TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Payment Services) Regulations, 2024
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....d accordingly - (a) "account issuance service" means any of the following services: i. the service of issuing a payment account to a payment service user; ii. the service required for operating a payment account, and includes: a) the service (other than a cross‑border money transfer service) that enables money to be placed in a payment account; or b) the service (other than a cross‑border money transfer service) that enables money to be withdrawn from a payment account; (b) "Act" means the International Financial Services Centres Authority Act, 2019 (50 of 2019); (c) "agent" means any person who acts on behalf of a payment service provider in relation to the payment services provided by him; (d) "applicable funds" means- i. funds received by a payment service provider from, or for the benefit of, a payment service user for the execution of a payment transaction; and ii. funds received by a payment service provider from another payment service provider for the execution of a payment transaction on behalf of a payment service user; (e) "Authority" means the International Fin....
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....28/Accounting Standard 23); (iv) common brand name or (v) investment in equity shares of 20 per cent and above; (n) "holding company", means a company as defined in sub-section 46 of section 2 of the Companies Act, 2013 (18 of 2013); (o) "IFSC" or "International Financial Services Centre" shall have the meaning assigned to it in clause (g) of sub-section (1) of section 3 of the Act; (p) "key managerial personnel" shall have the meaning assigned to it in sub-section 50 of section 2 of the Companies Act, 2013 (18 of 2013) and any other person whom the payment service provider may declare as key managerial personnel; (q) "merchant" means and includes all persons, in or outside IFSC, who accept payments for goods and services provided by them, through electronic/online payment modes; (r) "merchant acquisition service" means any service of accepting and processing a payment transaction for a merchant under an agreement between the payment service provider and the merchant, which results in a transfer of money to the merchant pursuant to the payment transaction, regardless of whether the payment service provider comes into possession of any mo....
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...."regular payment service provider" means a Payment Service Provider, authorised under regulation 10 of these regulations, other than significant payment service provider; (ae) "safeguarding institution" means an IFSC Banking Unit ('IBU') or an IFSC Banking Company ('IBC'), as defined in clause (ec) and (eb), respectively, of sub-regulation (1) of regulation 2 of the International Financial Services Centres (Banking) Regulations, 2020. (af) "significant payment service provider" means any Payment Service Provider, who is designated as such under sub-regulation 4 of regulation 4 of these regulations; (ag) "specified foreign currency" means the currencies specified in the First Schedule of the International Financial Services Centres Authority (Banking) Regulations, 2020 or any other regulation issued by the Authority; (ah) "subsidiary" means a company as defined in sub-section 87of section 2 of the Companies Act, 2013 (18 of 2013); (ai) "third-party service provider" means any person that provides services to one or more Payment Service Provider either directly or indirectly as part of the supply chain of another service provider; ....
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....ulations. 5. Legal form An Applicant making an application for authorisation under regulation 4 shall be required to be incorporated as a Company with its registered office in IFSC. 6. Minimum Net worth requirement (1) A Payment Service Provider shall, inter-alia, comply with the minimum net worth requirements, as specified in Schedule V of these regulations, on an ongoing basis. (2) The minimum net worth requirement of a Payment Service Provider shall be reviewed by the Authority from time to time to ensure their continued effectiveness and relevance and the Authority may also make adjustments to the minimum net worth requirements as needed to address emerging risks and changes in the financial landscape in which the Payment Service Provider is operating. (3) Requirement of additional net worth, if any, as a result of the review undertaken under sub-regulation (2), shall be satisfied by a Payment Service Provider, within 180 days from the date of communication by the Authority about the additional net worth requirement. (4) The Authority may establish a framework for prompt corrective action in case the net worth of a Payment Service Provider falls below the r....
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.... 9. Issuance of in-principle approval (1) After considering an application for authorisation, if the Authority is satisfied that the said application, prima facie, satisfies the conditions for granting authorisation, the Authority may issue an "in-principle approval" letter to the Applicant and shall require the Applicant to satisfy such conditions as may be specified by the Authority in the "in-principle approval" letter before grant of authorisation. (2) Grant of authorisation to an Applicant who has been issued "in-principle approval" shall be at the sole discretion of the Authority and the issue of "in-principle approval" by the Authority shall not automatically entitle the Applicant to be granted an authorisation under regulation 10. (3) The Applicant shall intimate to the Authority about any change of ownership or control of the Applicant during the period when an "in-principle approval" is in force. (4) The Authority, after receipt of intimation under sub-regulation (3) or when it otherwise becomes aware of any change of ownership or control of the Applicant to whom an "in-principle approval" has been issued, shall undertake a review of its decision to grant "i....
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.... shall refuse to grant authorisation and communicate the same to the Applicant. Provided that no such refusal shall be made without giving the Applicant a reasonable opportunity of being heard. (3) The application filed under sub-regulation (1) of regulation 4 of these regulations, may be withdrawn by the Applicant at any time before the grant of authorisation. (4) The Applicant whose application is refused under sub-regulation (2) above or withdrawn under sub-regulation (3) above, may submit a fresh application for authorisation after a period of six months from the date of communication of refusal of the application by the Authority under sub-regulation (2) or the date of withdrawal of the application under sub-regulation (3). 12. Revocation of authorisation (1) If the Authority is satisfied that a Payment Service Provider has failed to comply with any of the conditions of the authorisation, provision/s of these regulations, orders or directions of the Authority, or that the activity of the Payment Service Provider is being carried on in a manner prejudicial to the interests of the Payment Service Users, it may revoke the authorisation granted to such Payment Servi....
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....cate of Authorisation. (2) The Payment Service Provider may submit an application for extension of time, if instructed to do so by way of a resolution passed by its board of directors, for commencing operations at least two months before the latest date of commencement as stipulated under sub-regulation (1). (3) The application under sub-regulation (2) shall, inter-alia, include complete details of the reasons behind the request for extension, duration of extension sought, steps being undertaken to overcome the delay and any other information which, in the opinion of the Payment Service Provider, is relevant to the request for extension. (4) On receipt of the application under sub-regulation (2), if the Authority is satisfied that Payment Service Provider cannot commence its operation within stipulated time period, it may extend the time period by such further period, as it thinks fit, but not exceeding three (3) months: Provided that any extension of the time period under this regulation shall not be granted more than once. CHAPTER IV GOVERNANCE 16. Governance arrangements (1) A Payment Service Provider shall comprehensively and clearly document its governa....
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.... 18. Identification of critical services and assessment of criticality (1) A Payment Service Provider shall put in place a risk-based framework to assess the criticality of services that they receive or plan to receive from a Third-party Service Provider. (2) Such assessment shall be undertaken at the time of commencement of operations and at regular intervals thereafter to identify critical services. (3) The framework under sub-regulation (1) shall consider various factors relevant to identifying a service as "critical" including: a. the financial, operational and strategic importance of the service to the Payment Service Provider. b. the level of tolerance for disruption acceptable to the Payment Service Provider regarding critical business operations that rely or plan to rely on the Third-party Service Provider. c. the nature of any data or information shared by the Payment Service Provider with the Third-party Service Provider under a Service Relationship. d. the ease of substitutability of a service or lack thereof. 19. Onboarding and ongoing monitoring (1) A Payment Service Provider shall conduct appropriate planning and d....
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....to the extent practically feasible, test their strategy for exiting Third-party Service Relationship involving critical services. (2) Such strategy shall cover a range of scenarios including planned migration of services, but also include adverse events like: (a) Violation or breach of applicable laws, regulations or contractual terms; (b) Deterioration in the quality of the services provided; (c) Weaknesses in the Third-party Service Provider's governance, financial condition, resilience or risk management that could reasonably impact the delivery of critical services; (d) Extended disruption to critical services that cannot be managed through other business continuity measures. 21. Reporting of incidents The Payment Service Provider shall require the Third-party Service Providers to have clearly defined processes for identifying, investigating, remediating and notifying Payment Service Provider in a timely manner of incidents that impact the Third-party Service Provider's ability to deliver agreed-upon services. 22. Record of third-party service relationships The Payment Service Provider shall maintain complete, up-to-date record....
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....of the Authority before entering into any transaction of merger, consolidation, re-organisation, scheme of arrangement or compromise with its shareholders or effect any scheme of amalgamation or reconstruction. (4) The Authority may, for the purpose of carrying out its functions under these Regulation, conduct or get conducted audits and inspections of a Payment Service Provider and a Third-Party Service Provider and it shall be the duty of the Payment Service Provider and a Third-Party Service Provider to assist the Authority to carry out such audit or inspection, as the case may be. 27. Duty towards Payment Service Users (1) A Payment Service Provider shall ensure that due regard is given to protecting the interests of Payment Service Users and the relevant information is communicated to them in a clear and fair manner that minimises the possibility of them getting misled. (2) A Payment Service Provider shall comply with the disclosure requirements as specified in Schedule VII of these regulations. 28. Duty to secure the information technology systems and other infrastructure (1) A Payment Service Provider shall secure its information technology systems and othe....
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....ome activities relating to a payment service from a place of business other than from IFSC shall seek prior approval from the Authority. CHAPTER VIII RETURNS, DOCUMENTS AND OTHER INFORMATION 32. Submission of returns, documents or other information etc. Every Payment Service Provider shall submit requisite documents and information in such format and in such manner as may be specified by the Authority. 33. Furnishing of accounts and Balance Sheet Every Payment Service Provider shall submit to the Authority, a copy of the audited financial statements, which includes Balance-sheet, Profit and Loss statement, Cash or Fund flow statement along-with the auditor's report thereon within three (3) months from the date of its finalisation to the Authority, along with the remarks or observations of the auditor, if any, on the conduct of the business, state of accounts, etc., and a suitable explanation on auditor's observations/remarks. Provided that the Authority may, on an application made by the Payment Service Provider, extend the said period of three months for furnishing of returns by a further period not exceeding one month. 34. Maintenance of books of accounts,....
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....payment transactions carried out within a payment or securities settlement system between Payment Service Providers and settlement agents, central counterparties, clearing houses, central banks or other participants in the system; d) payment transactions related to securities asset servicing, including dividends, income or other distributions, or redemption or sale, carried out by persons referred to in sub-paragraph (c); e) payment transactions carried out between Payment Service Providers, or their agents or branch offices, for their own account; f) payment transactions and related services between a Holding company and its subsidiary or between subsidiaries of the same Holding company, without any intermediary intervention by a Payment Service Provider other than Group Entities; g) transporting currency, including the collection, processing and delivery of the currency, where the service is carried on as a business; h) services provided by technical service providers, being an entity that supports the provision of payment services, without being in possession of the funds to be transferred at any time, including the services of: ....
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.... (i) the average daily value, over a calendar year, of the total value in one day of all e-money that is intended to be issued or issued by the Regular Payment Service Provider exceeds $3 million (or its equivalent in a Specified Foreign Currency); SCHEDULE II [See Regulation 7(1)] FIT AND PROPER REQUIREMENTS 1. This schedule sets out the fit and proper criteria applicable to all Relevant Persons. The Authority expects a Relevant Person to be competent, honest, to have integrity and to be of sound financial standing. 2. The criteria provided in this schedule are not meant to be exhaustive or a substitute for any legal provisions and are to be read in conjunction with any applicable legislation and any written instructions, notifications, standards, and additional guidelines that the Authority may issue from time to time. 3. A Payment Service Provider shall establish effective systems and controls to ensure that all the Relevant Persons meet the 'fit and proper' criteria. 4. A Payment Service Provider shall carry out 'fit and proper' evaluation, in the format specified in the annex to this schedule of all Relevant Persons, both at the time of their appointment....
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....tionary of the entity) 2 Whether the functionary or any of the companies/ entities in which the functionary is/ was associated with1, is in default or have defaulted in the past in respect of credit facilities obtained from any entity or bank? (If yes, please furnish information about the default and the name of the lending institution) 3 Whether any of the functionaries have been disqualified to act as promoter/ director/ key managerial personnel under any law in any jurisdiction where the applicant entity or the group companies of the applicant entity are operating? If yes, please furnish details. 4 Name/s of the companies, firms, partnership firms, in which any of the functionaries hold substantial interest. 5 Whether the Applicant/Group or any of the functionaries are/ were undergoing/ involved in any investigation/ disciplinary action/ legal or regulatory violations/ criminal case by any law enforcement/ regulatory agencies? If yes, please furnish details. 6 Whether any order has been passed by any bankruptcy/ resolution authority against any company....
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....g with the reason for and intent behind such surrender. b. A certificate from its Chartered Accountant about the number of customer accounts and amounts held in such accounts as on the date of the resolution in 1(a). Such statement should also indicate the name of its Escrow account details, outstanding Escrow amount, and liabilities A note outlining the process proposed to be followed by the Payment Service Provider and the timeline for extinguishing/ repaying the liabilities to the Payment Service Users, Merchants or any other parties. c. An undertaking duly signed, by its authorised signatory, and clearly stating that it would not incur any fresh liability during the process of surrender of authorisation and closing down the business. 2. A request for surrender of authorisation shall be considered by the Authority on the merits of the request. 3. The Authority shall process such a request communicate its decision to the Payment Service Provider. 4. The Authority may advise the Payment Service Provider to initiate certain actions including: a. Issue a public notice in English, Hindi and a vernacular language, in print/visual m....
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....gulation 4 (1)] PERSONS EXEMPTED FROM AUTHORISATION 1. An IFSC Banking Company (IBC) or an IFSC Banking Unit (IBU) licensed or permissioned under the Banking Regulation Act, 1949 (10 of 1949). 2. A person licensed to carry on the business of issuing credit cards in IFSC. 3. Any other person or class of persons, as may be specified by the Authority. SCHEDULE V [See regulation 6(1)] MINIMUM NET WORTH REQUIREMENTS 1. A Regular Payment Service Provider shall have a minimum net-worth of USD 100,000 (or equivalent in a Specified Foreign Currency) on the date of commencement of operations. A Regular Payment Service Provider shall achieve a minimum net-worth of USD 200,000 (or equivalent in a Specified Foreign Currency) by the end of the third financial year (i.e., March 31) from the year of commencement of operations. 2. A Significant Payment Service Provider shall achieve a minimum net-worth of USD 250,000 (or equivalent in a Specified Foreign Currency) within ninety days of the date of being so designated by the Authority. A Significant Payment Service Provider shall achieve a minimum net-worth of USD 500,000 (or equivalent in a Specified Foreign Currency) by ....
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....he Authority. (4) A Regular Payment Service Provider and a Significant Payment Service Provider mentioned in clause (3) above, shall ensure that from the time any applicable funds are received from, or on account of, a customer, the whole or such part, as may be specified, of the relevant money is safeguarded in one of the following manners: (a) by an undertaking, from a safeguarding institution, to be fully liable to the customer for the relevant money; (b) by a guarantee given by a safeguarding institution for the amount of the relevant money; (c) by depositing the relevant money in a trust account maintained with a safeguarding institution; (d) in such other manner as may be specified by the Authority. (5) A Regular Payment Service Provider and a Significant Payment Service Provider shall hold the applicable funds in an escrow account with an IBU. Separate escrow accounts shall be opened for holding applicable funds pertaining to each of the payment services listed in Part A of Schedule I. (6) A Regular Payment Service Provider and a Significant Payment Service Provider providing e-money issuance service shall ensure that the balance ....
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....Service Provider > if the "< Name of Payment Service Provider >'s business fails" 2. The statement referred to in clause 1 above must : a. be published at least once in publicly available material issued by the Payment Service Provider; b. be provided to a potential customer prior to the potential customer using the payment services provided by the Payment Service Provider; c. be provided at least once in writing to any customer where such a customer was not provided the statement in the manner set out in (b); d. not be obstructed or obscured, or embedded within other unrelated writing; e. be of a reasonable size and typeface. 3. Where a Payment Service Provider makes a representation in respect of the scope of its regulation by the Authority in any publicly available material, the Payment Service Provider shall at all times ensure that the representation is accurate and not false or misleading. 4. A Payment Service Provider shall ensure that materials provided to customers or potential customers, are clear, complete, accurate, understandable and not misleading, regardless of the delivery channel. 5. Any advertisement or prom....