Introduction: The International Financial Services Centres Authority (IFSCA) plays a pivotal role in regulating financial activities within International Financial Services Centres (IFSCs). One crucial aspect managed by the IFSCA is the fee structure applicable to entities undertaking permissible activities within IFSCs. This article delves into the detailed circular issued by the IFSCA regarding fee regulations, providing insights into the various categories of fees, payment procedures, and implications for regulated entities (REs) and applicants.
Detailed Analysis:
1. Categories of Fees: The circular delineates four categories of fees:
- Application fees and Licence/Registration/Recognition/Authorisation fees
- Recurring fees
- Activity based fees
- Processing fees
2. Payment Procedures: The circular outlines clear payment procedures for different types of fees, emphasizing that applications or requests will only be considered upon full payment of applicable fees. Non-payment within specified timelines may result in termination of the application process.
3. Recurring Fees: REs are liable to pay recurring fees based on their operational status and activities. The circular provides detailed guidelines on the calculation and payment of recurring fees, including pro-rata payments and adjustments based on turnover.
4. Activity-Based Fees: Entities undertaking specific activities specified by the Authority are subject to activity-based fees as per Schedule I. This section emphasizes the importance of compliance with fee regulations concerning specific activities.
5. Processing Fees: Applications for relaxation/waiver of regulations or modification of licence terms require accompanying processing fees. The circular elucidates the fee structure for handling such requests.
6. Late Payment and Additional Fees: Provisions for late payment fees and additional/supplementary fees are outlined, highlighting the consequences of delayed payments or non-compliance with regulatory requirements.
7. Waiver of Fees: The circular allows for the waiver of fees in exceptional circumstances, subject to the discretion of the Authority, acknowledging the need for flexibility in fee regulations.
8. Payment Mechanisms: Entities are provided with detailed instructions for remitting fees, including account details and currency considerations, ensuring transparency and adherence to regulatory standards.
Conclusion: The circular issued by the IFSCA regarding fee structures for entities and applicants in IFSCs reflects the Authority’s commitment to transparency, accountability, and regulatory compliance. By providing comprehensive guidelines on fee categories, payment procedures, and compliance requirements, the circular aims to foster a conducive environment for financial activities within IFSCs while safeguarding the interests of stakeholders. Adherence to the outlined fee regulations is imperative for entities and applicants seeking to operate within IFSCs, ensuring a robust and well-regulated financial ecosystem.
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International Financial Services Centres Authority
Circular F.No.865/IFSCA/Banking/Fee Revision/2022-23 | May 17. 2023
[As amended upto February 6, 2024]
All Regulated Entities in International Financial Services Centres (IFSC) and all Applicants to the International Financial Services Centres Authority (IFSCA)
Sub: Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC
1. In exercise of the powers conferred by Section 12 and 13 of the International Financial Services Centres Authority Act, 2019, the International Financial Services Centres Authority (“Authority”) issues this circular, alongwith the schedules I and II annexed, laying down a consolidated fee structure for an entity desirous of getting licence, registration, recognition or authorisation or availing of any permitted financial service in the IFSC under relevant regulations, circulars, guidelines or framework (“Applicants”) and for the entities which have been granted licence, registration, recognition or authorisation by the Authority (“Regulated Entities (REs)”).
2. The fees payable to the Authority fall into the following categories:
a. Application fees and Licence/Registration/Recognition/Authorisation fees payable during the process of application
b. Recurring fees – payable after grant of licence, registration, recognition, or authorisation
c. Activity based fees — payable based on the nature and volume of activity carried out by the Fls
d. Processing fees — payable for handling specific requests such as modification of terms of licence, waiver of regulations etc.
3. Where a fee is payable as part of any application or request to the Authority, the application or request shall not be regarded as submitted until such fee has been paid in full.
4. The use of the term “authorisation” in this circular shall include all types of authorisations by the authority including limited use authorisations.
5. Fees payable during the application process
i. All applications for setting up an Fl shall be in the format specified by the Authority, supported by the documents prescribed by the Authority. An application may be withdrawn before grant of final licence, registration, recognition or authorisation at any time till grant of such licence, registration, recognition or authorisation, by due intimation to the Authority.
ii. Applications for setting up a Fl shall be accompanied with the necessary Application fee, as specified in the Schedule-I. Application fee once paid shall not be refunded under any circumstances, including the case where the application is withdrawn.
iii. On intimation of the decision by the Authority to grant provisional/in-principle approval or final licence, registration, recognition or authorisation, the applicant shall, within 15 days of such intimation, pay the licence, registration, recognition or authorisation fee specified in Schedule I.
iv. In case the Applicant fails to pay the requisite licence, registration, recognition or authorisation fee within the specified time, or any extension of such time as may be granted by the Authority, it shall be presumed that the Applicant does not wish to continue the process and the Authority shall terminate the application process under intimation to the applicant. An application process, once terminated, shall not be reopened by the Authority. Termination of the application process, however, shall not make the entity ineligible for making a fresh application.
v. Grant of provisional/in-principle approval shall not make an Applicant automatically eligible for grant of final licence, registration, recognition or authorisation. In case where the Authority decides not to grant final licence, registration, recognition or authorisation to an applicant to whom provisional/inprinciple approval has been granted, due to non-compliance of the condition/s communicated while granting provisional/in-principle approval, or due to any other reason, the fees already paid by the Applicant shall not be refunded.
6. Fees payable after grant of licence, registration, recognition, or authorisation On grant of licence, registration, recognition or authorisation, Fls shall be liable to pay Recurring fees as specified in Schedule I as follows:
i. For IFSC Banking Units, Capital Market Infrastructure Institutions (Stock Exchanges, Clearing Corporations, and Depositories), Bullion Market Infrastructure Institutions (Bullion Exchanges, Bullion Clearing Corporations, Vault Managers)
a) The Fls covered under this sub-clause are liable to pay Recurring fees from the date of commencement of operations. The date of commencement of operations shall be the earliest of (a) the date of commencement of operation as communicated by the Fl to the Authority or (b) the last date specified, if any, in the final licence, registration, recognition or authorisation, for commencement of operations or (c) the date on which the capital of the Fl is provided.
b) “Conditional” Recurring fee based on “Turnover” (“Turnover Fee”) shall be payable on the basis of the “Turnover” of the financial year to which such fee pertains.
c) “Turnover Fee” shall be payable in advance as under:
i. Other than the year of commencement of operations, “Turnover Fee” for the financial year to which such fee pertains, shall initially be determined on the basis of the “Turnover” of the preceding financial year and shall be paid within 30 days from the beginning of the financial year to which such fee pertains.
ii. For the year of commencement of operations, the “Turnover Fee” shall initially be determined as pro-rata share of the lowest turnover slab applicable to the FI, from the date of commencement of operations to the end of the financial year and shall be paid within 15 days of commencement of operations. For calculation of this pro rata share, part of a month shall be considered a full month.
d) At the end of every financial year “Turnover Fee” for the said financial year shall be calculated based on the actual “Turnover” of such financial year.
e) The difference between fees calculated at (c) and (d) above:
i. If negative, shall be paid to the Authority within 30 days of the end of such financial year.
ii. If positive, shall be adjusted against the fees payable by the Fl for the next financial year.
f) For the year of commencement of operations, the “flat” Recurring fee payable by an Fl shall be pro-rata share of the Recurring fees from the date of commencement of operations to the end of the financial year and shall be paid within 15 days of commencement of operations. For calculation of this pro rata share, part of a month shall be considered as a full month.
g) For a financial year other than the year of commencement of operations, the “flat” recurring fee shall be paid within 30 days of the end of the preceding financial year.
ii. For International Branch Campus & Offshore Education Centres
a) For Fls in this sub-clause, no recurring fee shall be payable in the year of grant of registration in terms of Clause 16(2) of International Financial Services Centres Authority (Setting up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022.
b) For the year other than the year of commencement of operations, the “flat” recurring fee shall be paid within 30 days of the end of the preceding2 financial year.
iii. For all other Fls
a) The Fls covered under this sub-clause are liable to pay Recurring fees from the date of communication intimating the decision of the Authority to grant final licence, registration, recognition, or authorisation.
b) For the financial year of communication referred to in (a)3, the Recurring fee, as specified in the Schedule-I, shall be payable on pro-rata basis for every month remaining in such financial year and shall be paid within 15 days of the date of communication. For calculation of this pro rata share part of a month shall be considered as a full month.
c) For a financial year other than the year of commencement of operations, the “Recurring” fee, as specified in Schedule-I, shall be paid within 30 days of the end of the preceding4 financial year.
iv. Recurring fees for periods other than a year
a) Other recurring fees as may be specified by the Authority from time to time, such as monthly fees, quarterly fees, or fees prescribed at other intervals, shall be payable by the 5th working day from the date on which such fee falls due. Such “Conditional” Recurring fee, if payable on the basis of “Turnover”, shall be calculated on the basis of the “Turnover” as on the last day of the preceding period (i.e., month, quarter, half-years, etc.)
7. Multiple applications
i. Applications for rendering different financial services shall be made separately under the respective regulations, guidelines, circulars or frameworks, except as otherwise provided by the Authority.
ii. Multiple applications from a single entity will be treated as separate applications and shall attract specified fees separately.
8. Fees payable based on the nature and volume of activity carried out by the Fls
Fls desirous of undertaking specific activities, as may be specified by the Authority from time to time, shall pay specific activity-based fees as specified in Schedule — I hereto.
9. Fees payable for handling specific requests such as modification of terms of licence, waiver of regulations etc.
i. Relaxation/waiver of provisions of applicable regulations/ guidelines/circulars,
Application from the REs requesting relaxation/waiver of provisions of applicable regulation, guideline, circular or framework, shall be accompanied with the processing fees, as specified in the Schedule 15 hereto.
ii. Modification of the terms and conditions of the licence, registration, recognition, or authorisation
Application from the REs for modification of the terms and conditions of the licence, registration, recognition or authorisation excluding (i) above), which in the opinion of the Authority is of a substantive nature 6 (including withdrawal/surrender of licence, registration, recognition or authorisation), shall be accompanied with the processing fees as specified in the Schedule I 7.
10. Late payment of any outstanding dues/fees or delay in submission of periodic returns
i. If the RE fails to pay the outstanding dues/fees to the Authority within the specified time, such dues/ fee may be paid after the specified time, along with a late payment fee as specified in the Schedule II.
ii. If the RE fails to submit periodic returns to the Authority within the specified time, a late submission fee for delayed submission of returns shall be payable, as specified in the Schedule II hereto.
iii. Such acceptance of delayed payment of outstanding fees/dues or periodic returns shall be without prejudice to any other action that the Authority may take for the defaults indicated in (i) and (ii) above.
11. Additional /Supplementary fees
In exceptional circumstances, the Authority may, at its discretion, levy additional/supplementary fee on an Applicant or a RE if it is of the opinion that such additional/ supplementary fee is justified by the resources allocated or to be allocated by the Authority towards considering an application or request or in regulating the activities undertaken by the said Applicant or RE.
12. Request for approval of key managerial personnel/directors/trustee etc.
Any request for approval or change of key managerial personnel, directors, trustees or any person holding an equivalent position in the RE, by whatever name called, shall be accompanied with the fees as specified in the Schedule II hereto.
13. Waiver of fees
The Authority may, in exceptional circumstances, suo motu or on a request by the Applicant or RE, waive the full or part of any fee (including fees outstanding and late payment fee thereon).
14. Manner of Payment
i. All dues/fees payable to the Authority shall be paid by the entities either on receipt of a demand from the Authority, or as per the quantum and periodicity fixed in terms of the relevant regulations, guidelines, circulars, licence, registration, recognition, or authorisation, or this Circular and schedules thereto.
ii. The fees as specified in the Schedule-I and II hereto shall be paid to the following account of the Authority in USD:
Account Name: International Financial Services Centres Authority
Account Number: 970105000174
Type of Account: USD Current Account
Bank Name: ICICI Bank Limited
SWIFT Code: ICICINAAXXX
NOSTRO Details: CHASUS33XXX
JP MORGAN CHASE BANK NA, NEWYORK, USA
Account no: 833999532
iii. An applicant from India (other than an entity set up in GIFT-IFSC) desirous of getting licence, registration, recognition, or authorisation from the Authority shall have the option to pay only the application fee and registration fee, as specified in the Schedule-I hereto, in INR into the following account of the Authority:
Account Name: IFSCA FUND 2
Account Number: 39907189884
Name of the Bank: State Bank of India
Type of Account: INR Current Account
IFSC Code: SBIN0060228
iv. For the entities remitting the fee in INR, RBI reference rate for the date on which the remittance is being made will be applicable. The RBI reference rate is available at https://www.rbi.org.in/scripts/ReferenceRateArchive.aspx. a
v. After paying the required fees, Applicants/REs shall submit documentary evidence of having paid such fees to the Authority.
15. In case any of the provisions of this circular are found to be in contravention with any provision of any applicable Act, Rule or Regulation, then such provision of the applicable Act, Rule or Regulation shall prevail.
16. This circular shall be effective from the date of its issuance and shall replace all other circulars issued by the Authority on the issue of fees payable to the Authority.
17. A copy of this circular is available on the website of the International Financial Services Centres Authority at ifsca.gov.in.
(R. Kumar)
General Manager & Head of Banking Supervision
Notes:-
1 Inserted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
2 Inserted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
3 Inserted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
4 Inserted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
5 Substituted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
6 See Clarificatory notes to Schedule I
7 Substituted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
8 Substituted vide IFSCA Amendment F.No.865/IFSCA/Banking/Fee Revision/2022-23 dated July 5, 2023
