In a significant stride towards enhancing cross-border financial infrastructure, the International Financial Services Centres Authority (IFSCA) has officially launched the Foreign Currency Settlement System (FCSS). This pivotal move is set to streamline and strengthen foreign currency transactions within the International Financial Services Centre (IFSC) ecosystem, particularly benefiting IFSC Banking Units (IBUs).
The announcement was made through an official circular (E.File.No. IFSCA-FMPP0BR/12/2023-Banking) dated October 7, 2025, which outlines the operational framework, membership criteria, and regulatory backing for FCSS.
A Milestone in India’s Cross-Border Financial Infrastructure
The FCSS has been designed to facilitate the settlement of transactions conducted in foreign currencies, starting with the United States Dollar (USD). The system aims to provide a safe, efficient, and transparent settlement mechanism that aligns with international standards, reinforcing India’s position as a competitive international financial hub.
Key Highlights of the FCSS
According to the circular issued by Supriyo Bhattacharjee, Chief General Manager, Department of Banking Regulation, the FCSS offers several noteworthy features:
- Currency Support: The system will initially support settlement in USD, with potential for expansion to other currencies in the future.
- Gross Settlement: Settlement of payment obligations will be based on a gross settlement procedure, ensuring finality and reducing systemic risk.
- Operating Hours: FCSS will operate from 08:00 hrs IST to 20:00 hrs IST on all business days.
- ISO 20022 Compatibility: The system is compatible with the ISO 20022 messaging standard, enabling seamless communication with global financial systems.
Regulatory Framework and Key Stakeholders
The FCSS has been authorized under:
- Section 7 of the Payment and Settlement Systems Act, 2007
- Regulation 6 and 9 of the IFSCA (Payment and Settlement Systems) Regulations, 2024
- Sections 12 and 13 of the IFSCA Act, 2019
The system is operated by CCIL IFSC Limited (CIL), which has been formally authorized by IFSCA. CIL has partnered with Standard Chartered Bank – IBU to act as the Settlement Bank for FCSS operations.
Additionally, IFSCA has officially notified the Bye-Laws, Rules, and Regulations (BRR) prepared by CIL, which govern the functioning of FCSS. These rules are enforceable and binding on all participants.
Membership Guidelines for IBUs
All IFSC Banking Units are eligible to become members of the FCSS, subject to meeting the access criteria laid out in the BRR. The circular specifies:
- IBUs must apply to CIL following the procedure detailed in the BRR.
- Upon approval, members must adhere to all operational requirements and instructions issued by IFSCA.
- Compliance with the BRR and future guidelines is mandatory for continued participation.
What This Means for the Industry
The launch of FCSS marks a significant leap forward for India’s international financial architecture. It offers IBUs and cross-border financial entities a dedicated and regulated settlement mechanism, reducing reliance on external clearinghouses and boosting operational efficiency.
As India’s IFSC continues to grow, initiatives like FCSS reflect the regulator’s commitment to building robust, transparent, and globally integrated financial systems.
For further information, IBUs are encouraged to refer to the full circular and contact the IFSCA Banking Regulation Department as needed.