and on any section 31 notification. Meridian should check for a notification and the specific regulation before relying on either law.

Answer: Section 30 overrides only in favour of the provisions of the IFSCA Act, not its regulations. A regulation conflicting with another Central Act is tested for consistency with the Act and rules (section 28) and against any section 31 notification. The Central Government can disapply or adapt the other Central Act for IFSCs by notification under section 31, subject to the 30-day laying of the draft before Parliament.

Example 2

Explain the role of RBI, SEBI, IRDAI and PFRDA in the IFSC framework after the IFSCA Act, 2019.

Show the solution

Provision: section 5(1)(b) provides one Member each, nominated ex officio by RBI, SEBI, IRDAI and PFRDA.
Analysis: this gives each sector regulator a voice in IFSCA's decisions, while IFSCA is the single regulator for financial products, services and institutions in the IFSC.
Their laws are not wiped out. They apply as modified under section 31 notifications, and earlier rules and notifications continue under section 34 if consistent, until superseded.
Definitions: terms undefined in the IFSCA Act take their meaning from the Acts in the First Schedule (section 3(2)).
Conclusion: the four regulators influence the IFSC through the Authority's composition and their parent laws, but IFSCA is the main regulator there.

Answer: IFSCA is the single regulator in the IFSC. RBI, SEBI, IRDAI and PFRDA each nominate one ex officio Member to the Authority, and their laws apply only as modified under section 31 or saved under section 34.

Exam tips

Quote section numbers for override (30), modification (31), savings (34), composition (5), rules (27) and regulations (28).
Use the structure: provision, facts, conclusion, then one compliance point.
Keep the rules versus regulations distinction crisp; examiners often test it.
For a conflict question, address both section 30 and section 31 so the answer is complete.
Do not give regulation names or dates unless you are sure; section-based reasoning earns marks safely.

Practice questions from IFSCA Ecosystem and Regulatory Framework

Regulatory Framework and Role of Other Regulators in other exams

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

Regulatory Framework and Role of Other Regulators: frequently asked questions

What is the difference between IFSCA and SEBI or RBI jurisdiction in an IFSC?

In an IFSC, IFSCA is the single authority for financial products, services and institutions. SEBI and RBI laws apply there only as modified under section 31, or as saved under section 34 where consistent. Each also nominates a Member to the Authority.

What is the overriding effect of the IFSCA Act, 2019?

Section 30 says the provisions of the Act apply notwithstanding anything inconsistent in any other law or in an instrument having effect under any other law. It resolves conflicts in favour of the Act's own provisions. Regulations must still be consistent with the Act and rules under section 28.

Who makes rules and regulations under the IFSCA Act?

The Central Government makes rules under section 27. IFSCA makes regulations under section 28, consistent with the Act and rules. Both are laid before Parliament under section 29, and if both Houses agree to modify or annul one, it takes effect only in the modified form or not at all.

How does the SEZ Act connect to the IFSCA Act?

IFSCs are set up under section 18 of the SEZ Act, 2005. The IFSCA Act applies to those centres and regulates financial services in them.