RBI amends Directions for setting up for International Financial Services Centre Banking Units

The Reserve Bank of India (RBI) vide notification dated May 17, 2018 has amended the direction for setting up for IFSC Banking Units (IBU) after receiving suggestions from the stakeholders to consider minimum prescribed regulatory capital at the parent level rather than at the IBU level. The issue has been examined and the RBI circular DBR.IBD.BC.14570/23.13.004/2014-15 dated April 01, 2015 stands modified as follows:

1.       Existing para 2.3 of Annexure I has been amended which reads as follows:

“With a view to enabling IBUs to start operations, the parent bank will be required to provide a minimum capital of USD 20 million or equivalent in any foreign currency to its IBU which should be maintained at all times. However, the minimum prescribed regulatory capital, including for the exposures of the IBU, shall be maintained on an on-going basis at the parent level.”

2.      Existing para 2.3 of Annexure II has been amended which reads as follows:

“With a view to enabling IBUs to start operations, the parent bank will be required to provide a minimum capital of USD 20 million or equivalent in any foreign currency to its IBU which should be maintained at all times. However, the minimum prescribed regulatory capital, including for the exposures of the IBU, shall be maintained on an on-going basis at the parent level as per regulations in the home country and the IBU shall submit a certificate to this effect obtained from the parent on a half-yearly basis to RBI (International Banking Division, DBR, CO, RBI). The parent bank will be required to provide a Letter of Comfort for extending financial assistance, as and when required, in the form of capital / liquidity support to IBU.”

[RBI/2017-18/177 DBR.IBD.BC. 105/23.13.004/2017-18]

URL:  https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT177361E0168DA69485FA2F9551AB4BF60AF.PDF