IFSCA FinTech Sandbox Framework

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CIRCULAR

eF.No.: 505/IFSCA-FTec0FTEF/1/2023 Date: March 16, 2026

To, All Applicants Applying Under the IFSCA FinTech Sandbox Framework

Madam / Sir,

Subject: IFSCA FinTech Sandbox Framework

1. Reference may be drawn to the Circular titled “Framework for FinTech Entity in the IFSCs", dated April 27, 2022 (“2022 Framework”), whereby a framework for limited use authorization of FinTechs in IFSC was laid down.

2. Building on the outcomes and insights derived from the implementation of the above Circular, evolving global FinTech trends, feedback received from stakeholders, and considering the importance of financial technology products and solutions in promoting innovation, it has been decided to issue a fresh framework for an entity desirous of obtaining Limited Use Authorisation as FinTech Sandbox Entity, and accordingly this Circular is being issued.

3. This Circular aims to further support innovation by offering access to different kinds of sandboxes, viz., Regulatory Sandbox, Innovation Sandbox, Inter-Operable Regulatory Sandbox, and Overseas Regulatory Referral Mechanisms, across banking, capital markets, insurance, fund management, and other segments.

4. This Circular is issued in exercise of powers conferred by section 12 of the International Financial Services Centres Authority (IFSCA) Act, 2019, to develop and regulate the financial services market in the IFSCs and shall come into with immediate effect.

5. All provisions relating to Sandbox activities in IFSCs contained in any Circulars, Frameworks, Guidelines, Regulations, or other regulatory instruments issued by the Authority shall stand superseded with immediate effect from the date of this Circular. However, any actions taken under such instruments prior to the issuance of this Circular shall remain valid.

A copy of this circular is available on the website of IFSCA at www.ifsca.gov.in.

Sd/- (Joseph Joshy C J) Chief General Manager Division of FinTech Sandbox Department of Technology fe-sandbox@ifsca.gov.in

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Part I: General

A) Applicability

1. This Framework shall apply to all entities desirous of obtaining Limited Use Authorisation as a FinTech Sandbox Entity (FSE) from International Financial Services Centres Authority (IFSCA).

2. The entities which have a valid limited use authorisation issued under the 2022 Framework shall continue to be governed under the said Circular till the validity of their existing limited use authorisation.

B) Definitions

3. In this Framework, unless the context otherwise requires, the terms defined herein shall bear the meaning as assigned to them below and their cognate expression shall be construed accordingly: -

(a) ‘Act’ means the International Financial Services Centres Authority Act, 2019 (50 of 2019);

(b) ‘Applicant’ means an entity desirous of seeking a Limited Use Authorisation as a FinTech Sandbox Entity under this Framework;

(c) ‘Authority’ means the International Financial Services Centres Authority / IFSCA;

(d) ‘Boundary Conditions’ means the parameters or conditions, specified by the Authority in the Limited Use Authorisation letter, within which a FinTech Sandbox Entity shall operate , and which may, inter-alia, include restrictions on duration, customer type, transaction, and geographic scope;

(e) ‘Domestic FinTech’ means an entity that is not a ‘Foreign FinTech’;

(f) ‘Domestic Financial Sector Regulator’ means the Reserve Bank of India, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, and the Pension Fund Regulatory and Development Authority;

(g) ‘Foreign FinTech’ means a non-resident entity, engaged in the FinTech activities, and established/incorporated outside India;

(h) ‘‘FinTech’ means financial technology ideas/ products/ solutions, and innovative technology ideas/ products / solutions, which either result in financial business models/ applications/ processes, or aid and assist activities, respectively, in relation to financial products, financial services and financial institutions regulated or likely to be regulated by the Authority;

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(i) ‘FinTech Sandbox Entity’/‘FSE’ means an entity which has been granted Limited Use Authorisation by the Authority under this Framework;

(j) ‘Final Application’ means an ensuing application, containing the complete set of requisite information, documents, and supporting materials, submitted by the Applicant to the Authority, through SWIT, seeking Limited Use Authorisation under this Framework.

Explanation.– For removal of doubt, it is clarified that only an Applicant whose Preliminary Application has been accepted, and who has received a communication from the Authority confirming such acceptance, shall be eligible to submit a Final Application;

(k) ‘IFSCA FinTech Innovation Sandbox (FIS)’ refers to a testing environment wherein a FinTech Sandbox Entity can develop and/ or test its innovative idea(s) / product(s) / solution(s), in isolation from the live market, which may add value to the financial products or financial services offered in IFSCs, based on market related data made available to them by Financial Institutions operating in IFSCs;

(l) ‘IFSCA FinTech Regulatory Sandbox (FRS)’ refers to a controlled live testing environment with a limited set of real customers for a limited timeframe, wherein a Fintech Sandbox Entity may be granted certain exemptions / relaxations from applicability of certain regulatory provisions for the purpose of experimenting the proposed product(s)/ solution(s);

(m) ‘Inter-Operable Regulatory Sandbox’ or ‘IORS’ refers to a mechanism to facilitate testing of innovative hybrid financial products/ solution falling within the regulatory ambit of more than one Domestic Financial Sector Regulator;

(n) ‘Limited Use Authorisation’ means the authorisation granted by the Authority to a FinTech Sandbox Entity for developing and/or testing innovative financial idea(s) / product(s) / solution(s), as the case may be, within a controlled environment under this Framework;

(o) ‘Overseas Regulatory Referral’/‘FinTech Bridge’ refers to a co-operation mechanism between the Authority and an overseas financial sector regulator for facilitating the FinTech Sandbox Entities desirous of operating in each other’s jurisdiction;

(p) ‘Preliminary Application’ means an initial application submitted by an Applicant to the Authority, through SWIT, for the purpose of assessment, by the Authority, of the suitability of the proposed idea(s)/ product(s)/ solution(s);

(q) ‘Single Window IT Systems (SWIT)’ refers to an online platform designed by the Authority, inter-alia, to facilitate the processing of applications submitted by the Applicants under this Framework;

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(r) ‘Testing Stage’ means the specified period during which a FinTech Sandbox Entity may develop and/ or test the proposed idea(s)/ product(s)/ solution(s) in a sandbox, under regulatory oversight of the Authority, within the Boundary Conditions;

(s) ‘Testing Partner’ means an entity which – (i) is engaged in rendering financial service(s) in respect of any financial product(s), or (ii) directly or indirectly aids, or assists activities relating to financial products, financial services or financial institutions, and with whom the Applicant has a Memorandum of Understanding (MoU), Letter of Intent, or a similar arrangement for the purpose of developing and/or testing its proposed idea/product /solution in sandbox;

4. Words and expressions used and not defined in this Framework but defined in the applicable Laws, and in particular, under the Act or any rules or regulations made thereunder shall have the same meanings respectively assigned to them in those Laws, Act, rules or regulations or any statutory modification or re-enactment thereto, as the case may be.

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C) Eligibility

5. An Applicant desirous of making an application to the Authority for obtaining a Limited Use Authorisation under this Framework shall satisfy the following eligibility conditions:

(i) The Applicant shall propose the use of innovative technology: a) in its core product or service, business model, distribution model or methodology to provide financial products or financial services regulated or likely to be regulated by the Authority; or b) products and/or solutions which directly or indirectly aid and assist activities in relation to financial products, financial services and financial institutions regulated or likely to be regulated by the Authority.