IFSCA consultation on Foreign Currency Settlement System (FCSS) compliance for IBUs in GIFT IFSC
Background and context
The International Financial Services Centres Authority (IFSCA) has released a consultation paper dated July 7, 2026 inviting comments from market participants and the public on a proposed circular governing the use of the Foreign Currency Settlement System (FCSS) by International Banking Units (IBUs) operating in GIFT IFSC.
FCSS, which went live on October 7, 2025, was designed to serve as a dedicated real-time settlement platform for foreign currency transactions, initially in USD, between IBUs in GIFT IFSC. The system has matured operationally and is now consistently settling USD transactions among participating member IBUs in approximately 5–6 seconds.
In light of this stabilisation and growing stakeholder interest, IFSCA has drafted a circular to formalise usage and customer-facing requirements around FCSS, ensuring the system is fully leveraged and its benefits reach end customers.
The consultation paper also clarifies that the proposed circular will be issued under the provisions of the Payment and Settlement Systems Act, 2007 read together with Section 12(1) and Section 13(1) of the International Financial Services Centres Act, 2019.
Objective of the consultation
IFSCA has articulated a clear objective in bringing out this consultation paper:
- To operationalise a robust compliance framework around FCSS so that:
- inter-bank foreign currency settlements between IBUs in GIFT IFSC are routed through the designated FCSS infrastructure, and
- customers of IBUs are made fully aware of, and able to access, the advantages of real-time USD settlement within GIFT IFSC.
The consultation attaches the draft circular as Annexure-I and seeks structured feedback on the proposals contained in it.
Timelines and mode for submitting comments
Stakeholders are required to send their comments on the draft circular by July 24, 2026. Comments have to be submitted by email in MS Word or MS Excel format in a tabular structure.
Addressees for comments
Comments should be emailed to:
- Mr. Akileshwaran N, Manager, IFSCA at
n@ifsca.gov.in - With a copy marked to Mr. Pavan Jindam, Deputy General Manager, IFSCA at
pavan.jindam@ifsca.gov.in
- Mr. Akileshwaran N, Manager, IFSCA at
Comments are to be furnished in the following format (as indicated by IFSCA):
- Name and designation of the person submitting comments
- Contact number
- Name of organisation
- Serial number of comment
- Paragraph number of the draft circular being commented upon
- Comments/suggestions along with the revised wording proposed
- Detailed reasoning and supporting information for the suggestion
The consultation paper is formally dated July 7, 2026.
Overview of the draft circular (Annexure-I)
Scope and addressees
The draft circular—bearing reference E.File.No. XXX and proposed to be dated July XX, 2026—is addressed “To, All IFSC Banking Units”, i.e., the IBUs established in GIFT IFSC under IFSCA’s regulatory ambit.
The circular is specifically titled:
Foreign Currency Settlement System (FCSS) – Instruction to member IBUs
Purpose of FCSS and current operational status
The draft circular reiterates the core purpose of FCSS:
- To provide a safe, secure and efficient settlement mechanism for transactions between IBUs; and
- To remove dependence on traditional correspondent banking channels for inter-IBU settlements in foreign currency.
IFSCA notes that:
- FCSS operations have now been stabilised, and
- The platform is currently capable of settling USD transactions among member IBUs in about 5–6 seconds, enabling almost real-time settlement.
Key obligations proposed for member IBUs
To maximise utilisation of FCSS and enhance customer benefit, the Authority proposes the following binding instructions for IBUs that are already members of FCSS (“member IBUs”):
1. Exclusive FCSS route for inter-bank settlements among member IBUs
- Member IBUs will be required to process their inter-bank transactions with other FCSS member IBUs exclusively through FCSS.