RBI tweaks norms for setting up of IFSC Banking Units
The Reserve Bank of India (RBI) has modified norms for setting up International Financial Services Centres (IFSC) Banking Units (IBUs) by banks in IFSCs. In April 2015, RBI had formulated scheme for setting up of IFSC IBUs by banks in IFSCs.
The modification makes mandatory for parent bank to provide and maintain at all times minimum capital of US $ 20 million or equivalent in any foreign currency to its IBU. However, minimum prescribed regulatory capital, including for exposures of IBU, should be maintained on on-going basis at parent level.
Moreover, parent bank will be also required to provide Letter of Comfort for extending financial assistance, as and when required, in the form of capital/liquidity support to IBU. The guidelines are applicable to IBUs set up in Gujarat International Finance Tec-City (GIFT) as well as in other IFSCs which may be set up in India.
The modification was made based on suggestions from stakeholders to consider minimum prescribed regulatory capital at parent level rather than at IBU level. The government has set up an IFSC in Gujarat namely Gujarat International Finance Tec-City (GIFT) in Gandhinagar, Gujarat.