The International Financial Services Centres Authority (IFSCA) continues to shape India’s fintech landscape with the launch of its Draft FinTech Sandbox Framework, inviting public comments and industry feedback by October 10, 2025. This bold step is part of IFSCA’s broader commitment to foster a cutting-edge financial innovation ecosystem in GIFT City, India’s first International Financial Services Centre (IFSC).
Why a FinTech Sandbox Matters
A sandbox is essentially a regulatory safe space where fintech firms can test innovative financial products, services, or business models under relaxed regulatory conditions but with strict oversight. It helps strike a balance between innovation and risk mitigation, offering startups and established players a chance to validate new ideas in a controlled environment.
IFSCA’s proposed FinTech Sandbox Framework aims to enable both domestic and international fintechs to test solutions across a wide spectrum of financial services—banking, capital markets, insurance, asset management, and more.
What’s New in the Draft Framework
Building on the earlier framework introduced in April 2022, the updated draft introduces a dedicated and unified regulatory approach. Key highlights include:
Multiple Sandbox Options:
- Regulatory Sandbox (live testing with real users),
- Innovation Sandbox (testing with market data),
- Inter-Operable Regulatory Sandbox (IoRS),
- Overseas Regulatory Referral Mechanism/FinTech Bridges.
Eligibility Criteria: Open to startups, established firms, academic institutions, and even foreign entities not based in FATF-blacklisted jurisdictions.
Two-Stage Application:
- Preliminary Application for idea assessment,
- Final Application for sandbox access with regulatory oversight.
- Time-Bound Testing: Up to 12 months, with a possible extension of 6 months.
- Regulatory Relaxations: Tailored exemptions may be granted, depending on the use case and risks involved.
- Clear Exit and Revocation Rules: Ensures user protection and systemic integrity.
- Encouraging Cross-Border FinTech Growth
A standout feature is the Overseas Regulatory Referral Mechanism, also known as FinTech Bridges. This enables Indian fintechs to expand globally and allows foreign fintechs to test and launch their innovations in GIFT IFSC, in collaboration with overseas regulators.
Additionally, the Inter-Operable Regulatory Sandbox (IoRS) offers a platform for testing products involving multiple Indian regulators—like RBI, SEBI, IRDAI, and PFRDA—with IFSCA acting as the lead coordinator when applicable.
Call for Public Feedback
IFSCA has opened the draft for stakeholder consultation, seeking views from fintech startups, financial institutions, academics, and technology firms. Feedback is to be sent by October 10, 2025, to fe-sandbox@ifsca.gov.in, with copies to key officials listed in the circular. Comments must follow the prescribed format and can help shape a truly world-class regulatory environment.