IFSCA to all regulated entities: hold a valid SEZ Letter of Approval and IFSCA registration at all times, or face penalty, suspension or cancellation
IFSCA has directed every regulated entity in the IFSC to hold a valid and subsisting Letter of Approval under the SEZ Act, 2005 and the applicable IFSCA registration, licence or authorisation at all times, and not to do business without them. It notes that some entities are operating without these. The circular supersedes the direction of 3 April 2025.
Key facts
- In force
- Immediate effect — circular dated 10 August 2026
- Who it affects
- All Regulated Entities in the IFSC holding a registration, licence, recognition, authorisation or approval from IFSCA, and their compliance officers
- What it is
- Action needed
- Section
- FEMA & RBI
- Published
- 10 August 2026
In 30 seconds
- Circular IFSCA-LPRA/9/2024-Legal and Regulatory Affairs is dated 10 August 2026 and is in force with immediate effect.
- A valid Letter of Approval (LoA) under the SEZ Act, 2005 is a condition precedent for seeking any IFSCA registration and for undertaking any permissible activity in the IFSC.
- An LoA is valid for one year where business has not commenced, and five years where it has.
- Under rule 19(6A) of the SEZ Rules, 2006, the renewal application goes to the Administrator (IFSCA) at least two months before expiry.
- Breach is a violation of the IFSCA Act, 2019 and the SEZ Act, 2005 — inviting financial penalty, suspension or cancellation.
हिंदी में सार
IFSCA ने 10 अगस्त 2026 के परिपत्र से IFSC की सभी विनियमित संस्थाओं को निर्देश दिया है कि वे हर समय SEZ Act, 2005 के तहत वैध Letter of Approval और लागू IFSCA पंजीकरण या लाइसेंस रखें, और इनके बिना कोई कारोबार न करें। LoA कारोबार शुरू न होने पर एक साल और शुरू होने पर पाँच साल के लिए वैध रहता है; नवीकरण का आवेदन समाप्ति से कम से कम दो महीने पहले देना होता है। उल्लंघन पर जुर्माना, निलंबन या रद्दीकरण हो सकता है।
What the circular says
The International Financial Services Centres Authority has issued a circular dated 10 August 2026 to all Regulated Entities in the IFSC. It records that the Authority has observed certain Regulated Entities continuing to undertake business activities in the IFSC without holding a valid and subsisting Letter of Approval, the applicable regulatory instrument, or both.
The circular uses “Regulatory Instruments” as a collective term for a registration, licence, recognition, authorisation, permission, approval or any equivalent document issued by the Authority.
The two documents an IFSC unit must keep alive
| Document | Validity, as noted in the circular |
|---|---|
| Letter of Approval (LoA) under the Special Economic Zones Act, 2005 | One year where the entity has not commenced business; five years where it has commenced business |
| Renewal of the LoA | Application to the Administrator (IFSCA) at least two months before the date of expiry — rule 19(6A) of the Special Economic Zones Rules, 2006 |
| Regulatory Instrument issued by IFSCA | Either perpetual, or valid only for the period mentioned on it |
The circular reminds entities that holding a valid and subsisting LoA is a condition precedent both for seeking a Regulatory Instrument from the Authority and for undertaking any permissible activity in the IFSC.
The direction
All Regulated Entities shall, at all times, ensure that they:
- hold a valid and subsisting LoA and the applicable Regulatory Instrument(s); and
- do not undertake any business activities without holding a valid and subsisting LoA and the applicable Regulatory Instrument(s).
Consequences of breach
Entities are advised to ensure strict compliance to avoid operational disruptions or regulatory sanctions. Any breach of these directions constitutes a violation of the relevant provisions of the International Financial Services Centres Authority Act, 2019, the Special Economic Zones Act, 2005, and the rules or regulations made under them. That makes the entity liable for penal or enforcement action, including:
- financial penalty;
- suspension of its Regulatory Instrument(s); or
- cancellation of its Regulatory Instrument(s),
in accordance with the applicable laws.
Legal basis
The circular is issued under sections 12 and 13 of the IFSCA Act, 2019, in supersession of the circular titled “Direction for all Regulated Entities” dated 3 April 2025, and comes into force with immediate effect.
What IFSC units should do
- Check the expiry date on the LoA and on every IFSCA registration, licence or authorisation that carries a validity period.
- Diarise the LoA renewal so that the application reaches the Administrator (IFSCA) at least two months before expiry.
- If either document has lapsed, do not carry on business activities until it is valid again.
Questions and answers
How long is an SEZ Letter of Approval valid for an IFSC unit?
As noted in the IFSCA circular of 10 August 2026, an LoA remains valid for one year where the entity has not commenced business, or for five years where it has commenced business.
When must the LoA renewal application be filed?
In terms of rule 19(6A) of the Special Economic Zones Rules, 2006, the application for renewal is to be filed with the Administrator (IFSCA) at least two months prior to the date of expiry.
What happens if an IFSC entity operates without a valid LoA or registration?
It is a violation of the IFSCA Act, 2019, the SEZ Act, 2005 and the rules or regulations under them, and makes the entity liable for penal or enforcement action including financial penalty, suspension or cancellation of its regulatory instrument(s).
Does this replace an earlier direction?
Yes. The circular is issued in supersession of the circular titled “Direction for all Regulated Entities” dated 3 April 2025.
Published 10 August 2026. Updated 7 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.