The Framework, Four Quiet Years and the 2026 Sweep
For its first four years the International Financial Services Centres Authority published no enforcement order on its website. In the 26 months since July 2024 it has published 26, 22 of them in the first eight months of 2026. This three-part series examines every one of those actions in order to explain how IFSCA enforces, who it has proceeded against, what it has looked for and what the consequences of non-compliance have been. Part 1 sets out the enforcement framework and the trend.
Background
IFSCA was established on April 27, 2020 under the International Financial Services Centres Authority Act, 2019 (the “IFSCA Act”), and its unified regulatory powers under Section 13 of the IFSCA Act came into force on October 1, 2020. Its Enforcement Actions, as on September 4, 2026, lists 26 items, the earliest dated July 29, 2024. On IFSCA’s own count, 1,147 registrations and authorizations had been granted by March 2026. The IFSCA therefore supervised more than a thousand registrations and authorizations for close to four years before publishing a single adverse order.
The distribution since July 2024 is set out in Figure 1: two actions in the second half of 2024, two in 2025, and 22 between January 1 and August 25, 2026, of which eight were published in May 2026 alone. The powers had existed since 2020. What changed was the machinery around them, namely (i) a quarterly-reporting obligation imposed on every capital market intermediary by circular dated February 8, 2024, (ii) a consolidated fee circular dated May 17, 2023, (iii) a program of unannounced visits to regulated entities and (iv) a standing three-Member Quasi-Judicial Authority for Enforcement (the “QJAE”) to decide the notices that followed.
Figure 1: Published IFSCA enforcement actions by calendar year (source: IFSCA Enforcement Actions as on September 4, 2026).
Three features of this record are of greater significance than the headline count, and they provide the structure for this series. First, the 2026 actions are not a gradual increase; they are a coordinated exercise, traceable to a body of show cause notices issued within a single six-week window. Second, the entities proceeded against are predominantly small, dormant or early-stage registrants and the issues are predominantly ones of substance, namely whether the entity was in fact present in and operating from GIFT City. Third, the monetary penalties remain modest, but the sanction IFSCA has applied where a registration no longer corresponds to a functioning business is cancellation, and that sanction is not modest.
The Enforcement Framework
At the outset, it is pertinent to note that IFSCA has no enforcement code of its own. The legislative design of the IFSCA Act is to vest in a single authority, within an IFSC, the powers that four domestic regulators exercise under 14 statutes, and to borrow those statutes’ enforcement machinery wholesale. Section 13(1) provides that all powers exercisable by 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 under the Acts listed in the First Schedule are, in an IFSC, exercised by IFSCA in so far as they relate to financial products, financial services and financial institutions. Section 33 and the Second Schedule correspondingly exclude the parent regulators from the IFSC by inserting a carve-out into each of their statutes (for example, Section 28C of the Securities and Exchange Board of India Act, 1992 (the “SEBI Act”) and Section 118A of the Insurance Act, 1938).
The provision that governs enforcement is Section 13(4), which is reproduced below:
“(4) For the purposes of sub-section (1), the provisions of the respective Acts specified under column (3) of the First Schedule relating to— (a) the manner of filing an application for recognition or registration or withdrawal of recognition or registration or furnishing of information or reports; (b) the procedure of inspection, investigation or prosecution of offences, settlement of civil and administrative proceedings, compounding or adjudication of any offence or penalty, or actions to be taken in furtherance of such inspection, investigation, or adjudication or filing of appeals arising therefrom; (c) the determination or settlement, as the case may be, of any fee or fine or penalty or any other sum of amount or punishment for the contravention of any provisions of respective Acts specified in the First Schedule and recovery of such fine or penalty, shall, mutatis mutandis, apply to financial products, financial services and financial institutions under this Act, as they apply to the financial products, financial services and financial institutions under such respective Acts.”
An entity’s enforcement regime therefore depends on the parent statute that governs its activity. Securities-side entities, being broker-dealers, fund management entities, investment advisers, distributors, custodians and the remainder of the capital-market population, face the SEBI Act machinery: directions under Section 11B, suspension or cancellation of registration under Section 12(3), adjudication under Section 15-I, penalties under Sections 15A to 15HB, the quantum factors in Section 15J, settlement under Section 15JB and an appeal to the Securities Appellate Tribunal (“SAT”) within 45 days under Section 15T. Insurance-side entities face the Insurance Act, 1938; the order against LMB Insurance Brokers invokes Sections 33, 34 and 102 of that Act and records that the appeal lies to SAT under Section 110. Finance companies, including aircraft lessors and trade-finance platforms, occupy a different position: each of the five orders against them is issued “under Regulation 11 of the IFSCA (Finance Company) Regulations, 2021 read with Section 12 of the IFSCA Act, 2019”, invokes no parent statute and no penalty provision, and contains no paragraph on appeal. The significance of this will be analyzed in Part 3.
Two features are specific to the IFSC. Under Section 13(5), penalties are computed in rupees but collected in the foreign-currency equivalent at the RBI reference rate on the date of the order, which is why every penalty order directs payment “in foreign currency equivalent”. Under Section 13(6), sums realized are credited to the Consolidated Fund of India rather than to IFSCA.
The sectoral regulations supply the license-level sanctions. Regulation 143 of the IFSCA (Fund Management) Regulations, 2025 (the “FM Regulations”) permits suspension or cancellation of a fund management entity’s registration for, inter alia, breach of registration conditions, non-submission of periodic reports and non-cooperation in an inquiry; Regulation 30 of the IFSCA (Insurance Intermediary) Regulations, 2021 and the default provisions of the finance-company and capital-market-intermediary regulations perform the same function in their sectors. IFSCA also re-issued its capital-market and fund-management regulations in 2025. As a result, almost every 2026 order cites the 2021 or 2022 provision “read with” its 2025 successor and the savings clause (Regulation 47(3) of the IFSCA (Capital Market Intermediaries) Regulations, 2025; Regulation 148(3) of the FM Regulations), which carries pending notices and inquiries across the re-issue. Re-issuance did not interrupt any pending proceeding.
More recently, IFSCA notified the International Financial Services Centres Authority (Prohibition of Market Abuse in Securities Markets) Regulations, 2026, on September 5, 2026. Given the recent introduction of the framework, its application through enforcement proceedings is likely to emerge over time.
The Decision-maker
The four items published in 2024 and 2025 were each signed by a single officer, the Head of IFSCA’s Division of Enforcement. Every order published in 2026 is signed by a bench of three Members of a body IFSCA styles the QJAE; two Members sit on almost every panel, with the third seat rotating among a pool of at least six. The shift from a single administrative officer to a collegiate bench is the clearest institutional signal in the record that IFSCA now treats enforcement as a standing function rather than an occasional one. The QJAE applies the SEBI Act’s adjudication grammar in full: each of the seven penalty orders considers the Section 15J factors and cites the Supreme Court’s decision in Adjudicating Officer, SEBI v. Bhavesh Pabari [(2019) 5 SCC 90], ex parte proceedings are recorded where a noticee does not appear, and each order disposes of its show cause notice in terms. A reader familiar with SEBI adjudication orders will find the form familiar.
IFSCA has also published a short statement of enforcement policy on its website. It identifies three aims (the maintenance of trust and integrity through early detection of misconduct, deterrence and shaping the conduct of regulated institutions), four factors that determine whether a formal investigation is opened (the seriousness of the misconduct and the harm caused, the public interest, the availability of evidence and intent), and a menu of five outcomes: directions, warnings, monetary penalty, suspension or cancellation of registration and prosecution. Four of the five have been used. Prosecution has not, and neither has the statutory settlement route under Section 15JB of the SEBI Act, which is available to IFSC entities through Section 13(4) but has not yet produced a published settlement order.
Four Quiet Years, Then a Sweep
The absence of published orders between 2020 and mid-2024 requires further context. IFSCA spent those years as a developer, writing a regulatory framework across banking, capital markets, funds, insurance, leasing, bullion and payments and persuading entities to establish themselves in GIFT City. Supervision followed registration, and enforcement followed supervision. It does not follow that there was no enforcement in that period. The orders themselves record a directive to an insurance broker in January 2022 to cease writing fresh business, warning letters delivered to broker-dealers through the IFSC exchanges and restrictions on onboarding new investors imposed on fund managers by letter. The enforcement orders capture outcomes, not the full range of supervisory activity; accordingly, 26 represents a floor.
The turn is more visible in the show cause notices than in the orders. Of the 22 actions published in 2026, twenty rest on a dated show cause notice, and 17 of those notices were issued between December 15, 2025 and January 28, 2026. Orders followed an average of 129 days after the notice, within a range of 67 to 265 days. The concentration of orders in May 2026, shown in Figure 2, is the January 2026 notices reaching decision.
Figure 2: Show cause notices and published orders by month, July 2025 to August 2026 (notice dates as recorded in the orders; the two We Founder Circle protective orders proceeded without a notice).
The notices, in turn, rest on evidence gathered in 2024 and the first half of 2025: unannounced visits to fund management entities on common dates (July 31, 2024; August 21, 2024; October 17 and 24, 2024; January 27 and February 7, 2025; April 4 and May 14, 2025), visits to aircraft lessors on December 14, 2023, August 29 and November 6, 2024 and June 2, 2025, joint inspections with India INX and NSE IFSC, and the reporting obligation created by the circular of February 8, 2024. Drawing from the above, it becomes evident that IFSCA ran a supervisory program for approximately 18 months, issuing advisories and exchange-routed warnings before bringing the unresolved cases into formal proceedings in a single batch.
For regulated entities in GIFT City, the record has two immediate implications. The pipeline is unlikely to be empty: the visits continued into mid-2025, IFSCA’s circular of June 5, 2026 on annual compliance audits for capital market intermediaries creates a fresh evidentiary stream, and the We Founder Circle matter (Part 3) shows that an investor complaint can now produce a protective order within weeks. The lead time is also long: on this record, an entity that received an advisory in late 2024 and did nothing about it is the typical 2026 respondent.
Who has been Proceeded Against
The twenty-six actions involve 24 entities across seven categories. Fund management entities and broker-dealers together account for 17 of the 26.
Figure 3: Actions by category of regulated entity. The fund management count includes three actions against one entity (We Founder Circle) and one against a fund management entity acting as a portfolio manager; the two finance-company sub-categories are shown separately.
Three features of this population are notable.
- The IFSC units are small, although several belong to substantial Indian financial groups. No bank, market infrastructure institution, IFSC insurance office, payment service provider or global in-house center appears among the enforcement orders published by IFSCA, nor does any large asset manager. The largest business by revenue is String AI IFSC Private Limited, a broker-dealer whose revenue of INR 479.80 million across two financial years was derived entirely from IT services, and whose registration was cancelled for that reason.
- Many are legacy registrations. Four of the eight broker-dealer actions concern long-inactive entities: Silver Stream Equities and Dynamic Equities, both registered in January 2017 and inactive for more than eight years; Karvy Broking (IFSC), registered in December 2018, whose trading terminal had been deactivated since December 2019; and Majortrend Capital, which had been pursuing an exit since 2018.
- Where the respondent is an operating business, the issue is one of perimeter or investor-facing conduct rather than presence. Ashoka Whiteoak Capital Management (an investment adviser found to have earned distribution fees without a distribution registration), Abans Financial Services (a fund management entity with a 14-month compliance-officer vacancy and seven quarters of missed investor disclosures), Bonanza Portfolio (global-access broking without an exchange no-objection and reliance on a foreign broker’s KYC) and Prowess Insurance Brokers (reinsurance broking without a composite license) are the cases in which a functioning business was penalized for what it did rather than for not being there.
The absence of larger institutions from the published enforcement record should not be read as immunity. The visits and inspections that produced the 2026 orders were directed at the population most likely to fail a substance test, and the published orders record outcomes rather than the full extent of supervisory activity, they therefore say nothing about which other entities have been inspected. The next phase is likely to reach institutions with clients and assets under management. The annual compliance audit requirement, together with the more sophisticated issues addressed in the Ashoka Whiteoak and Abans orders, points in that direction. If future cases involve quantified gains or investor losses, the Section 15J factors may potentially produce materially larger penalties.
What Follows
Part 2 sets out the seven issues that recur across the 26 actions, from physical presence to fee default, together with the escalation sequence IFSCA follows before it issues a notice and the defenses that have and have not succeeded. Part 3 examines the sanctions: the seven monetary penalties totaling INR 2.60 million, the five cancellations, the first protective order freezing investor money and what the reasoning in those orders indicates for the management of an IFSCA proceeding.
This insight has been authored by Swapneil B. Akut (Partner), Abhishek Singh (Counsel), Anushka Rungta (Associate) and Sankalp A. Dubey (Associate). They can be reached on sakut@snrlaw.in, abhisheksingh@snrlaw.in, arungta@snrlaw.in and sdubey@snrlaw.in, respectively, for any questions. This insight is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.
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