IFSCA Notifies Rules for Foreign Currency Settlement System

Circular No. E.File.no.IFSCA-FMPP0BR/6/2024-Banking; Dated: 03.10.2025

1. Introduction

The International Financial Services Centres Authority (IFSCA) has taken a major step toward strengthening cross-border financial infrastructure by authorising CCIL IFSC Limited (CIL) under Section 7 of the Payment and Settlement Systems Act, 2007. The authorisation allows CIL to operate a dedicated payment system for the settlement of foreign currency transactions within the GIFT International Financial Services Centre (IFSC).

2. Establishment of the Foreign Currency Settlement System

The newly approved system, titled the Foreign Currency Settlement System (FCSS), will facilitate smooth and efficient settlement of transactions in multiple foreign currencies for entities operating in GIFT IFSC. The system aims to provide a secure and robust payment infrastructure that supports financial market participants engaged in international trading, clearing, and settlement activities.

3. Regulatory Approval and Legal Framework

Following its authorisation, the IFSCA has also notified the Bye-Laws, Rules, and Regulations prepared by CIL. These have now been formally recognised as the governing framework for the operation of the FCSS. The notified provisions set out the operational procedures, risk management norms, and compliance obligations that will ensure safe, transparent, and efficient settlement of foreign currency transactions in the IFSC ecosystem.

4. Significance for GIFT IFSC and Market Participants

The introduction of the Foreign Currency Settlement System marks an important milestone in GIFT IFSC’s evolution as a global financial hub. It enhances India’s capacity to handle multi-currency financial transactions domestically and reduces reliance on offshore settlement mechanisms. The initiative is expected to boost confidence among international investors, banks, and financial institutions operating from GIFT City by offering greater efficiency and regulatory clarity.

5. Conclusion

In conclusion, the IFSCA’s authorisation of CIL to operate the Foreign Currency Settlement System represents a strategic advancement in India’s financial market infrastructure. By ensuring a regulated, secure, and transparent mechanism for foreign currency settlements, the move strengthens GIFT IFSC’s role as a competitive international financial centre. The operationalisation of the FCSS is likely to enhance liquidity, attract global participants, and further integrate India into the global financial ecosystem.

Click Here To Read The Full Circular