The 2026 framework
IFSCA issued the FinTech Sandbox Framework by circular dated 16 March 2026, under section 12 of the IFSCA Act, 2019. It took effect immediately. It grants a Limited Use Authorisation, and an entity holding one is a FinTech Sandbox Entity. All earlier sandbox provisions in IFSCA instruments were superseded from that date. IFSCA's FAQs confirm that this includes the FinTech Entity Framework, 2022 and the Framework for Regulatory Sandbox, 2020. Entities already holding a valid limited use authorisation under the 2022 framework stay under it until that authorisation expires. See Entities authorised under the 2022 framework.
The four routes compared
| Route | What it is for | Presence in the IFSC | After testing |
|---|---|---|---|
| FinTech Regulatory Sandbox (FRS) | Controlled live testing with a limited set of real customers for a limited time, with possible relaxations of specific rules | Testing may be remote, but physical presence is required where testing involves holding customer funds needing an account with an IFSC Banking Unit, or where IFSCA directs | Authorisation and relaxations expire at the end of testing; continuing needs registration under the relevant framework |
| FinTech Innovation Sandbox (FIS) | Developing and testing in isolation from the live market, using market data made available by financial institutions in the IFSC | Not required; testing may be fully remote | Authorisation expires at the end of testing |
| Inter-Operable Regulatory Sandbox (IoRS) | Hybrid products within the remit of IFSCA and one or more of RBI, SEBI, IRDAI and PFRDA. IFSCA is the principal regulator, the others associate regulators | As set by the inter-regulatory SOP | Approach IFSCA and the associate regulators for authorisation before launch |
| Overseas referral mechanism (FinTech Bridge) | Access for fintechs moving between the IFSC and a partner regulator's jurisdiction | Governed by the relevant MoU or cooperation agreement | As the arrangement provides |
IFSCA's FinTech page lists an international FinTech Bridge with the Monetary Authority of Singapore and a domestic bridge through the IoRS.
Who can apply
The idea must use innovative technology in a financial product or service that IFSCA regulates or is likely to regulate, or in a solution that aids such activities. It must also have the potential to improve existing services significantly, with a genuine need to test in a controlled setting. Activities must link to the areas in Appendix 1 of the framework: capital markets, banking (including payment services and payment systems), insurance, pension, metals and commodities, foreign universities, or financial support services.
- Indian applicants: a company, LLP or registered partnership firm, or a branch in the IFSC; a DPIIT-registered fintech start-up; an entity regulated by RBI, SEBI, IRDAI or PFRDA; or individuals affiliated with a recognised research or academic institution, incubator or accelerator.
- Foreign applicants: a legal person, or affiliated individuals, from a jurisdiction not identified by FATF as a high-risk jurisdiction subject to a call for action.
Before applying, an applicant must consider whether the IFSCA (TechFin and Ancillary Services) Regulations, 2025 fit the product instead (clause 7). See TechFin service providers.
Process, timing and fees
- Preliminary application on SWIT. IFSCA examines it within 30 days for suitability.
- Final application on SWIT, only after IFSCA confirms acceptance of the preliminary application, with the application fee.
- In-principle approval, which IFSCA may grant within 60 days. Its conditions must be met within 30 days unless extended, and may include having at least one testing partner.
- Limited Use Authorisation, subject to boundary conditions on duration, customer type, transactions and geography.
- Testing stage of up to 12 months, extendable by six months at IFSCA's discretion on written request. Monthly status reports are due before the 10th of the following month. A final report is due within 30 days of the end of testing, and records must be kept for seven years after exit.
Under IFSCA's fee circular of 2 March 2026, the sandbox fees are USD 100 on application, USD 1,000 for the limited use authorisation and USD 1,000 for an extension. See IFSCA fees.
Choosing, and the common pitfalls
Use the Regulatory Sandbox for live IFSC products with real customers, the Innovation Sandbox for early testing on market data, the Inter-Operable Sandbox where Indian onshore regulators are also involved, and the referral mechanism if your home regulator is a partner of IFSCA.
- The authorisation ends with the test. The limited use authorisation and any relaxations expire at the end of the testing stage. Plan the application for full authorisation during testing, not after it.
- Users must consent. In the Regulatory Sandbox, users must be told in writing of the key risks, told whether compensation is available, and give express written consent before onboarding.
- Material changes need approval. Changes bearing on the authorisation need IFSCA's prior written approval during testing.
- Currency rules apply in the FRS. Transactions must be in specified foreign currencies, with rupee accounts only for administrative expenses.
- Revocation is possible. IFSCA may revoke on grounds that include wrong disclosure, weak risk controls and harm to users, and may suspend without prior notice in the public interest.