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International Financial Services Centres Authority (IFSCA) | Ministry of Finance
The International Financial Services Centres Authority (IFSCA) has released a consultation paper titled Guidance Framework on sustainable deposits and sustainable lending and investments to significantly broaden its regulatory scope for sustainable finance in GIFT IFSC. Building on the 2022 guidelines, the proposed framework introduces “sustainable deposits” as a new product, allowing IFSC Banking Units (IBUs) to raise dedicated funds for green and social projects. This evolution aligns with a global financing gap of USD 4.2 trillion annually required to meet the Sustainable Development Goals (SDGs).
Operationalizing Green Lending and Investments The modified circular provides comprehensive directions for financial institutions to integrate sustainability across their portfolios:
Sustainable Lending: Includes Green, Social, and Sustainability-linked lending, where interest margins may be adjusted based on the borrower’s achievement of predetermined sustainability targets.
Sustainable Trade Finance: Adopts the International Chamber of Commerce (ICC) principles to support sustainable supply chains and green trade products.
Target-Driven Deployment: A mandatory target requires IBUs to deploy at least 5 per cent of their aggregate loans and investments toward sustainable activities each financial year.
Investment Scope: Guidelines now cover investments in ESG-labelled debt securities, Transition Bonds, and ESG-specific funds both within and outside the IFSC.
Governance, Accountability, and Verification To prevent “greenwashing” and ensure credibility, the framework mandates rigorous oversight mechanisms:
Policy and External Review: Entities must maintain board-approved policies that align with international standards, such as the Green Loan Principles, and subject them to external review.
Third-Party Assurance: Allocation of funds from sustainable deposits is subject to annual independent third-party verification to monitor end-use.
Impact Reporting: IBUs and Finance Companies must publish annual Impact Assessment reports and maintain public disclosures of their sustainability policies on their websites.
What are “Sustainable Deposits” in the context of GIFT IFSC? Sustainable deposits are a distinct product offering where the funds raised are exclusively earmarked by banks to finance eligible green or social activities, such as renewable energy or affordable housing. These deposits are typically accepted as term deposits, and their proceeds must be allocated in accordance with strictly defined statutory principles and verified by independent third parties.
Policy Relevance
The IFSCA’s move to refine these frameworks solidifies India’s position as a leading hub for sustainable capital in the Global South.
Mobilizing Climate Capital: By September 2025, cumulative ESG-labelled debt in GIFT IFSC reached USD 15.73 billion, providing a critical channel for Indian and global firms to access transition finance.
Standardizing Green Metrics: The framework complements India’s domestic Sovereign Green Bonds and BRSR norms by providing an international-grade platform for standardized ESG reporting.
Inclusive Development: Through eligible social categories, the framework encourages financing for Microfinance, SMEs, and affordable basic infrastructure in rural and underserved Indian regions.
Transition Pathways: The focus on Transition Bonds provides a specific pathway for high-carbon Indian industries to access the capital necessary for credible decarbonization.
Follow the full paper here: Consultation paper on “Guidance Framework on sustainable deposits and sustainable lending and investments”