FEMA and cross-border structuring
FEMA treats most IFSC entities as persons resident outside India. That single rule shapes how money moves between the IFSC, the rest of India and the world.
Further reading
How FEMA treats IFSC units; Resident individuals investing through GIFT; Indian groups setting up IFSC units.
Guides in this section
How FEMA treats IFSC units
Regulation 3 of the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 (FEMA 339/2015-RB, 2 March 2015) provides that a financial institution or branch of a financial institution set up in an IFSC and permitted or recognised by the Government of India or a regulatory authority shall be treated as a person resident outside India.
Read the guide →Resident individuals investing through GIFT
Resident individuals can invest in GIFT IFSC through the Liberalised Remittance Scheme: in IFSC funds, IFSC-listed securities, foreign-currency accounts with IBUs and other permitted instruments.
Read the guide →Indian groups setting up IFSC units
An Indian company setting up an IFSC entity makes an overseas direct investment for FEMA purposes, under the Overseas Investment Rules and Regulations, 2022.
Read the guide →Foreign investment into IFSC entities
Foreign investment into an IFSC entity is not treated as foreign direct investment into India in the ordinary way, because the IFSC entity is itself a person resident outside India for FEMA. The entity remains subject to Indian company law and IFSCA ownership rules.
Read the guide →Lending from the IFSC to India
Lending from an IFSC bank or finance company to an Indian borrower is external commercial borrowing for the borrower, subject to RBI's ECB framework.
Read the guide →Where rupees can and cannot be used
IFSC units conduct business in foreign currency as IFSCA determines (FEMA IFSC Regulations 2015, regulation 4). Rupee accounts and rupee legs are possible only where IFSCA or RBI expressly permits them, for example rupee drawing arrangements for PSPs under IFSCA's circular of 10 April 2026.
Read the guide →Sanctions and AML for cross-border structures
Cross-border structures through GIFT IFSC must clear IFSCA's AML/CFT rules, India's PMLA, and the sanctions laws of every jurisdiction connected to the transaction, including UN, US, UK and EU regimes where they apply.
Read the guide →FATCA and CRS reporting
IFSC financial institutions that maintain financial accounts are generally within India's FATCA and CRS reporting rules. Confirm the entity's classification under the current Income-tax Rules.
Read the guide →Authorities and further reading
The official instruments and pages this guide relies on. Check the current version on the issuer's site before acting.
- IFSCA Banking pageIFSCA
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