The International Financial Services Centres Authority vide its notification dated 18th November 2020 has published the International Financial Services Centres Authority (Banking) Regulations, 2020 which regulates the licensing requirement for setting up banking unit.
The key highlights from the Banking Regulations include:
- Permitting persons resident outside India (having net worth not less than USD 1 Million) to open foreign currency accounts in any freely convertible currency at IFSC Banking Units (IBUs)
- Every Parent Bank shall be permitted to establish only one Banking Unit in each International Financial Services Centre, as a branch.
- The liabilities of a Banking Unit, other than the deposits raised from Qualified Individuals and Qualified Resident Individuals, shall be exempt from Cash Reserve Ratio or other such requirements.
- Permitting persons resident in India (having net worth not less than USD 1 Million) to open foreign currency accounts in any freely convertible currency at IFSC Banking Units (IBUs) to undertake any permissible current account or capital account transaction or any combination thereof under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India
- Lays down the permissible activities of IBUs including credit enhancement, credit insurance, and sale , purchase of portfolios, engage in factoring and forfaiting of export receivables and undertake equipment leasing, including aircraft leasing.
- A Banking Unit shall follow Know Your Customer norms, combating of financing of terrorism and other antimoney laundering requirements, including reporting requirements issued by the Reserve Bank from time to time, unless otherwise specified by the Authority.
