Reserve Bank of India
22:30
RBI relaxes rules for IFSC bank branches
RBI relaxes rules for IFSC bank branches
The Reserve Bank of India (RBI) has permitted bank branches at international financial services centres (IFSCs) to open foreign currency current accounts for entities operating at those locations. RBI also lifted the limit on short-term liabilities these branches, called IFSC banking units (IBUs), could have from banks.
The rules have been eased to facilitate investment transactions and give flexibility in operations. IBUs can also open current accounts for non-resident institutional investors to facilitate their investment transactions, the regulator said in a notification.
Earlier, IBUs were not allowed to open any current or savings accounts. They also cannot raise liabilities from retail customers, including high net worth individuals (HNIs). Banks are barred from providing cheque facility to holders of current accounts at IBUs. All transactions through these accounts must be undertaken via bank transfers, RBI said.
On short-term liabilities, RBI said it will not prescribe any limit for raising short-term liabilities from banks. However, the IBUs must maintain Liquidity Coverage Ratio (LCR) applicable to Indian banks on a standalone basis and strictly follow RBI's liquidity risk management guidelines.
Further, Net Stable Funding Ratio (NSFR) will also be applicable to the IBUs as and when it is applied to Indian banks.
Also, exposure ceiling for IBU will be five per cent of the parent's bank's tier I capital for single borrower and 10% in case of borrower group, RBI added.
Source:Business Standard
