The Reserve Bank of India (“RBI”) on 1 April 2015 issued a notification with respect to schemes for setting up IFSC Banking Units with its prior permission by Indian banks as well as foreign banks which already have a presence in India. Some of the key features of the schemes are:
- the parent bank will be required to provide a minimum capital of US$ 20 million or equivalent in any foreign currency to its IFSC Banking Unit;
- the liabilities of the IFSC Banking Units will be exempt from cash reserve ratio and statutory liquidity ratio as prescribed by the RBI;
- the sources for raising funds will be persons not resident in India and will include borrowings in foreign currency. The deployment of the funds can be with both persons resident in India as well as persons not resident in India;
- the IFSC Banking Units will be permitted to engage in the form of business mentioned in section 6 (1) of the Banking Regulation Act, 1949, subject to the prescribed conditions;
- the IFSC Banking Units will be required to furnish certain information (offsite reporting, audited financial statements, etc.) relating to their operations as prescribed by the RBI; and
- the IFSC Banking Units will be required to follow ‘Know Your Customer (KYC)’, Combating of Financing of Terrorism (CFT) and other anti-money laundering instructions issued by the RBI, and IFSC Banking Units will be prohibited from undertaking cash transactions.
The new provisions will pave the way for the Gujarat International Finance Tec–City in Gandhinagar, Gujarat to set up its IFSC Banking Units within its premises as it is currently the only recognized IFSC.
The abovementioned notification can be accessed on the website of RBI, the link of which is set out below:
The Reserve Bank of India (“RBI”) on 1 April 2015 issued a notification with respect to schemes for setting up IFSC Banking Units with its prior permission by Indian banks as well as foreign banks which already have a presence in India. Some of the key features of the schemes are:
the parent bank will be required to provide a minimum capital of US$ 20 million or equivalent in any foreign currency to its IFSC Banking Unit;
the liabilities of the IFSC Banking Units will be exempt from cash reserve ratio and statutory liquidity ratio as prescribed by the RBI;
the sources for raising funds will be persons not resident in India and will include borrowings in foreign currency. The deployment of the funds can be with both persons resident in India as well as persons not resident in India;
the IFSC Banking Units will be permitted to engage in the form of business mentioned in section 6 (1) of the Banking Regulation Act, 1949, subject to the prescribed conditions;
the IFSC Banking Units will be required to furnish certain information (offsite reporting, audited financial statements, etc.) relating to their operations as prescribed by the RBI; and
the IFSC Banking Units will be required to follow ‘Know Your Customer (KYC)’, Combating of Financing of Terrorism (CFT) and other anti-money laundering instructions issued by the RBI, and IFSC Banking Units will be prohibited from undertaking cash transactions.
The new provisions will pave the way for the Gujarat International Finance Tec–City in Gandhinagar, Gujarat to set up its IFSC Banking Units within its premises as it is currently the only recognized IFSC.
The abovementioned notification can be accessed on the website of RBI, the link of which is set out below:
http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9636&Mode=0