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The International Financial Services Centres Authority amends the Framework for Aircraft Lease to restrict transactions involving persons resident in India. A resident person cannot sell, transfer, lease, or dispose of covered assets or related rights to a finance company undertaking aircraft leasing if those assets will be operated solely by residents in India or provide services to them. This restriction does not apply when the disposal occurs to a lessor who is not a group entity, or when the disposal occurs as part of a sale and leaseback arrangement for assets imported into India for the first time. The amendment applies with immediate effect.
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[Image omitted. See the official document.]
F. No. 172/IFSCA/Finance Company Regulations/2024-25/01
October 30, 2024
To, All Finance Company / Finance Unit registered in the International Financial Services Centres (IFSCs)
Subject: Amendment to the ‘Framework for Aircraft Lease’ with regard to transactions with person (s) resident in India.
Reference is drawn to the International Financial Services Centres Authority (Finance Company) Regulations, 2021 (FC Regulations) and the ‘Framework for Aircraft Lease’ (AL Framework) issued thereunder vide Circular No. 172/IFSCA/Finance Company Regulations/2022-23/01, dated May 18, 2022, as amended from time to time.
The AL Framework has now been amended with the insertion of a new clause, clause O.2 (Transactions with person resident in India).
The updated AL Framework, incorporating the above-mentioned clause is annexed to the circular and may also be accessed at www.ifsca.gov.in
This Circular is issued in exercise of powers conferred by section 12 of the IFSCA Act 2019, to develop and regulate the financial products, financial services and financial institutions in the IFSCs and the amendment to the AL Framework shall come into force with immediate effect.
Yours faithfully,
Riddhi Bhandari General Manager riddhi.bhandari@ifsca.gov.in
[Image omitted. See the official document.]
Annexure
CIRCULAR
F. No. 172/IFSCA/Finance Company Regulations/2022-23/01
May 18, 2022 (Updated as on October 30, 2024)
All Finance Company / Finance Unit registered in the International Financial Services Centres (IFSCs)
Framework for Aircraft Lease
In exercise of the powers conferred by sub-clause (vi) of clause (d) of sub-section (1) of section 3 of the International Financial Services Centres Authority Act, 2019 (hereinafter referred to as ‘IFSCA Act’), the Government of India vide Gazette Notification number S.O. 3652(E) dated October 16, 2020 has notified aircraft lease, including operating and financial lease and any hybrid of operating and financial lease of aircraft or helicopter and engines of aircraft or helicopter or any other part thereof, as a ‘financial product’.
Further, in exercise of the above powers, the Government of India vide Gazette Notification number S.O.5199 (E) dated December 14, 2021, has notified operating lease, including any hybrid of operating and financial lease of such product or equipment as may be specified by International Financial Services Centres Authority, as a ‘financial product’.
In exercise of the powers drawn from the aforementioned notification, the International Financial Services Centres Authority (hereinafter referred to as ‘IFSCA’) has specified an operating lease, including an hybrid of operating and financial lease, in respect of the following equipment, as ‘financial product’1:
Explanation: The aforementioned equipment shall collectively be referred to as the ‘Aircraft Ground Support Equipment’.”
^3[As per sub-clause (g) of clause (iii) of sub-regulation (1) of regulation 5 of International Financial Services Centres Authority (Finance Company) Regulations, 2021 (hereinafter referred to as “Finance Company Regulations”) an operating lease transaction for aircraft lease is classified as a ‘permitted non-core activity’ and as per sub-clause (a) of clause (ii) of sub-regulation (1) of regulation 5 of the Finance Company Regulations a financial lease transaction for aircraft lease is classified as a ‘permitted core activity’ which includes a hybrid of financial lease and operating lease transaction for aircraft lease.]
The IFSCA, in order to facilitate setting up of the Aircraft Leasing business in the International Financial Services Centres (hereinafter referred to as “IFSCs”) and in exercise of the powers conferred under section 12, read with section 13 of the IFSCA Act, 2019, hereby specifies the following framework for entities to get registered under Finance Company Regulations as a ‘Finance Company’ or a ‘Finance Unit’ for undertaking aircraft lease transactions:
A. Applicability: This framework shall apply to all applicants desirous of seeking registration for one or more of the permissible activities specified under this Circular.
B. Definition: For the purpose of this Circular:
(i) “Aircraft Ground Support Equipment” shall have the same meaning as assigned to it under Explanation of the Gazette Notification number IFSCA/2022-23/GN/023- dated April 12, 2022, issued by the IFSCA.
(ii) ^4[“Lessor” shall mean an entity registered with IFSCA as a Finance Company or a Finance Unit in accordance with Finance Company Regulations and -
C. Eligibility and Registration Requirement:
