How Capital Requirements Differ for Foreign vs. Local Applicants in UAE, Canada and GIFT City (2025)
August 18, 2025
What the Numbers Say: Fastest Jurisdictions to Get a License in 2025
August 25, 2025The Gujarat International Finance Tec-City (GIFT City) in Gandhinagar has quickly transformed from an ambitious concept into one of Asia’s most competitive international financial hubs. Designed as India’s first International Financial Services Centre (IFSC), it offers a globally benchmarked regulatory ecosystem, modern infrastructure, and tax benefits that have already attracted over 725 licensed entities — including global banks, payment service providers, and fintech innovators.
For fintechs, the IFSC is a game-changer. It allows operations in 15 foreign currencies with full capital account convertibility, offers SEZ benefits, and is regulated by a unified body — the International Financial Services Centres Authority (IFSCA). Modeled on frameworks from Singapore, London, and Dubai, IFSCA regulations are principle-based yet flexible, designed to enable innovation while ensuring compliance.
Why GIFT City is Gaining Ground in Fintech
The appeal is rooted in both infrastructure and policy. The city spans 886 acres, divided into the IFSC Zone and the Domestic Tariff Area, with “walk-to-work” design, high-speed digital infrastructure, and modern social facilities. Strategically located near Ahmedabad Airport, it sits at the crossroads of India’s largest industrial corridors.
On the policy side, the benefits are hard to ignore:
- Tax holiday on business income for 10 out of 15 years.
- Zero GST, STT, or CTT, plus reduced withholding tax of 9% on certain debt instruments.
- 100% foreign ownership allowed for fintech companies.
- Fast-track approvals compared to onshore jurisdictions.
The macroeconomic picture adds to the appeal. India’s GDP stands at USD 3.94 trillion, growing at 8.2% in FY 2023–24, and is projected to reach USD 35 trillion by 2047. The country attracted USD 70.09 billion in FDI inflows last year, and GIFT IFSC is positioned as the “onshore-offshore” bridge to channel global capital into India.
Understanding the Minimum Capital Requirement
For a fintech to operate as a licensed Payment Service Provider (PSP) in GIFT IFSC, the IFSCA (Payment Services) Regulations, 2024 lay out clear net worth requirements. These vary based on whether you qualify as a Regular PSP or a Significant PSP.
| Category | On Commencement of Operations | By End of 3rd Financial Year |
| Regular PSP | USD 100,000 | USD 200,000 |
| Significant PSP | USD 250,000 | USD 500,000 |
Net worth here includes paid-up equity capital, compulsorily convertible preference shares, free reserves, share premium, and certain capital reserves — but excludes accumulated losses, intangible assets, and deferred revenue expenditure.
Regular vs Significant PSP: What’s the Difference?
A Regular PSP provides one or more regulated payment services without breaching the thresholds for significant status. A Significant PSP crosses any of the following benchmarks:
- Monthly average transaction value of over USD 2 million for a single service, or over USD 4 million combined for multiple services.
- Average daily e-money balance over USD 3 million for account issuance or e-money issuance services.
These categories matter because they determine not only your capital requirement but also the level of scrutiny and compliance expectations.
Charting a Capital-Readiness Strategy
Meeting the minimum capital requirement is not simply a matter of depositing funds; it’s about structuring your capital in a way that supports long-term licensing and operational stability.
Step 1: Map your services
Identify whether your business model falls under account issuance, e-money issuance, escrow, cross-border money transfer, or merchant acquisition. This will help determine your PSP classification from the outset.
Step 2: Plan your capital structure
Inject capital in a specified foreign currency, use instruments like compulsorily convertible preference shares for flexibility, and avoid relying on reserves excluded from net worth calculations.
Step 3: Stage your infusions
Start with the commencement requirement (USD 100k for Regular PSP or USD 250k for Significant PSP) and plan the second infusion to meet the three-year target (USD 200k or USD 500k).
Step 4: Secure governance and compliance readiness
IFSCA approvals hinge on more than just capital — operational readiness, AML/KYC frameworks, escrow arrangements, and robust IT security systems are equally critical.
GIFT City offers unmatched potential for fintechs—but the capital barrier is real. Understanding how to creatively structure funds, tap into government schemes, and prepare for compliance obligations is crucial to your success.
With smart capital structuring, local incentives, and credible financial planning, you can unlock GIFT City’s full potential while staying on the right side of regulation.
Ready to launch your fintech in GIFT City? Let PayCompliance’s experts guide you through license applications, capital structuring, and ongoing compliance.
Contact our regulatory experts today to get started.
