Regulating Payment and Settlement Systems in GIFT-IFSC

The International Financial Services Centres Authority (IFSCA) recently notified regulations to provide for the regulation and supervision of payment and settlement systems within the IFSC. These regulations are a result of consultation papers released earlier this year.

According to the Payment and Settlement Systems Act, 2007, a payment system is defined as a mechanism enabling payment transactions between a payer and a beneficiary, encompassing clearing, payment, or settlement services, or all of them, excluding stock exchanges.

The new regulations envisage the setting up of a Board which is set to comprise a chairperson, whole-time members and not more than three members of the Authority to be nominated by the chairperson. This Board is empowered to prescribe policies for the regulation and supervision of the payment systems including electronic, non-electronic, domestic and cross-border payment systems affecting transactions within the IFSC. The Board is mandated to convene at least once every three months and submit quarterly reports to the Authority.

Further, IFSC is in the process of finalising norms providing for the authorisation for commencing or carrying on a payment system in GIFT-IFSC; the consultation period for these norms concluded last month.