Strengthening cross-border finance from regulation to innovation

International Financial Services Centres Authority (IFSCA) Executive Director Pradeep Ramakrishnan - Pix by Sameera Wijesinghe

International Financial Services Centres Authority (IFSCA) Executive Director Pradeep Ramakrishnan, brings over 27 years of regulatory and corporate experience to his current role, where he oversees critical areas including capital markets, sustainable finance, commodities and market infrastructure.

Having previously held key positions at Securities and Exchange Board of India (SEBI), including leading the Departments on Corporate Governance and Sustainable Finance, Ramakrishnan is known for his forward-looking 

regulatory approach.

He visited Sri Lanka as part of the delegation for the event ‘Credit and Capital: Building Trust through Ratings and Regulations’, co-hosted by IFSCA, NSE IX, CareEdge Global and other Indian and Sri Lankan institutional partners. The event aimed to deepen bilateral cooperation and promote robust financial ecosystems through transparent credit rating frameworks and investor-friendly regulatory environments.

In this exclusive interview with the Daily FT, Ramakrishnan shares insights on the evolving dynamics of capital and commodities markets, the importance of fair credit rating systems in emerging economies, investor appetite trends and the future of regulation in an interconnected world. 

Below are excerpts of the interview;

By Charumini de Silva

Q: You’ve had a long and multifaceted career, from company Secretary roles to key regulatory positions at SEBI and now at IFSCA. What have been some of the pivotal moments that shaped your approach to market regulation and governance?

Let me start by going back to when I qualified as a Company Secretary, which was around the year 2000. I worked with a listed company and once you’re in a listed entity, you naturally begin engaging with a host of compliance requirements. Back then, we didn’t have the SEBI regulations. Instead, compliance was governed through the listing agreement. Whenever the regulator needed to bring in new rules, they would be incorporated into that agreement—that was how the system operated.

Sri Lanka can look at the Indian experience with IFSCA and other regulatory innovations to adopt best practices suited to its context 

After about two years in the industry, I came across an advertisement for a position at SEBI. At that time, SEBI was still a relatively new organisation. I applied and was fortunate to be selected. Moving to SEBI was a major shift. As a regulator, the role involves policymaking, investor protection, investigation, inspection— far broader than in corporate compliance. I joined SEBI at a time of significant transformation, both globally and India. Traditionally, reporting was synonymous with financial reporting. But starting in the late 1990s, non-financial reporting began gaining prominence. Corporate governance, ESG compliance and sustainable finance became more critical. 

Over the years at SEBI, I had the opportunity to work across multiple departments—issue management, investigations, inspections, research, investor education and protection. This diverse exposure helped me gain a bird’s-eye view of the entire regulatory ecosystem. In 2008, I moved to SEBI’s Southern Regional Office in Chennai and worked there for seven years. A regional office acts as a microcosm of the head office. While in the head office you might work in four departments over 20 years, in the regional office, you get exposure to all departments at once. It was a tremendous learning experience. I even led one of the largest accounting fraud investigations in India—the Saturn case. 

All these experiences shaped my understanding of how markets function and how regulations need to evolve in tandem. In 2010, I moved to the IFSCA and the experience here has been truly enriching and fundamentally different. There’s a great deal of innovation and value addition involved. 

Regional cooperation in knowledge sharing, capacity building and co-developing financial ecosystems can help both India and Sri Lanka build more resilient, globally integrated capital markets

Q:Could you share the historical and economic context that led to the creation of GIFT City and the establishment of IFSCA?

India and Sri Lanka gained independence around the same time, in the late 1940s. But these are not young countries, we have civilisations that go back to thousands of years, rich in culture, religion and population. Colonialism, however, disrupted our natural trajectories. When colonial powers left, they took away not only wealth but also institutional frameworks and we had to rebuild from scratch. India adopted a mixed economy model post-independence, where the Government was heavily involved in business and private enterprises operated under a licensing regime, the so-called ‘Licence Raj’. 

By 1991, we faced a severe balance of payments crisis and had to ship gold abroad to secure a loan from the IMF. That crisis led to liberalisation, privatisation and globalisation—in short, the LPG reforms. With these reforms. India opened up its economy and gradually integrated with global markets. Foreign companies were allowed to enter and Indian regulators like SEBI, Reserve Bank of India (RBI), Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA) evolved to support this transformation. But, even as we opened up, India didn’t permit full capital account convertibility. We couldn’t freely trade in foreign currencies domestically, which limited our ability to fully integrate with global financial systems. 

Around 2006, a committee headed by Percy Mistry recommended that Mumbai be developed as an international financial centre. The idea was to ‘onshore the offshore’—to attract global financial activity that was happening outside India back into the country. In 2012, the then Chief Minister of Gujarat and current Prime Minister of India Narendra Modi, decided to act on this vision. This led to the creation of GIFT City—Gujarat International Finance Tec-City, which became India’s first International Financial Services Centre (IFSC). To support this innovation, a unified regulatory body was needed. We couldn’t have multiple regulators, each with different frameworks, governing one financial zone. 

So, in 2020, the IFSCA was established as a unified regulator for all financial products, services and institutions in the IFSCA. Its goals are threefold; 1) onshore offshore financial activities, 2) become a hub for global capital flows and 3) serve as a centre for innovation.

Q: How can regional collaboration such as between Sri Lanka and India support the development of more resilient capital markets in South Asia?

There is a lot of shared history and common challenges especially between India and Sri Lanka. Both countries need capital to meet development goals, including infrastructure and sustainability targets. India, over the years has built institutional capacities and experimented with many models. These experiences can offer valuable lessons to Sri Lanka and others in the region. India has always believed in ‘Vasudhaiva Kutumbakam’, which means the world is one family. Our support to neighbours during natural disasters or financial crises reflects that philosophy. For example, India has consistently supported Sri Lanka in times of economic need, not just out of goodwill, but because regional stability and prosperity benefit everyone. 

Sri Lanka can look at the Indian experience with IFSCA and other regulatory innovations to adopt best practices suited to its context. In fact, some of the innovation frameworks developed by IFSCA are now being adapted by domestic Indian regulators. That’s the advantage of a sandbox environment—it allows for experimentation and interactive learning. In today’s world, the pace of change is so rapid, concepts we considered cutting-edge 20 years ago are now obsolete. With technologies like AI becoming a part of everyday life, financial regulation must be dynamic and collaborative. Regional cooperation in knowledge sharing, capacity building and co-developing financial ecosystems can help both India and Sri Lanka build more resilient, globally integrated capital markets.

Regulators must always maintain a sense of optimism. But more importantly, regulatory frameworks need to be ‘all-weather’—they must work in both bullish and bearish markets. Regulations cannot be designed only for times of growth or crisis; they must be robust enough to adapt to different market cycles. At the same time, flexibility and ease of doing business is critical

Q: What are the key elements of a sound regulatory framework that can help ensure long-term financial stability in emerging markets?

Regulators must always maintain a sense of optimism. But more importantly, regulatory frameworks need to be ‘all-weather’—they must work in both bullish and bearish markets. Regulations cannot be designed only for times of growth or crisis; they must be robust enough to adapt to different market cycles. At the same time, flexibility and ease of doing business is critical. Markets are increasingly influenced by global geopolitical events, economic disruptions and technological shifts. If your regulations are too rigid, they quickly become obsolete. The framework must allow for innovation, respond to evolving dynamics and incorporate lessons from international developments. We live in a deeply interconnected world, whatever happens in one part of the globe inevitably has a ripple effect elsewhere.

Investors today can choose from a wide array of jurisdictions and they are more discerning than ever. If the regulatory landscape is too complex or bureaucratic, they will simply look elsewhere. Lastly, the regulatory environment must enable growth and innovation without compromising oversight. It is a delicate balance, but a good framework allows space for experimentation, while still ensuring that risks are appropriately managed. 

Q: What challenges do regulators face when it comes to verifying or standardising sustainably-related disclosures, especially in the bond market?

One of the purposes of setting up IFSCA was to adopt international practices and enable a learning process that can go both ways, between the international and domestic regulatory space. When I was at SEBI, I had the opportunity to work on creating a green taxonomy for listed entities to issue bonds. It was largely based on the International Capital Market Association (ICMA) framework, which is widely respected. However, despite the effort, the initiative didn’t really take off. It was mainly municipal bodies that issued green bonds and corporates largely stayed away. 

When I moved to IFSCA, we decided not to create a completely new taxonomy. We recognised that different jurisdictions already have their own established taxonomies and rather than trying to reconcile all these into one unwieldy standard, we took a practical route. We allowed all globally accepted taxonomies to be recognised at IFSCA. In the past 3-4 years, we have seen around $ 17-18 billion raised through sustainable bonds across over 160 transactions. We have had major international players like Asian Development Bank (ADB) and International Finance Corporation (IFC) issue bonds from our platform. Interestingly, this approach has also influenced SEBI, which has recently allowed Indian issuers to use international taxonomies, just like we do. 

We didn’t limit ourselves to just green bonds, we have seen issues of social bonds and sustainability bonds. We also facilitated sustainability-linked bonds, which are among the most challenging instruments. These are advanced instruments that require careful monitoring and credibility and we are glad to have enabled them. Sustainability regulation is not a one-time exercise, it is a moving target. We have tried to maintain flexibility, while encouraging international alignment and practical adoption. Our approach shows that with the right balance between adaptability and regulatory clarity, it is possible to create a thriving ecosystem for sustainable finance.

Ratings shouldn’t be mechanical or one-size-fits-all. They need to account for the broader realities of emerging markets, the resilience of their democracies, the soundness of their regulatory regimes and their institutional maturity. This is why I believe it is important for ratings to reflect the truth, not just a pre-set model

Q: With your oversight of market infrastructure institutions, how do you view the role of technology and AI in improving supervision, compliance and trading systems?

At IFSCA, we have built a comprehensive market infrastructure ecosystem, this includes two stock exchanges—BSE and NSE along with clearing corporations, depository and a bullion exchange since 2022. We have also created a network of value managers and other related infrastructure to support end-to-end operations. Our markets operate nearly 22 hours a day, which is far longer than most domestic markets globally. This extended trading time presents a unique set of challenges and it demands highly resilient systems. Regulators, as the saying goes, cannot be everywhere at once. 

In the same spirit, we rely on Market Infrastructure Institutions (MIIs), as the first level of oversight and regulation. For them to be effective, they must have strong infrastructure, advanced technology and robust risk management systems. This includes planning for outages, having disaster recovery mechanisms, ensuring constant surveillance and maintaining strong cybersecurity.

International Financial Services Centres Authority (IFSCA) Executive Director Pradeep Ramakrishnan

These are not optional anymore, they are essential for operational continuity and investor confidence. To ensure this, we’ve implemented specific regulations for market infrastructure institutions, including a dedicated set of rules for the bullion market. These frameworks aim to embed resilience, security, and adaptability into the system. Our engagement with MIIs is ongoing and it includes regular inspections, feedback loops, policy reviews and supervisory updates. The relationship is dynamic because it has to be; it’s not something that can be handled with a one-time checklist. 

On the technological front, AI is no longer a luxury, it’s a necessity. At IFSCA, we have a dedicated FinTech and Innovation Department that looks at how we can use AI across different regulatory and supervisory functions. We’re also drawing from practices used by other regulators, such as SEBI, where AI tools are already being used to read and analyse documents and filings more efficiently. We are in the process of adopting similar technologies.

At IFSCA, we also place a strong emphasis on capacity building because no matter how strong your infrastructure is, the people running it need to be equally capable. Market infrastructure institutions themselves need to be engines of innovation. They must not only manage today’s operations, but also prepare for tomorrow’s financial products and investor needs. That dual responsibility of ensuring operational integrity, while driving future-readiness is something we’ve actively supported through our regulatory structure and ongoing collaboration. In today’s environment, regulators cannot work around technology. They have to work with it and through it—that’s the mindset we’ve adopted. 

Q: What are your thoughts on the evolution of commodities markets regionally and globally?

Commodities markets tend to function differently from traditional securities markets. Globally and regionally, a large portion of commodity trading still takes place over-the-counter rather than through centralised exchanges. At IFSCA, we’re actively working to bring structure and regulation to this space. We have already gained significant insights from our experience with the bullion exchange, which in many ways resemble the broader commodities space. We have also studied global best practices and believe that the commodities market within our jurisdiction is at an inflection point—it’s ready to take off. But this evolution requires more than just regulatory clarity. Physical infrastructure such as certified warehouses is critical. Equally important is the education of brokers and other market intermediaries, as well as the readiness of MIIs to support such a market. 

Our next steps will likely involve expanding the scope of the existing bullion exchange, potentially adding a commodities wing to it. Our learnings from the bullion space will be instrumental in shaping this transition. At present, one of our exchanges does offer commodity derivatives, though activity in that segment has temporarily paused. However, with the new commodities report expected soon and subsequent regulations, we expect trading in products like crude oil derivatives to resume shortly. We’re taking a phased, but ambitious approach rooted in practical experience, informed by global practices and aligned with the infrastructure and policy support that such a market needs to flourish.

Q: How do credit ratings influence investor perception and decision-making in emerging markets like Sri Lanka?

Historically, countries like India and Sri Lanka have been assessed by a limited set of dominant international rating agencies. These agencies use fixed sets of parameters, often developed in and for different contexts, to determine sovereign and institutional creditworthiness. This sometimes leads to a disconnect between the actual on-ground realities of a country and how it is perceived globally. The credit rating process is evolving and it needs to. Ratings shouldn’t be mechanical or one-size-fits-all. They need to account for the broader realities of emerging markets, the resilience of their democracies, the soundness of their regulatory regimes and their institutional maturity. This is why I believe it is important for ratings to reflect the truth, not just a pre-set model. 

In the case of India, for example, our regulatory frameworks are globally acknowledged to be among the strongest. Regulation is a living, breathing process and we continuously refine our framework to make it more robust. So, when rating agencies claim to factor in regulatory frameworks, but still give low ratings, it raises questions—either they’re looking at an outdated model or ignoring what’s actually happening on the ground. My view is that the rating industry itself needs to evolve. I’m optimistic that going forward, more agencies will take a balanced and nuanced approach, one that properly recognises the progress and potential of emerging economies like Sri Lanka and India.

Q: What are the investor appetite trends for emerging market assets? 

Investors are always looking for the best RoIs. They consider the cost of compliance, cost of capital and overall cost of investment—these are fundamental in shaping investor decisions. But you also need to build a larger ecosystem that supports investment, one that inspires confidence in long-term value creation. For instance, if an investor were to look at a jurisdiction and see only a location, they may not be interested. But if they see substance; strong governance, infrastructure and forward-looking policies— that changes the equation entirely. To this end, IFSCA has taken several initiatives to build institutional depth and educational infrastructure.

We’ve invited reputed foreign universities to set up campuses within the IFSCA. These universities operate under their own global curricula, without interference from the domestic University Grants Commission and they’re allowed full repatriation of profits. Already, four to five international universities have established a presence at GIFT City. These steps indicate that the IFSCA is becoming a self-sustaining ecosystem. It gives investors’ confidence that this is not just a regulatory sandbox, but a genuine, evolving marketplace with deep-rooted infrastructure. This is the kind of value proposition investors are now recognising and I hope this trend continues to grow.

Q: What advice would you give to young professionals interested in regulatory roles or intersection of finance and policy?

The first piece of advice is simple—read. Stay informed because what was relevant yesterday can quickly become outdated today. The second is to always remain optimistic. Regulation is not a reaction to the market going up or down. A regulator’s job is to create a framework within which markets can operate efficiently and fairly. So, regardless of market movement, we must stay focused on whether the framework is sound and whether it protects investors. 

Next, young professionals must understand that regulations should be ‘comply-worthy’. Regulation should never be about creating unnecessary paperwork or complex checklists that generate a flood of meaningless data. When drafting regulations, one must always consider the cost of compliance. It is also important to evaluate the impact of regulations over time. Bringing in a new rule is only half the work. A good regulator or anyone working in policy, must assess whether the regulation has achieved its intended outcomes and be willing to modify or repeal it if necessary. This means setting aside ego and accepting that change is constant. In fact, I often say the most important skill for a regulator is not learning, but unlearning and relearning.