International Financial Services Centres Authority (IFSCA) has issued a circular effective June 6, 2025, outlining updated policies for Payment Service Providers (PSPs) operating within the IFSC concerning their involvement in international payment systems. Citing its regulatory authority under the Payment and Settlement Systems Act, 2007, and the IFSCA Act, 2019, the IFSCA now requires PSPs to obtain prior approval before participating in international payment systems for transactions with banks or financial institutions outside the IFSC. Furthermore, any international payment system that facilitates payments between PSPs or other financial institutions within the IFSC, thereby impacting domestic IFSC transactions, must secure specific authorization from the IFSCA. PSPs are permitted to join such internal IFSC-affecting systems only after confirming the system’s compliance with this authorization requirement and obtaining the IFSCA’s prior approval. The circular mandates all PSPs to review their current participation in international payment systems against these new policies and to report their compliance to the Department of Banking Supervision within 30 days. Additionally, PSPs must provide the IFSCA with a comprehensive list of all international payment systems they participated in as of May 31, 2025.
International Financial Services Centres Authority
Circular No. E.File.No. IFSCA-FMPP0BR/3/2023-Banking June 06, 2025
To,
All Payment Service Providers in IFSC
Dear Sir/Madam,
Participation of Payment Service Providers (“PSPs”) in international payment systems
Reference is drawn to section 18 of the Payment and Settlement Systems Act, 2007 (“PSS Act”) read with section 13 of the International Financial Services Centres Authority Act, 2019 (“IFSCA Act”), which, inter alia, empower the Authority to lay down policies relating to the regulation of payment systems including international payment systems affecting domestic transactions and to give such directions as it may consider necessary to system providers or the system participants or any other person either generally or to any such agency and in particular, pertaining to the conduct of business relating to payment systems.
2. In the exercise of the abovementioned powers, the Authority lays down the following policies for PSPs participating in international payment systems:
a. PSPs may participate as/be members of international payment systems for making or receiving payments to/from banks/financial institutions outside IFSC after obtaining prior approval of the Authority.
b. An international payment system that permits PSPs to make or receive payments among themselves or among other financial institutions in IFSC, thereby affecting domestic (i.e. IFSC) transactions, would require authorisation from the Authority under sub-section 1 of section 7 of the PSS Act.
c. PSPs may participate as/be members of international payment systems for making or receiving payments with other PSPs or to/from other financial institutions in IFSC after being satisfied that such international payment system complies with the condition mentioned in para 2(b) above and after obtaining prior approval of the Authority.
3. Further, the Authority hereby directs every PSP to review its participation in the international payment systems in light of the aforementioned policies and intimate the Department of Banking Supervision about its compliance with the same within 30 days from the date of this circular and also share with the Authority a list of all the international payment systems in which the PSP was participant, as on May 31, 2025.
Yours faithfully
Sd/-
(Supriyo Bhattacharjee)
Chief General Manager
Department of Banking Regulation
