International Financial Services Centres Authority (Banking) Regulations, 2020
On 18th November 2020, the International Financial Services Centres Authority (IFSCA) issued a Notification No. IFSCA/2020-21/GN/REG004, titled “International Financial Services Centres Authority (Banking) Regulations, 2020”.
The IFSCA Banking Regulations 2020 are designed to specify the procedures and framework for setting up banking units in an IFSC. The regulations elaborate on the setting-up process, including the requirement of a licence. The regulations also mention the prudential regulatory requirements for a Banking Unit in an IFSC, which include the general prudential requirements, liquidity ratios, maintenance of Leverage Ratio by Banking Units, exposure ceiling, reserve requirements, and lender of last resort.
Provisions with respect to permissible activities for a Baking Unit in an IFSC are provided. Such provisions comprise of subjects including currency for conducting business, foreign currency accounts, transactions through foreign currency accounts, and permitted activities. The regulations also lay down operational requirements for businesses wanting to open their banking units in the IFSC.
Further, these regulations also mention the requirement for Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) measures for such Banking Units.
