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Grants under IFSCA (FinTech Incentive) Scheme, 2022

IFSCA (FinTech Incentive) Scheme

IFSCA is a statutory body established under the International Financial Services Centres Act, 2019[1]. It is established to develop and regulate India’s financial institutions, products, and services.

FinTech plays an essential role in the economy of a country. It helps in providing solutions to various financial services. To facilitate multiple FinTech activities, the IFSCA has issued a framework on FinTech via Circular dated 27th April 2022.The guidelines are issued in personam with these frameworks, aiming to grant funds to various FinTechs entities dealing overseas or domestically. The grants under were notified with the primary objective of establishing a world-class FinTech Hub at GIFT IFSC (International Financial Services Centre), India.This article will critically analyse the guidelines about eligibility criteria, approval route for claiming the grants under IFSCA (FinTech Incentive) Scheme, 2022.

Key definitions under the IFSCA (FinTech Incentive) Scheme

  1. Cohorts or Special Programmes: It means any business programs that are run by the companies or incubators and supports early-stage, growth-driven FinTech companies through mentorship, education etc.
  2. FinTech Entity: It means an entity that is authorised by the IFSCA and shall include both Foreign and Domestic FinTechs.
  3. Innovation Sandbox: It means a testing environment where the FinTech entitiescan test their ideas and solutions in isolation from the live market.
  4. Regulatory Sandbox: It means a live environment with a small number of actual customers for a limited time frame. Under this, the entities are operating in the banking, insurance capital market and other financial services and are granted certain exemptions from the applicability of specific regulatory provisions.

Applicability of the IFSCA (FinTech Incentive) Scheme

This scheme shall apply to:

  1. Domestic FinTechs looking for access to Overseas Market
  2. Domestic FinTechs looking for listing on IFSCA recognised Stock Exchanges
  3. Foreign FinTechs looking for market access to IFSCs in India
  4. Foreign FinTech looking for access to the domestic market under IORS (Inter-Operable Regulatory Sandbox) framework
  5. Domestic FinTechs extend their business to the IFSCs either by authorisation, registration or regulatory sandbox.

Types of Grants

The types of grants available under the IFSCA (FinTech Incentive) Scheme are:

  1. FinTech Start-up Grant: This grant shall be utilised to develop a product, service and ‘go to market’ initiatives for a start-up with a novel FinTech idea or solution with a focus on converting the idea into a Minimum Viable Product (MVP)
  2. Proof of Concept Grant (PoC) Grant:This grant shall be utilised by a mature or early FinTech Entity in a domestic or foreign entity.
  3. Sandbox Grant: This grant shall be utilised by the FinTech Entity for experimenting with innovative products or services in a Sandbox.
  4. Green FinTech grant: This grant shall be used in finding solutions to sustainable finance and sustainable linked finance, including ‘Environmental, Social, and Governance’ investments.
  5. Accelerator Grant: This grant shall be used for capacity building, bringing investors, bringing more projects, tie-ups etc., by the supporting accelerators.
  6. Listing Support Grant: This grant shall be used to support domestic FinTech Entities aspiring to go for listing on IFSCA recognised Stock Exchange.
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Eligibility to claim Grant under IFSCA (FinTech Incentive) Scheme

The FinTech entities are required to get authorised to avail of the benefits of this scheme. The FE Framework rules out the process of authorisation and states that any FinTech entity could make an application to IFSCA if the following conditions are fulfilled: 

  1. If the applicant is from India, it is required that an entity shall be:
  2. Registered with DPIIT (Department for Promotion of Industry and Internal Trade) as a start-up entity, and its activities are related to FinTech.
  3. Incorporated as Company and LLP (Limited Liability Partnership), including their branches.
  4. Working in the domestic Financial Sector Regulator environment, whether directly or indirectly.
  5. If the applicant is from outside India, it is required that an entity shall be from FATF-compliant countries.

Further, the guidelines state that the grant under IFSCA (FinTech Incentive) Schemes shall be provided to FinTech entities which are:

  1. Part of the Regulatory and Innovative Sandbox.
  2. Referred to the authority under a FinTech bridge arrangement with the counterpart Regulator.
  3. Participated in any Cohort, Special and Accelerator programme recognised by the authority.
  4. Referred to the authority by an entity under an arrangement or MOU

Also Read: IFSCA Authorisation: Eligibility, Procedure

Code of Conduct for the Key Managerial Persons under IFSCA (FinTech Incentive) Scheme

The guidelines have provided a provision under the IFSCA (FinTech Incentive) Scheme that determines the conduct of the person responsible for the business’s day-to-day activities.According to the scheme, the applicant and its directors, partners, designated partners, and its Key Managerial Person have to meet the below-mentioned criteria for availing of the benefits of the scheme:

  1. The applicant shall be a person of integrity, reputation and character
  2. The applicant shall not have any convictions or any restraint order.
  3. The applicant shall be a person of competence
  4. The applicant shall not be declared insolvent

Further, below mentioned are the detailed conditions under which the conduct of the applicant shall not be regarded as “Fit and Proper”:

  1. Convicted of any offence involving moral turpitude or any economic offences
  2. An Order for winding up has been passedagainst such persons  for malfeasance
  3. An order of court barring the person from dealing in any financial products or financial services
  4. The applicant is of unsound mind, and a competent court has passed the same
  5. The applicant is declared a wilful defaulter
  6. The applicant is declared a fugitive economic offender
  7. Any other disqualifications.
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Procedure for Implementation of IFSCA (FinTech Incentive) Scheme

The IFSCA (FinTech Incentive) Scheme has provided a detailed procedure required to be fulfilled by the applicant for the grant mentioned under the scheme:

Step 1:  Submission of Application

Theapplicant shall be submitted in the prescribed format with IFSCA along with the submission of a processing fee amounting to USD 100.

Step 2: Evaluation of Application

 There shall be an Evaluation Committee that will scrutinise the application based on technical evaluation, business evaluation, market potential etc. The committee will examine the following aspects and make its recommendations:

  1. Eligibility criteria
  2. Business Context or Problem Statement
  3. Product offered
  4. Underlying technology
  5. Market Potential
  6. Business Model
  7. Financial Potential
  8. Technical Specifications
  9. Team capabilities, its structure and expertise
  10. Measures for Cybersecurity

After assessing all the details, the committee will sanction the grant in favour of the applicant.

Step 3: Disbursement of Grants

The disbursement shall take place in the form of ‘Reimbursement’ after submission of required documents. It shall be disbursed within 30 working days of submission of documents and in multiple tranches depending on the fulfilment of milestones. It shall be issued only against the bank account of the applicant.

Step 4: Internal Committee

After the disbarment of the grant, there shall be an internal committee that will monitor the post-disbursement process, the end use of the grant, progress and track milestones. The committee can also recommend the competent authority, provided they have fulfilled specific conditions.

Reimbursement of Eligible Expenses

The FinTech entity is entitled to receive a grant towards reimbursement of eligible expenses under the IFSCA (FinTech Incentive) Scheme.The eligible expenses are the expenses needed to develop and commercialise the products of the applicant successfully. It shall be evaluated by the internal committee, who, after adequately examining the supporting documents, shall recommend the release of the grant.

Achievement of Milestones and Document Submission

The FinTech entity must, in consultation with the IFSCA, finalise the milestones to be achieved. After the finalisation, the FinTech entity shall submit technical reports, expense invoices, certificate utilisation, and other documents.

Regulatory Requirements for FinTech Entity

There are specific corporate governance and regulatory requirements that FinTech Entity shall follow under IFSCA (FinTech Incentive) Scheme.

  1. It shall develop a framework for corporate governance and disclosure requirements keeping in view its business operations.
  2. Itshall appoint a compliance officer to ensure that the guidelines and other applicable laws are adequately fulfilled.
  3. The information provided to stakeholders shall be communicated promptly and accurately.
  4. It shall submit the relevant data, business plans, utilisation certificate and financial statements to the IFSCA.
  5. It shall comply with the KYC compliance process and Anti-Money laundering norms.
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Power of IFSCA to relax the strict enforcement

The IFSCA (FinTech Incentive) Scheme provides the power to IFSCA to relax the applicability of these guidelines.

  1. The IFSCA shall, on such intervals, may issue clarifications on the application or the interpretation of these guidelines.
  2. The IFSCA may, in the interest of the development of FinTech activities may, relax the strict enforcement of these guidelines upon payment of such fee.

Additional Conditions for Grant under IFSCA (FinTech Incentive) Scheme

Apart from the general conditions mentioned under the IFSCA (FinTech Incentive) Scheme, additional conditions also need to be fulfilled for receiving the specified grants.

  1. There shall be only a one-time grant for FinTech entities under PoC Grant, Start-Up Grant or Sandbox Grant.
  2. The following conditions are to be fulfilled in case of an Accelerator grant:
  3. The number of FinTechs shall be 10
  4. Minimum tenure shall be of four weeks
  5. They are eligible for the following number of grants in a year:
  6. One Grant, Accelerator not based in IFSC
  7. Three Grants, Accelerator based in IFSC
  8. The preference for a grant shall be given to a FinTech entity having a tie-up or support with a financial Institution.
  9. The FinTech entity shall own the Intellectual Propertyduring the Sandbox tenor.
  10. In case of any violation of any terms or conditions of the grant by any FinTech entity, the IFSCA shall have the right to claim over the Intellectual Property of the FinTech entity during the Sandbox tenor.
  11. The FinTech entity shall adhere to the timelines approved when sanctioning the grant. However, extra time could be awarded to the FinTech entity on the recommendation of the internal committee.
  12. The IFSCA shall have the right to showcase the products and details developed by using grants.


The IFSCA is established to promote ideas and solutions of the FinTech entities. To achieve this objective, the IFSCA has notified various regulatory guidelines periodically. The IFSCA (FinTech Incentive) Scheme are one of the successful steps in supporting the activities of the FinTech entities. The scheme provides a robust mechanism for FinTech entities to claim grants so that they can fulfil their objectives without any constraints. The guidelines also provide a provision for reimbursement of eligible expense that is incurred by the FinTech entity in furtherance of any project.The grant is provided to domestic FinTechs looking for access to the overseas market and Foreign FinTechs looking for access to Indian Market.

Read our Article:RBI establishes Fintech Department for development of Fintech Industry

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