Pursuant to the powers conferred on the IFSCA under section 13 of the IFSC Authority Act, the IFSCA notified the International Financial Services Centres Authority (Banking) Regulations, 2020 [“IFSCA (Banking) Regulations”]. The IFSCA (Banking) Regulations repeal and supersede the scheme for setting of IFSC Banking Units formulated by the RBI. It also provides that a banking unit operating in IFSC prior to notification of these regulations shall comply with additional requirements, if any, within 3 months.
The IFSCA (Banking) Regulations inter-alia provides that for setting up of any banking unit in IFSC, there is primary requirement to obtain license for such banking unit to operate in IFSC. Application for obtaining such license can be made by parent bank of banking unit, whether Indian bank or foreign bank. Further such parent bank needs to provide initial funding of minimum USD 20 million to proposed banking unit which shall be maintained on an unimpaired basis. Additionally, an undertaking is required to be given for providing regular liquidity to such proposed banking unit in IFSC. Also, an NOC from home regulator for setting up of banking unit in IFSC shall be obtained.
Further regulation, provides for maintenance of prudential norms, permissible activities, operations of banking units, know your customer and anti-money laundering measures applicable to banking units etc.
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