Which law governs the security
Security follows the asset. A mortgage over land in India, a pledge of shares in an Indian company or a hypothecation of Indian receivables is created and perfected under Indian law, whatever law governs the loan. Security over assets abroad is taken under the law of the place where they are, or the flag or registry for ships and aircraft.
Where an IFSC lender takes security from an Indian resident, the transaction is cross-border for exchange control, because the IFSC unit is generally treated as a person resident outside India. The resident's ability to borrow and to grant security then depends on the FEMA route it uses. See lending to India from the IFSC.
Registering charges
- Duty to register. A company creating a charge, in or outside India, on property in or outside India, must register its particulars with the Registrar within thirty days of creation, signed by the company and the charge-holder (section 77(1), Companies Act, 2013). The Registrar may allow later registration within a further period on payment of additional fees.
- Consequence of not registering. An unregistered charge is not taken into account by a liquidator, under the Act or the Insolvency and Bankruptcy Code, or by any other creditor (section 77(3)). The debt itself remains payable (section 77(4)).
- Charge-holder's own application. If the company fails to register, the charge-holder may apply to the Registrar (section 78). Lenders usually make this a condition of drawdown rather than rely on it.
- Foreign companies. Chapter VI applies to charges on property created or acquired by a foreign company (section 384(4)), so a branch in the IFSC is caught too.
MCA's notification of 4 January 2017 for Specified IFSC private companies includes a longer period for late registration and extends its Chapter VI exemptions to foreign companies in the IFSC. Check how they apply to the particular charge before relying on them. See incorporating for the IFSC.
Aircraft and engines
India acceded to the Cape Town Convention and its Aircraft Protocol in 2008. The Protection of Interests in Aircraft Objects Act, 2025 (17 of 2025) gives them effect in Indian law, and the Protection of Interests in Aircraft Objects Rules, 2026 (G.S.R. 77(E), 30 January 2026) set the procedure. Under the Rules:
- a debtor operating an aircraft object informs the registry authority of international interests within thirty days of registering the aircraft object (rule 6);
- before exercising a remedy under the Convention or Protocol, a creditor informs the registry authority of the default in Form III (rule 9).
In practice the lessor or financier takes an irrevocable deregistration and export request authorisation (IDERA) in the form the DGCA prescribes, a deregistration power of attorney and, where engines are financed separately, an engine IDERA, and registers the international interest on the International Registry at delivery, not on default. IFSCA's aircraft lease framework requires lessors to comply with the Convention and Protocol. See aircraft leasing.
Ships
Ship mortgages are registered with the flag state under its law. An IFSC ship lessor financing a vessel on a foreign flag takes and perfects its mortgage in that registry. Claims against a ship in India can be pursued in rem before the High Courts with admiralty jurisdiction, which include the High Court of Gujarat, under the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. See ship leasing.
Planning enforcement
- Intercreditor terms. Agree ranking, standstill, enforcement instructions and the sharing of proceeds before the first drawdown, especially where IFSC and onshore lenders share security.
- Forums. Identify where each remedy would be pursued: an arbitral tribunal or court on the loan, the registry or a court on the asset, and the National Company Law Tribunal if the borrower enters insolvency. See where IFSC disputes are decided.
- Insolvency moratorium. Once a corporate insolvency process starts, a moratorium generally stops enforcement. Aircraft, engines, airframes and helicopters were carved out of it by an MCA notification of October 2023. See insolvency.
- Special recovery routes. Indian statutes that give banks and financial institutions faster recovery routes define which lenders may use them. Confirm whether the IFSC lender qualifies before relying on one.