Setting Up and Operating the International Trade Finance Service (ITFS) Platform

The International Trade Finance Service Platform (ITFS) is a digital ecosystem established to facilitate trade finance activities such as factoring, reverse factoring, and bill discounting for cross-border trade. Operated under the regulatory purview of the International Financial Services Centres Authority (IFSCA), ITFS aims to address financing challenges faced by exporters and importers by providing a transparent and efficient platform for trade receivables and payables. By leveraging advanced financial technology, the platform connects exporters, importers, financiers, and other stakeholders, enabling seamless transactions in a regulated environment.

Our expertise lies in guiding clients through the process of setting up their offices in the GIFT IFSC, encompassing a comprehensive range of regulatory and structural considerations. One of the new regulations in GIFT IFSC is ITFS under Finance Company. In this article, we take you through important aspects of the International Trade Finance Service Platform (ITFS).?ITFS, as envisioned by IFSCA, will act as a cornerstone for boosting trade finance capabilities in International Financial Services Centres (IFSC), aligning with global standards and fostering innovation in the financial services sector.

A)???? Legal Structure

A company incorporated under the Companies Act, 2013.

B)???? Pre-requisites for ITFS in GIFT IFSC

(i)??????? General Requirements

• Obtaining a Certificate of Registration under the IFSCA (Finance Company) Regulations, 2021.
• Parent entity must have 3+ years’ experience in trading infrastructure or fintech operations.
• Should have necessary infrastructure and resources in IFSC.
• Must satisfy financial soundness and "fit and proper" criteria.

(ii)????? Financial Criteria

• Maintain a minimum owned fund of USD 0.2 million.

(iii)??? Technical Criteria

• Establish robust IT infrastructure, ensuring real-time data dissemination.
• Shall be able to provide an electronic platform for all participants
• Compliance with Business Continuity Planning (BCP).

C)???? Permitted Activities

?D)???? Process flow for setting up ITFS in GIFT IFSC

E)???? Commencement of Operations

• Commence operations within six months of registration application approval.
• In case of an extension request, the registered entity is required to submit application at least two months before the deadline. The authority may extend the time by such period not extending three months.

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F)???? Other key considerations

• The ITFS operator must ensure that financiers seeking onboarding as participants meet the criteria and comply with the conditions outlined in the guidelines.
• Audits must be conducted by an auditor approved by CERT-In or one who holds the certifications specified in the guidelines.
• While outsourcing is permitted, the ITFS operator is prohibited from outsourcing the onboarding process of participants or the day-to-day operations of the ITFS platform.

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G)???? Regulatory Fees for ITFS Entities in GIFT IFSC

• IFSCA Fees

• SEZ authorities’ Fees [Now, IFSCA (Administrator)]