Requirements for Payment Service Providers entering into Rupee Drawing Arrangement (RDA)

International Financial Services Centres Authority, vide Circular No. e.F.No. IFSCA-FMPP0BR/3/2023-Banking 2026-27/01 dated April 10, 2026, has announced an important update regarding requirements for Payment Service Providers entering into Rupee Drawing Arrangement (RDA).

Key Details of the Update –
• The circular clarifies that Payment Service Providers in the International Financial Services Centre must obtain prior permission from the Authority before participating in the Rupee Drawing Arrangement (RDA) scheme as a non-resident Exchange House.
• This clarification builds upon the earlier circular titled “Participation of Payment Service Providers (“PSPs”) in International Payment Systems” dated June 6, 2025, which had already mandated prior approval for participation in international payment systems for making or receiving payments to or from banks or financial institutions outside the International Financial Services Centre.
• The Authority has specifically linked this requirement to the Master Direction titled “Opening and Maintenance of Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses” dated January 1, 2016, issued by the Reserve Bank of India, thereby aligning the approval framework for Payment Service Providers with the broader regulatory architecture governing cross-border remittance arrangements.
• A Payment Service Provider seeking such approval must submit, along with its request, a comprehensive overview of the framework and processes established by it to ensure compliance with the International Financial Services Centres Authority (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022, as well as any other applicable laws of a similar nature in force for the proposed RDA transactions.
• The emphasis on Anti Money Laundering, Counter-Terrorist Financing, and Know Your Customer controls indicates that the Authority expects Payment Service Providers to demonstrate robust risk management, due diligence, transaction monitoring, and regulatory compliance systems before they are permitted to operate under the RDA framework.
• The circular states that it is issued under sections 12 and 13 of the International Financial Services Centres Authority Act, 2019, for the purpose of developing and regulating the financial services market in the International Financial Services Centre.
• The circular has been made effective immediately, meaning that any Payment Service Provider proposing to enter into an RDA arrangement must comply with the approval requirement from the date of issuance itself.

Actions if Any –
• Any Payment Service Provider proposing to participate in the Rupee Drawing Arrangement scheme as a non-resident Exchange House must obtain prior permission from the International Financial Services Centres Authority before such participation.
• The Payment Service Provider must submit a request for prior permission along with a comprehensive compliance framework and process overview demonstrating adherence to the Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer Guidelines, 2022 and other similar applicable laws in relation to the proposed RDA transactions.

Compliance Deadline –
The circular comes into force with immediate effect from April 10, 2026, and accordingly any Payment Service Provider intending to enter into a Rupee Drawing Arrangement as a non-resident Exchange House must obtain prior permission from the International Financial Services Centres Authority before commencing or participating in such arrangement.