Aim and Objective
The main aim of the IFSCA scheme is to promote the creation of a world-class fintech hub across jurisdictions at IFSCs by providing financial support to fintech activities in the form of specific grants as detailed in the scheme based on the eligibility and fulfilment of terms and conditions. The IFSCA scheme mentions various provisions with respect to criteria for eligibility, the meaning of ‘fintech’, beneficiaries that are eligible and the way in which the scheme will be executed.
The Scheme is Open to Domestic and Foreign FinTechs
The IFSCA scheme is effective from February 2, 2022, and it will be in operation for an initial period of three years from the date of beginning. And, per the regulation of the IFSCA scheme, the fintech will mean a technologically enabled innovative solution that will help or assist the financial institutions to delivery financial products or financial services.
The IFSCA scheme is open to the following: domestic fintechs that are looking for access to overseas markets, domestic fintechs that are seeking listing on IFSCA-recognised stock exchanges, foreign fintechs that are in search for market access to IFSCs in India and want to work within the IFSCA’s regulatory framework, foreign fintechs that want to access the domestic market under Inter-Operable Regulatory Sandbox (IORS) framework and domestic fintechs that are spreading business to the IFSCs by way of either authorisation or registration or through the regulatory sandbox.
The eligibility of the IFSCA scheme is divided into two parts: the applicant is from India and the applicant is from outside of India
Applicants from India
An applicant from India has to fulfill any of the following conditions to be eligible to make an application for incentive under the IFSCA scheme: the entity is registered with Department for Promotion of Industry and Internal Trade (DPIIT) as a start-up entity linked with fintech; the entity is incorporated as a company under the Companies Act 2013, or as a limited liability partnership (LLP) under the Limited Liability Partnership Act 2008, or a ‘branch’ of an Indian company or LLP in IFSC; the individual is a resident citizen; and the entity is working directly or indirectly in the ecosystem regulated by RBI, SEBI, IRDAI and PFRDA.
Applicants from Outside India
An applicant from outside India has to fulfill any of the following conditions to be eligible to make an application for incentive under the IFSCA scheme: the applicant should be a non-resident individual or an entity from FATF-compliant countries/jurisdictions; and where the applicant is a body corporate incorporated outside India, the shareholding of non-resident individuals in the applicant at all times should be more than 51%.
Various Incentives to the Eligible Applicant
The IFSCA scheme will provide the following incentives to the eligible applicants
• Fintech start-up grant – This grant should be used for developing a product or a service and be related ‘go-to-market’ initiatives for a start-up with a new fintech idea or a solution.
• Proof of concept (PoC) grant – This grant should be used for conducting a PoC by an early or a mature fintech entity in the domestic market or overseas.
• Sandbox grant – This grant should be used by the fintech entity to experiment with innovative products or services in a sandbox.
• Green fintech grant – This grant should be used for developing solutions facilitating sustainable finance and sustainability-linked finance, including environmental, social and governance investments.
• Accelerator grant – This grant should be used for supporting accelerators at the IFSC for capacity building, build capabilities around mentors, bringing investors and so forth.
• Listing support grant – This grant should be used to support domestic fintech entity that is aspiring to list on stock exchanges that are recognised by IFSCA.
Execution of the Scheme
The applicant has to apply for the scheme in such a way prescribed by the authority. After the receipt of the application, the application is scrutinized and due diligence will be conducted complying all the requisite norms, the application is further evaluated by the evaluation committee that will further submit its recommendation along with comments, the satisfied authority will issue the sanction letter containing terms and conditions of the grant and then the internal committee monitors pre and post disbursement conditions, compliance and other functions.