Strategic Management and Corporate Finance · An Overview on Listing and Issuance of Securities in International Financial Services Centre

Issuance of Securities in IFSC: Debt and Equity

Updated 11 October 2026 · Fact-checked

Issuance of securities in an IFSC means raising capital by issuing equity or debt, including green and masala bonds, from an International Financial Services Centre such as GIFT City. IFSCA, which exercises the powers of the appropriate regulator there, governs the process. Solve questions by identifying the security, issuer, rule source and disclosure steps.

Understand Issuance of Securities in IFSC: Debt and Equity

An International Financial Services Centre (IFSC) is a centre set up under section 18 of the Special Economic Zones Act, 2005. GIFT City in Gujarat is the Indian example. Securities issued here are a financial product under the IFSCA Act, 2019, and buying, selling, subscribing to or underwriting them is a financial service.

The International Financial Services Centres Authority (IFSCA) is the single regulator. Under section 13, powers that an appropriate regulator (such as SEBI or RBI) has under its own Act are exercised by IFSCA in the IFSC, as far as they relate to regulating financial products, services or institutions. So IFSCA stands in the shoes of the sector regulator, but only inside the IFSC.

Section 13(4) also carries over the procedure of the respective Acts: filing of applications, inspection, investigation, adjudication, and fixing of penalties. Penalties and fees are collected in the foreign currency equivalent, using the RBI exchange rate on the date of the order. Sums realised as penalties or fines are credited to the Consolidated Fund of India in rupees.

In practice, a company issues equity (shares) or debt (bonds, debentures) to investors through an IFSC exchange and lists them there. The detailed issue and listing conditions sit in IFSCA's regulations, not in the Act. The Act supplies the framework: who regulates, how powers are exercised, and how other laws can be modified under section 31.

Two debt types are often asked. A green bond raises money for projects with environmental benefit, so the use of proceeds must be disclosed and tracked. A masala bond is a rupee-denominated bond issued outside India, so the investor bears the currency risk. Whatever the type, the exam expects you to link the security to the regulator, the disclosure and the listing venue. For exact eligibility thresholds, use the current IFSCA regulations text allowed in your paper, rather than memory.

Key rules to remember

Financial product (s 3(1)(d)): Securities + contracts of insurance + deposits + credit arrangements + foreign currency contracts (not spot exchange) + notified products; Bonds and shares fall under 'securities', so their issue is regulated by IFSCA inside an IFSC.
Financial service (s 3(1)(e)): Includes buying, selling or subscribing to a financial product, underwriting its issuance, and advising on it; Underwriting an issue and arranging it are financial services.
Regulator's powers (s 13(1)): Powers of appropriate regulator under its Act → exercised by IFSCA in the IFSC; Applies to regulation of financial products, services or institutions.
Procedure carry-over (s 13(4)): Filing, inspection, investigation, adjudication, penalties of the parent Act apply mutatis mutandis; Same procedure as the parent Act, applied to IFSC activity.
Penalty currency (s 13(5)-(6)): Collected in foreign currency equivalent at RBI rate on the date of order; credited to Consolidated Fund of India in rupees; Do not say penalties are collected in rupees.
Modification of other laws (s 31): Central Government notification → other Central Act does not apply, or applies with modifications, in the IFSC; Draft is laid before Parliament for 30 days.
Regulations (s 28 and s 29): IFSCA makes regulations by notification; laid before each House for 30 days; Issue and listing rules are made through this power.

How to solve Issuance of Securities in IFSC: Debt and Equity questions

Use this order for any case or theory question on issuing securities in an IFSC.

1Identify the security: equity, plain debt, green bond, masala bond or another instrument.
2Confirm it is a financial product and the activity a financial service under section 3.
3Name the regulator: IFSCA exercises the parent regulator's powers in the IFSC under section 13.
4State the governing rules: IFSCA regulations made under section 28, plus any modification under section 31.
5Walk through the issue steps: eligibility, offer document and disclosures, intermediaries, pricing, allotment, listing.
6Add the special feature: use of proceeds for green bonds, currency risk for masala bonds.
7Note compliance and consequences: continuing disclosures, penalties collected in foreign currency.
8Conclude with a clear answer tied to the facts.

Quickest way: Four-line answer frame

When to use it: Use when time is short and the question asks you to explain or advise on an IFSC issue.

Line 1: define the security and say it is a financial product.
Line 2: IFSCA regulates under sections 13 and 28.
Line 3: list the issue and disclosure steps and any special feature.
Line 4: state the conclusion and one compliance consequence.

Common mistakes in Issuance of Securities in IFSC: Debt and Equity

Saying SEBI regulates issues in the IFSC.
Students carry over domestic listing rules.
Fix: Write that IFSCA exercises the relevant powers in the IFSC under section 13.
Stating penalties are collected in rupees.
Rupee is assumed as default.
Fix: Penalties are collected in the foreign currency equivalent at the RBI rate on the order date; the sum is credited to the Consolidated Fund of India in rupees.
Writing that a masala bond is foreign-currency denominated, or that every rupee bond issued in an IFSC is a masala bond.
Confusion with foreign currency bonds, and the assumption that an IFSC location alone settles the bond's type.
Fix: A masala bond is a rupee-denominated bond issued to overseas investors outside India's domestic market, so the investor bears the currency risk. Do not call a rupee bond issued in an IFSC a masala bond automatically. The IFSCA Act does not classify it, so check how the applicable IFSCA and FEMA framework treats the issue.
Quoting eligibility numbers from memory.
Students try to impress with figures.
Fix: State the principle and refer to the IFSCA regulations. Give a figure only if certain.
Treating the Act as the source of detailed listing conditions.
The Act and regulations get blurred.
Fix: The Act gives the framework; detailed conditions are in regulations made under section 28.
Ignoring section 31.
Students think domestic laws apply unchanged.
Fix: Mention that the Central Government may notify that another Central Act does not apply or applies with modifications in the IFSC.

Worked examples

Example 1

Aarav Infra Ltd plans to raise funds from overseas investors by issuing bonds listed in GIFT City. The CFO asks who regulates the issue and what law lets the regulator act like SEBI or RBI there. Advise.

Show the solution

Bonds are securities, so they are a financial product under section 3(1)(d). Subscribing to or underwriting them is a financial service under section 3(1)(e).
GIFT City is an IFSC set up under section 18 of the SEZ Act, 2005, so the IFSCA Act applies.
Under section 13(1), powers of the appropriate regulator under its own Act are exercised by IFSCA in the IFSC for regulating these products, services and institutions.
Procedures such as inspection and adjudication follow the parent Act mutatis mutandis under section 13(4).
Detailed issue conditions come from IFSCA regulations made under section 28.

Answer: IFSCA regulates the issue. Section 13 lets it exercise the powers of the appropriate regulator in the IFSC, and its regulations under section 28 set the detailed conditions.

Example 2

Meera Renewables Ltd issues a rupee-denominated bond to fund solar projects, with the issue made through an IFSC. The CFO asks how the bond should be described and what happens if IFSCA fines the company ₹10,00,000 for a contravention on an order date.

Show the solution

Because the funds go to solar projects, the bond can be structured as a green bond. The use of proceeds should then be disclosed and tracked.
A masala bond is a rupee-denominated bond issued to overseas investors outside India's domestic market. Rupee denomination alone does not make a bond a masala bond, and issue through an IFSC does not make it one automatically. The IFSCA Act does not classify it, so the answer depends on the facts and the applicable IFSCA and FEMA framework.
If the bond is treated as a masala bond, the investor bears the currency risk because the bond is in rupees.
Under section 13(5), the penalty is collected in the foreign currency equivalent of ₹10,00,000, using the RBI-notified rate on the date of the order.
Under section 13(6), the sum realised is credited to the Consolidated Fund of India in Indian rupees.

Answer: The bond can be a green bond because of its solar use of proceeds. It is a masala bond only if it meets that description under the applicable IFSCA and FEMA framework, not merely because it is in rupees and issued through an IFSC. The ₹10,00,000 penalty is collected in foreign currency at the RBI rate on the order date and credited to the Consolidated Fund of India in rupees.

Exam tips

Open every answer by naming IFSCA and citing section 13; this earns the provision mark.
Use the format: provision, facts, conclusion. Tie each point to the company in the question.
Cite only sections you are sure of: 3, 5, 8, 13, 21, 26, 28, 29 and 31 are in your text.
For green and masala bonds, always add the special feature: use of proceeds or currency risk.
If the question gives regulations text, quote from it instead of relying on memory.

Practice questions from An Overview on Listing and Issuance of Securities in International Financial Services Centre

Issuance of Securities in IFSC: Debt and Equity: frequently asked questions

Who regulates the issue of securities in GIFT City?

IFSCA does. Under section 13 of the IFSCA Act, 2019, it exercises the powers of the appropriate regulator in the IFSC for financial products, services and institutions.

What is a masala bond?

It is a rupee-denominated bond issued outside India. The investor, not the issuer, bears the exchange-rate risk.

What is a green bond?

It is a bond whose proceeds fund projects with environmental benefit. Disclosure of how proceeds are used is central to it.

How is listing in an IFSC different from a domestic exchange?

In an IFSC, IFSCA is the regulator and its regulations apply, and other Central Acts may be modified under section 31. Penalties there are collected in foreign currency equivalent.