Recognition as a stock exchange, clearing corporation or depository may be granted after the Authority considers the application and is satisfied that the applicant meets the prescribed conditions and eligibility requirements. The Authority may attach appropriate conditions to recognition. A recognised market infrastructure institution must also comply with additional conditions imposed from time to time.

Recognition applicants must be companies limited by shares, demutualised, fit and proper, and compliant with ownership, governance, net-worth, capability and infrastructure requirements. Stock exchanges require electronic trading, real-time surveillance, member regulation, investor grievance and arbitration mechanisms, information dissemination, and business-continuity systems. Clearing corporations require timely settlement infrastructure, risk management, settlement guarantees, connectivity, real-time controls and dispute-resolution arrangements. Depositories must maintain secure communications and data systems, controlled access, operational procedures, offsite backups and insurance-backed indemnification for beneficial-owner losses.

Input tax credit on tax paid through DRC-03 following a DGGI investigation raises whether payment may be made under section 73 and whether credit can be availed. The issue contrasts the section 17(5) restriction concerning credit on payments under section 74 with payments made under section 73, and considers the relevance of DGGI involvement and judicial guidance.

Recognition of a depository in an IFSC requires the application to include a copy of the depository's draft bye-laws as part of the recognition process.

Recognition applications for a stock exchange or clearing corporation in an IFSC must include the memorandum and articles of association, bye-laws, and other prescribed documents. The required documentation must comply with the Securities Contracts (Regulation) Act, applicable rules, and the Market Infrastructure Institutions Regulations.

Recognition of a market infrastructure institution in an IFSC requires an application to the Authority in the prescribed form and manner, accompanied by the fee prescribed by the Authority.

Recognition as a market infrastructure institution in an IFSC requires the applicant to be a company incorporated in the IFSC and to comply with prescribed shareholding requirements.

Recognition is mandatory for any person seeking to conduct, organise, or assist in organising a stock exchange, clearing corporation, or depository in an IFSC. Such activities may be undertaken only after obtaining recognition from the Authority in accordance with the applicable regulations.

Regulation 2 defines recognised market infrastructure institutions as recognised stock exchanges, clearing corporations and depositories in an International Financial Services Centre. It defines governance participants, including governing boards, key management personnel, public interest directors and shareholder directors. Clearing and settlement concepts include clearing corporations, clearing members, trading members, netting and novation. Associate relationships are determined through control, voting power, corporate relationships, family connections, or circumstances involving control, independence or conflict of interest. Undefined expressions adopt meanings assigned under the applicable securities, depository, company and IFSC legal framework.

International Financial Services Centres Authority (Market Infrastructure Institutions) Regulations, 2021 are made under the enabling provisions of the International Financial Services Centres Authority Act, 2019, the Securities Contracts (Regulation) Act, 1956, and the Depositories Act, 1996. The framework takes effect on the thirtieth day following publication in the Official Gazette.

Minimum owned fund requirements apply according to the activities undertaken by finance companies. Sole aircraft operating lease transactions and non-core activities require USD 0.2 million or equivalent, subject to any higher amount needed for specific registration. Core activities require USD 3 million or equivalent, while specialised activities require USD 5 million or equivalent. Aircraft operating lease entities are exempt from specified requirements if they maintain a Board-approved prudential policy and meet fit-and-proper criteria. No exemptions are specified for core or specialised activities.

Default in registration conditions by a Finance Company or Finance Unit may result in regulatory action where the entity fails to fulfil conditions attached to registration. After providing an opportunity to make submissions, the Authority may suspend, withdraw, or cancel the registration.

Regulation 10 authorises the Authority to issue circulars or guidelines prescribing norms, procedures, processes, modes and permissible relaxations for implementing the Finance Company Regulations, addressing incidental matters, and facilitating or regulating permitted financial services. Applicant entities, Finance Companies and Finance Units must pay fees and charges as specified by the Authority.

Every Finance Company and Finance Unit must furnish operational information to the Authority in the manner, at intervals, and in the form specified by the Authority. Financial reporting submitted to the Authority must be in US Dollar unless otherwise specified by the Authority.

Every Finance Company and Finance Unit must comply with Authority-specified corporate governance and disclosure guidelines. Mergers, acquisitions, takeovers, or management changes affecting control of a Finance Company require prior approval where they alter control of share capital or business decisions under an agreement. Parent-level changes concerning a Finance Unit require registration compliance and intimation to the Authority.

Every Finance Company and Finance Unit must comply with Know Your Customer norms, measures to combat financing of terrorism, anti-money laundering obligations, and reporting requirements applicable to a Banking Unit in IFSCs.

Currency of operations for a Finance Company or Finance Unit must be conducted in freely convertible foreign currency with persons permitted by the Authority. Permitted INR-denominated transactions must be settled in freely convertible foreign currency. An INR account may be maintained from such foreign currency for administrative, statutory and other authorised purposes. Balance sheets must be maintained exclusively in United States Dollars, and a Finance Unit must keep its transaction accounts separate from those of its parent.

Finance Companies and Finance Units may undertake specified specialised, core, and non-core financial activities, subject to applicable conditions, registration requirements, and approvals. Non-core activities must be conducted through separately identifiable departments, protected by conflict-of-interest firewalls, and supported by a Board-approved grievance-redressal and customer-compensation policy. Dealings with residents remain subject to foreign exchange law. Derivatives undertaken by entities carrying out non-core activities are restricted to hedging underlying exposures, and speculative transactions may not be undertaken or funded.

Income from a liquor business should be estimated at 5% of the assessee's reported sales where those sales represent actual turnover. Applying a 24% gross-profit margin to the cost of goods sold to derive a higher turnover creates only a notional sales figure, absent determination of suppressed sales. Comparable liquor-trade matters support estimation of profit at 5% of goods put to sale. Accordingly, the addition based on enhanced estimated turnover is unsustainable, and income is computed at 5% of reported sales.

Finance Companies and Finance Units must comply with prudential requirements specified by the Authority, including a minimum capital ratio of regulatory capital to risk-weighted assets. They must maintain a liquidity coverage ratio on a stand-alone basis, subject to approved parent-entity maintenance for a Finance Unit. Aggregate exposure to a single counterparty or connected counterparties is limited to twenty-five per cent of the available eligible capital base without approval. Operational guidelines govern implementation.