IFSCA - Regulations, Listing and Compliances · International Financial Services Centres: An Introduction

Establishment, Powers and Functions of IFSCA

Updated 11 October 2026 · Fact-checked

The International Financial Services Centres Authority (IFSCA) is a body corporate set up by the Central Government under the IFSCA Act, 2019. It is the unified regulator for financial products, services and institutions in International Financial Services Centres. It exercises powers of RBI, SEBI, IRDAI and PFRDA within IFSCs.

Understand Establishment, Powers and Functions of IFSCA

Before IFSCA, a unit in an International Financial Services Centre (IFSC) had to deal with several regulators. Each regulator had its own rules. The IFSCA Act, 2019 replaces this with one regulator: the International Financial Services Centres Authority.

Establishment (Section 4). The Central Government establishes the Authority by notification. It is a body corporate with perpetual succession and a common seal. It can enter into contracts, hold and dispose of movable and immovable property, and sue and be sued in its own name. The Central Government decides the head office by notification. The Authority may open offices elsewhere in India or outside India, but only with the Central Government's prior approval.

Composition (Section 5). The Central Government appoints the Members. They are: a Chairperson; one ex officio Member each nominated by RBI, SEBI, IRDAI and PFRDA; two ex officio Members from officials of the Ministry dealing with Finance, nominated by the Central Government; and two other Members appointed on the recommendation of a Selection Committee. The Chairperson is a whole-time Member. The two Selection Committee Members may be whole-time or part-time. Members must be persons of ability, integrity and standing with capacity in financial sector matters or special knowledge of law, finance, economics, accountancy, administration or another useful discipline.

Functions and powers (Sections 12 and 13). The Authority's duty is to develop and regulate financial products, financial services and financial institutions in IFSCs. Under Section 13, powers that an appropriate regulator has under the Acts listed in the First Schedule are exercised by IFSCA in IFSCs, for these products, services and institutions. This is why it is called a unified regulator.

Finance and administration. The Chairperson has general superintendence and direction in administrative matters (Section 10). The Authority has its own Fund (Section 15), credited with grants, fees and charges and other sums decided by the Central Government, and used for salaries and expenses.

Key rules to remember

Nature of the Authority (Section 4): Body corporate + perpetual succession + common seal; can contract, hold property, sue and be sued; Established by Central Government notification. Head office decided by notification; other offices need prior Central Government approval.
Composition (Section 5): 1 Chairperson + 4 regulator nominees (RBI, SEBI, IRDAI, PFRDA) + 2 Finance Ministry officials + 2 Selection Committee Members = 9 Members; Regulator nominees and Ministry officials are ex officio. Only the Chairperson must be whole-time; the two Selection Committee Members may be whole-time or part-time.
Term and age limits (Section 6): Term: 3 years, eligible for re-appointment. Age limit: Chairperson 65 years; whole-time Member 62 years; No one holds office as Chairperson after 65 or as whole-time Member after 62.
Resignation and removal (Section 6): Resign by written notice to Central Government of at least 3 months; or removal under Section 7; Applies to Members, as stated in Section 6(3).
Cooling-off (Section 6(4)): 2 years after ceasing office: no Central/State Government employment or IFSC financial institution appointment without Central Government's previous approval; Does not apply to ex officio Members.
Functions (Section 12): Develop and regulate financial products, financial services and financial institutions in IFSCs; Includes recommending new products to the Central Government and regulating products notified by it.
Powers (Section 13): Powers of the appropriate regulator under First Schedule Acts are exercised by IFSCA in IFSCs; Applies despite any other law. Central Government can amend the First Schedule by notification, laid before Parliament.
Penalties (Section 13(5), (6)): 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; Applies to penalties, fines, fees and settlement amounts.

How to solve Establishment, Powers and Functions of IFSCA questions

Questions on this topic are usually case-based. Follow the provision, analysis, conclusion pattern.

1Identify what is asked: establishment, composition, term, powers, functions, fund or penalty collection.
2Name the Act and the section: the IFSCA Act, 2019, and the relevant section only if you are sure.
3State the rule in plain words with its exact conditions, such as ex officio, whole-time or part-time, prior approval.
4Apply the rule to the facts: count Members, check age and term, check who nominated whom, check whether approval was taken.
5Check for exceptions, such as ex officio Members being outside the cooling-off rule.
6Write a clear conclusion in one or two lines.
7Add a practical point, such as a unit in the IFSC dealing with IFSCA alone rather than several regulators.

Quickest way: Remember the numbers and the nominators

When to use it: Use for short questions on composition, term and age limits when time is short.

Recall 1 + 4 + 2 + 2: Chairperson, regulators (RBI, SEBI, IRDAI, PFRDA), Finance Ministry, Selection Committee.
Recall 3 years term, 65 for Chairperson, 62 for whole-time Member.
Recall 3 months resignation notice and 2 years cooling-off.
Write the power in one line: Section 13 transfers First Schedule regulator powers to IFSCA within IFSCs.
Close with the Fund: fees and grants in, salaries and expenses out.

Common mistakes in Establishment, Powers and Functions of IFSCA

Saying the Authority has nominees from RBI, SEBI and IRDAI only.
PFRDA is easy to forget.
Fix: Remember four nominees: RBI, SEBI, IRDAI and PFRDA, each ex officio.
Stating that all Members must be whole-time.
Students confuse the Chairperson's status with the rest.
Fix: Only the Chairperson must be whole-time. The two Selection Committee Members may be whole-time or part-time.
Applying the cooling-off rule to ex officio Members.
The rule is remembered without its condition.
Fix: Section 6(4) applies to Members other than ex officio Members.
Mixing up the age limits of 65 and 62.
Both appear in one proviso.
Fix: 65 is for the Chairperson; 62 is for a whole-time Member.
Saying penalties are collected in rupees.
Students overlook Section 13(5).
Fix: They are collected in the foreign currency equivalent, converted at the RBI-notified rate on the date of the order. Sums realised are credited to the Consolidated Fund of India in rupees.
Saying IFSCA can open an overseas office on its own decision.
Students stress its body corporate status and ignore the condition.
Fix: Offices elsewhere in India or outside India need the Central Government's prior approval.

Worked examples

Example 1

The Central Government proposes to appoint a person aged 63 as a whole-time Member of IFSCA. Another person aged 64 is proposed as Chairperson. Advise on eligibility under the IFSCA Act, 2019.

Show the solution

Rule: under Section 6(1) proviso, no person holds office as Chairperson after 65 years, or as a whole-time Member after 62 years.
Person aged 63 as whole-time Member: already above 62, so cannot be appointed to hold office as a whole-time Member.
Person aged 64 as Chairperson: below the 65-year limit, so eligible, subject to the term of three years. The Chairperson cannot continue in office after attaining 65.
Practical point: the term is three years, but the office must end on attaining the age limit if that comes earlier.

Answer: The person aged 63 cannot hold office as a whole-time Member because the limit is 62. The person aged 64 can be Chairperson, but cannot hold office after attaining 65 years, even if the three-year term has not ended.

Example 2

Mr. Rao, a Member of IFSCA nominated ex officio by SEBI, completes his tenure. Ms. Iyer, a Member appointed on the Selection Committee's recommendation, resigns. Within a year, both are offered appointments in a financial institution in an IFSC. Advise.

Show the solution

Rule: under Section 6(4), for two years after ceasing office, no Member other than an ex officio Member may accept Central or State Government employment or appointment in an IFSC financial institution without the Central Government's previous approval.
Mr. Rao: SEBI's nominee is an ex officio Member, so the restriction does not apply to him.
Ms. Iyer: she is a Selection Committee Member, not ex officio, so the restriction applies. Her resignation required at least three months' written notice to the Central Government under Section 6(3)(a).
Conclusion for Ms. Iyer: she needs the Central Government's previous approval before accepting the appointment, as the two years have not elapsed.

Answer: Mr. Rao is not restricted by Section 6(4). Ms. Iyer may accept the IFSC appointment only with the Central Government's previous approval, because two years have not passed since she left office.

Exam tips

Write composition answers as a list of categories with the number of Members in each, and mark which are ex officio.
In case studies, check each fact against a number: age, term, notice period or two-year period.
Use the phrase unified regulator and explain it through Section 13: First Schedule regulator powers are exercised by IFSCA in IFSCs.
Mention the penalty collection rule (foreign currency equivalent, credited to the Consolidated Fund of India in rupees) when the question touches Section 13.
Give section numbers only for provisions you remember with certainty; otherwise state the rule in words.

Practice questions from International Financial Services Centres: An Introduction

Establishment, Powers and Functions of IFSCA in other exams

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

Establishment, Powers and Functions of IFSCA: frequently asked questions

What is IFSCA and why was it created?

IFSCA is the International Financial Services Centres Authority, established under the IFSCA Act, 2019. It is a single regulator for financial products, services and institutions in IFSCs. This avoids a unit having to deal with several separate regulators.

How many Members does IFSCA have?

Section 5 provides for a Chairperson, four nominees of RBI, SEBI, IRDAI and PFRDA, two Finance Ministry officials and two Members appointed on the Selection Committee's recommendation. That makes nine Members. The Chairperson is whole-time.

What powers does IFSCA exercise under Section 13?

It exercises, within IFSCs, the powers of the regulators listed in the First Schedule under the Acts they administer. This covers regulation of financial products, services and institutions. The related procedures on registration, inspection, adjudication and penalties apply with necessary changes.

What is the term of IFSCA Members?

The Chairperson and a Member hold office for three years and can be re-appointed. The Chairperson cannot hold office after 65 years, and a whole-time Member cannot after 62 years.

How is IFSCA funded?

Section 15 creates the IFSCA Fund. Grants, fees and charges received by the Authority, and sums from sources the Central Government decides, are credited to it. It pays salaries, allowances and other expenses of the Authority.