Summary: The Institute of Company Secretaries of India (ICSI), through its President CS Pawan G. Chandak, submitted a proposal dated 28 September 2026 to Shri K. Rajaraman, Chairperson of the International Financial Services Centres Authority (IFSCA), seeking the establishment of a formal settlement proceedings framework at GIFT IFSC. The Institute observed that although IFSCA has developed regulatory frameworks covering banking, capital markets, insurance and fintech, settlement of regulatory proceedings remains an area requiring formal attention. Such a mechanism would facilitate quicker resolution of alleged regulatory violations, reduce litigation costs, provide commercial certainty, support investor protection and preserve regulatory resources. ICSI based its proposal on its research study titled “IFSC Settlement Mechanisms – A Study with Recommendations for GIFT IFSC,” which examines approaches followed in Dubai, Hong Kong, Luxembourg and the United Kingdom. The study recommends dedicated settlement regulations broadly modelled on the SEBI (Settlement Proceedings) Regulations, 2018, with an impact-based eligibility framework. Its seven principal recommendations cover transparent time-linked settlement discounts, balanced committees with internal and external members, severity-based restrictions on repeat settlements, formal settlement orders and public disclosure, third-party funding safeguards, and settlement without automatic admission of guilt or binding evidentiary consequences. The proposal also emphasises procedural fairness, transparency, accountability and enforceability, including safeguards against misuse. ICSI offered to assist IFSCA through comparative research, stakeholder consultations and further discussions. The proposal is a recommendation submitted for regulatory consideration and does not itself introduce binding settlement regulations.
THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
CS Pawan G. Chandak
PRESIDENT
ICSI: G&CL: 2026 September 28, 2026
Shri K. Rajaraman Chairperson International Financial Services Centres Authority (IFSCA)
Respected Sir,
Sub: Proposal for Establishing Settlement Proceedings Framework at GIFT IFSC
At the outset, the Institute of Company Secretaries of India (ICSI) appreciates the continued efforts of the International Financial Services Centres Authority (IFSCA) for its visionary leadership in shaping GIFT IFSC into a globally competitive financial hub, and for its continued efforts to build robust regulatory frameworks that inspire confidence among international investors and stakeholders.
We deeply appreciate the Authority’s remarkable efforts in building a comprehensive regulatory framework for GIFT IFSC, covering diverse sectors such as banking, capital markets, insurance, and fintech. In this context, we respectfully submit that while IFSCA has commendably introduced a wide spectrum of regulations, the area of settlement of proceedings remains to be formally addressed.
Settlement mechanisms are essential because they allow regulators to resolve alleged violations quickly, saving the time and high costs of prolonged litigation while providing faster commercial certainty and closure for businesses and markets. They free up regulatory bandwidth, reduce systemic friction, and enable corrective measures without years of reputational uncertainty. Importantly, such mechanisms secure monetary payments, investor restitution, or remedial actions efficiently, even in cases where violations arise from ambiguity in regulatory interpretation rather than fraudulent intent.
By balancing deterrence with procedural efficiency, a settlement framework fosters trust, predictability, and capital efficiency, the qualities which are indispensable for GIFT IFSC to attract and sustain global capital flows.
Recognising this need, ICSI has undertaken a comprehensive research study titled “IFSC Settlement Mechanisms – A Study with Recommendations for GIFT IFSC.” The study provides a comparative analysis of settlement frameworks adopted by leading jurisdictions including Dubai, Hong Kong, Luxembourg, and the UK. Drawing from this research, we have also prepared a draft set of settlement regulations tailored for IFSC, which may serve as a foundation for the Authority’s consideration.
The study endeavors to provide a suitable settlement architecture for the securities markets operating within the IFSC and includes draft settlement regulations for the consideration of IFSCA. In formulating these recommendations, emphasis has been placed on balancing regulatory effectiveness, procedural fairness, transparency, accountability, market integrity, and ease of doing business, while drawing upon international best practices and the unique regulatory framework governing IFSCs in India.
The key recommendations contained in the study are summarized below:
i) Legal Architecture: The study recommends the adoption of dedicated Settlement Regulations by IFSCA, broadly modeled on the SEBI Settlement Regulations framework, while incorporating an impact-based approach for determining the eligibility of matters for settlement.
ii) Discount Mechanism: It is proposed that a transparent and time-linked settlement discount framework be introduced to incentivize early settlement, self-reporting, and efficient resolution of regulatory proceedings.
iii) Institutional Design – decision-makers: The study recommends the constitution of a balanced settlement committee comprising both internal and external members, along with a clear separation between the settlement negotiation process and the final decision-making authority.
iv) Repeat Settlement/ Look-back Bar: A severity-based rule approach that considers the nature and seriousness of past misconduct rather than relying solely on fixed numerical restrictions.
v) Form, Publication and Enforceability of the Settlement: It emphasize issuance of formal settlement orders, appropriate public disclosure of settlements, and a robust framework for addressing breaches of settlement terms.
vi) Third-Party Payment: The study proposes a clear regulatory framework permitting corporate-group funding of corporate settlements while preserving individual accountability by restricting indemnification of penalties imposed for personal misconduct.
vii) Consent/ No-Admission, and Evidentiary Effect: It is recommended that settlement orders should not constitute admissions of guilt or create binding evidentiary consequences in other proceedings, while ensuring that settlement remains subject to full disclosure, cooperation obligations, and safeguards against misuse.
We would be pleased to extend assistance, share comparative insights, and engage in stakeholder consultations to aid IFSCA in designing and implementing this mechanism.
The detailed study, “IFSC Settlement Mechanisms – A Study with Recommendations for GIFT IFSC” (attached as ANNEXURE A) is enclosed herewith for your kind perusal and consideration.
We humbly submit that the establishment of a settlement mechanism will complete and strengthen the regulatory architecture of GIFT IFSC. It will enhance efficiency, safeguard investor interests, and reinforce the Authority’s reputation as a forward-looking regulator committed to global best practices. By adopting this framework, IFSCA will further consolidate GIFT IFSC’s position as a trusted and world class financial centre.
The ICSI looks forward to engaging with the Authority and extend its full cooperation in shaping this important initiative.
We would also be honoured to have an opportunity to meet your good self in person to further elaborate on our submissions and to provide any clarifications or additional inputs that the Authority may consider useful in this regard.
Thanking you,
Yours faithfully,
(CS Pawan G. Chandak) President, The ICSI
Encl.: “IFSC Settlement Mechanisms – A Study with Recommendations for GIFT IFSC”
