IFSCA Mandates Banking Units or SNRR Accounts for IFSC Transactions

Circular no. F. No. IFSCA-BDev0FSSC/2/2023; Dated: 19.06.2026

IFSCA has mandated that all Financial Institutions (FIs) in the IFSC must conduct transactions exclusively through Banking Units or Special Non-Resident Rupee (SNRR) accounts. The amendment revises Circular 3 of Exemption Circular, dated November 18, 2024, and affects even those previously exempted from the AML/CFT/KYC Guidelines. The circular is issued in exercise of powers conferred by sections 12 and 13 of the IFSCA, 2019, read with Rules and shall come into force with immediate effect.

The International Financial Services Centres Authority (IFSCA) has mandated that all Financial Institutions (FIs) operating in International Financial Services Centres (IFSCs) must conduct their transactions exclusively through Banking Units or Special Non-Resident Rupee (SNRR) Accounts.

The requirement has been introduced through an amendment to Circular 3 of the Exemption Circular dated 18-11-2024 and is aimed at strengthening transparency, traceability and regulatory oversight of financial transactions within the IFSC ecosystem.

1. Transactions Restricted to Banking Units and SNRR Accounts

Under the amended framework, Financial Institutions in IFSCs are required to route all transactions exclusively through:

• Accounts maintained with Banking Units operating in IFSCs; or
• Special Non-Resident Rupee (SNRR) Accounts, wherever permitted.

Accordingly, institutions will no longer be permitted to undertake transactions through any other mechanism unless specifically allowed under the regulatory framework.

2. Applicability to All Financial Institutions

The amendment applies to all Financial Institutions operating in IFSCs.

Importantly, the requirement extends even to entities that were previously exempt from certain provisions of the:

• Anti-Money Laundering (AML) Guidelines;
• Counter-Terrorist Financing (CFT) Guidelines; and
• Know Your Customer (KYC) Guidelines.

This ensures uniform application of the transaction routing requirements across all regulated entities.

3. Amendment to Exemption Circular

The circular revises Circular 3 of the Exemption Circular dated 18 November 2024.

The amendment forms part of IFSCA’s ongoing efforts to strengthen the regulatory framework governing financial transactions and fund flows within IFSCs.

4. Statutory Authority

The circular has been issued in exercise of powers conferred under:

• Sections 12 and 13 of the International Financial Services Centres Authority Act, 2019; and
• The relevant Rules framed thereunder.

5. Effective Date

The amended requirement shall come into force:

With immediate effect

Accordingly, all affected Financial Institutions are required to ensure compliance from the date of issuance of the circular.

6. Objective of the Amendment

The amendment seeks to:

• Enhance transparency in financial transactions;
• Strengthen monitoring and regulatory oversight;
• Improve compliance with AML/CFT requirements;
• Ensure traceability of fund flows within IFSCs; and
• Promote a uniform transaction framework for all Financial Institutions.

7. Expected Impact

The measure is expected to strengthen governance and compliance standards in IFSCs by ensuring that all financial transactions are routed through regulated banking channels. It will also facilitate more effective monitoring of fund movements and support the integrity of the IFSC financial ecosystem.

8. Key Takeaway

IFSCA has mandated that all Financial Institutions operating in IFSCs must conduct transactions exclusively through Banking Units or SNRR Accounts. The requirement applies even to entities previously exempt from certain AML/CFT/KYC provisions and comes into force immediately, reinforcing transparency and regulatory oversight of financial transactions within IFSCs.

Click Here To Read The Full Circular