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Gift City (Gujarat International Finance Tec-City) is a perfect hub for the set-up of NBFCs in Gift City, which serves as India’s international finance ecosystem regulator. It is a finance company/finance unit under the IFSCA framework, allowing all Indian financial institutions and fintech firms to establish and provide services to the overseas market.
Establishing an NBFC in a Gift City promotes foreign business, tax incentives, and aligns with global regulations. Presently, Non-Banking Financial Institutions (NBFCs) play an important role in expanding access to global finance and supporting cross-border transactions.
In this insightful blog, we will walk you through a step-by-step overview of the process, eligibility, documentation, and regulatory framework for setting up an NBFC in a Gift City.
An NBFC in a Gift City is a finance company registered under the India’s first International Financial Service Centre (IFSCA Official) Company Regulations, 2021. It offers a conducive environment for financial services and global business operations. For NBFCs setting up a Gift City, it presents unique opportunities to operate under regulatory oversight while tapping into the global markets.
Unlike conventional NBFC licensing in India, which falls under the RBI’s jurisdiction, NBFCs in a Gift City are regulated solely by IFSCA. This helps streamline the licensing framework by aligning with internationally compatible, and efficient institutions that offer global financial services.
Tax benefits, global market access, less compliance and many benefits are discussed below for the financial institutions looking to set up their NBFC in a Gift City:
Financial institutions setting up an NBFC in a Gift City have access to various tax incentives, such as 100% income tax exemption, reduced minimum alternate tax, and exemptions from indirect taxes.
NBFC registration in a Gift City provides access to a strategic regulatory environment aligned with a world-class smart city, advanced connectivity, and a robust financial ecosystem for attracting global institutions.
Operating an NBFC in a Gift City gives access to serve international clients and participate in cross-border financial activities, beyond the conventional restrictions imposed in the domestic Indian economy.
An NBFC operating in a Gift City enjoys a significantly reduced compliance burden compared to an RBI-regulated domestic NBFC.
NBFCs in a Gift City can liberalize their foreign exchange operations by using freely convertible foreign currency within the international marketplace.
Registering with an NBFC under the IFSCA framework permits engagement in a broader range of activities, including specialized services such as factoring, forfaiting, and other forms of leasing.
The NBFCs operating under the IFSCA regulations are not simply traditional NBFCs, but are considered finance companies or finance units. Have a look at the following types of NBFCs allowed in a Gift City:
A finance company is either set as a subsidiary or a joint venture, incorporated under the Companies Act, 2013, or any other form as may be specified by the authority from time to time.
A finance unit, especially a branch or unit of a foreign financial institution, is established if the investing entity, or the ultimate parent of the investing entity, carries out a regulated financial activity in its home jurisdiction.
The NBFC licensing framework, designed by the International Financial Services Centre Authority (IFSCA), aims to promote innovation, global competitiveness, and ease of doing business in Gift City. It further helps simplify the globally aligned regulatory environment for financial institutions. Have a look at the key features of the NBFC licensing IFSCA framework, as discussed below:
The financial institutions applying for NBFC (referred to as finance company or finance unit) registration in the Gift City must comply with the IFSCA-specified eligibility criteria, as discussed below:
The applicant entity or its promoters must be from a FATF-compliant jurisdiction and must ensure NBFC compliance with the FATF’s international standards.
The NBFC units seeking to apply for IFSC-Gift City registration must mandatorily have a business plan with financial projections.
The entities must have a registered office space within the Gift SEZ, as documented by a provisional letter of allotment.
The financial units carrying out core activities within their home jurisdiction must obtain a No-Objection Certificate (NOC) from their home regulator to establish an FU in the IFSC.
The entities must maintain a minimum capital ratio of 8% of their regulatory capital to risk-weighted assets or such percentage as specified by the IFSCA.
The entities must maintain a liquidity coverage ratio (LCR) on a stand-alone basis at all times, as determined by the IFSCA
The sum of all exposure to a single counterparty or a group of connected counterparties must not exceed 25% of its available eligible capital base without approval of the IFSCA.
The list of relevant documents required for NBFC setup in a Gift City is as discussed below:
The financial entities looking to apply for NBFC in a Gift City must comply with the following steps, as discussed below:
The entities must initially apply for mandatory company registration in the Gift City, as and when prescribed under the Companies Act, 2013.
The next step requires the applicants to submit an application for NBFC registration with the International Financial Services Centres Authority.
The next step after incorporation requires the applicants to submit an Application Form F to the Development Commissioner, Gift City.
Before forwarding the application to UAC, it undergoes review and verification at the Development Commissioner’s and IFSCA offices to seek additional details during this stage.
After the application is reviewed, the applicants are invited to appear for a Unit Approval Committee (UAC) personal meeting conducted by the Gift SEZ Authority.
Once approved, the International Financial Services Centres Authority grants NBFC licensing to operate within the Gift City.
Under Chapter IV of the IFSC Finance Company Regulations, the activities permissible for NBFCs in IFSC-Gift City are divided into three broad categories. Have a look at the table clarifying the different permissible activities in the IFSC-Gift City:
NBFC Licensing timeline ranges from 6 to 12 months. The company registration takes 3 to 5 days. Application with all documents submitted to the RBI for evaluation, which takes 4 to 8 weeks. Then, RBI issues in-approval within 1 to 2 weeks (12 months valid). The Certificate of Registration (CoR) is issued after 4 to 8 weeks by the RBI.
However, the processing timeline varies depending on the business structure and the activities carried out. Many external commentators and guides mention longer durations for obtaining SEZ approval, compliance set-up, and practical contingencies. So, while the formal regulatory timeline is shorter, the actual timeline may vary.
The cost of securing an NBFC-type entity under the IFSCA in Gift City comprises both government and professional fees, starting from US$1000 (one-time application fee). However, the fees vary depending on certain special activities and any additional regulatory or infrastructural compliance requirements.
Gift City, under the unified regulatory framework of IFSCA, has emerged as a transformative hub for financial service providers in India. For NBFCs looking to expand operations globally, it offers an unmatched combination of tax incentives, simplified regulations, faster approvals, and access to the international financial ecosystem.
With the right guidance and structured compliance support, setting up an NBFC in a Gift City enables businesses to establish their global footprint with confidence. At Enterslice, we will help you with registering an NBFC in gift city.
The common challenges faced while securing an NBFC license in a Gift City are as discussed below: Ensuring compliance with consistently evolving RBI guidelines Challenge while managing effective KYC and consumer grievance systems Challenges while retaining a sufficient pool of skilled financial and technical talent Faces operational limitations compared to banks Delays in finalizing an office space in Gift City Lack of sector-specific legal advice
Gift IFSC is an International Financial Services Centre (IFSC) located in Gift City, Gandhinagar, Gujarat. It is a special economic zone designed to offer world-class financial services, attract global investors, onboard offshore financial activities, and a platform for Indian and International firms to conduct financial business in foreign currencies.
The tax benefits of operating a Gift City are as follows: Allows a 100% income tax exemption for 10 consecutive years Reduced the minimum alternative tax to 9% of book profits Tax exemption for interest paid on account of monies borrowed by FC/ FU Reduced 10% tax on dividends paid by an FC to a non-resident Nil Goods and Services Tax on the services received by a unit in the IFSC
The process for registering an NBFC in a Gift City requires compliance with the following steps, as provided below: Step 1: Incorporate an Entity in GIFT IFSC Step 2: Submit Application for NBFC Registration to IFSCA Step 3: Apply for SEZ/ IFSCA Approval Step 4: IFSCA Review and Verification Step 5: Appear for UAC Personal Hearing Step 6: Issuance of NBFC Licensing by IFSCA
It takes 45 days to 2 months to set up an NBFC in a Gift City, depending on the business structure and activities carried out.
No, TDS is generally not applicable to specified payments made to eligible entities and investors in the Gift City. However, it is considered a key incentive, positioning it as a global financial hub for major businesses.
Yes, Gift City offers a highly concessional tax regime with many 0% tax scenarios for eligible investors, rather than a blanket 0% tax for all. In simple terms, the zero-tax aspect of Gift City applies only to specific types of income, transactions, and timeframes for eligible entities, making it a highly attractive, universally tax-free financial hub.
The benefits of registering an NBFC in a Gift City are as follows: Allows access to various tax incentives and exemptions Access to a strategic regulatory business environment Serve international clients and participate in cross-border financial activities Enjoys a significantly reduced compliance burden Helps liberalize foreign exchange operations Permits engagement in a broader range of permissible activities
Yes, a normal Indian resident is eligible to invest in a Gift City through the Liberalized Remittance Scheme, with an annual limit of USD $250,000.
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