The International Financial Services Centres Authority (IFSCA) —regulator of IFSCs including Gift City— on Wednesday approved draft Banking regulations that will be applicable in international financial services centres (IFSCs) such as Gujarat’s Gift City.
The formulation of draft regulation paves the way for putting in place the rules for the various aspects of banking operations that would be permissible at the IFSC.
The draft regulations include laying down the requirements for setting up IFSC Banking Units (IBUs); Permitting persons resident outside India (having net worth not less than $1 million) to open foreign currency accounts in any freely convertible currency at IBUs; Permitting persons resident in India (having net worth not less than $1 million) to open foreign currency accounts in any freely convertible currency at 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.
The draft regulations also lay down the permissible activities of IBUs including credit enhancement, credit insurance, and sale, purchase of portfolios, engage in factoring and forfeiting of export receivables and undertake equipment leasing, including aircraft leasing; Permitting the Authority to determine business that a Banking Unit may be permitted to conduct in INR with persons resident in India and persons resident outside India, subject to settlement of the financial transaction in relation to such business in freely convertible foreign currency.
These draft regulations will be notified by the government in due course, an official release said.
Meanwhile, the final report of the Pradipta Shah headed Panel, which was set up by IFSCA, has submitted its final report, which mainly focuses on Banking, capital markets and insurance. This panel has made a case for wealth management capabilities to be enabled in the IBU by allowing investments in various markets across different geographies.