RBI/2017-18/177
DBR.IBD.BC. 105/23.13.004/2017-18
May
17, 2018
All Scheduled Commercial Banks
(excluding Regional Rural Banks)
Dear Sir/Madam
Setting
up of IFSC Banking Units (IBUs) – Permissible activities
Please refer to RBI circular DBR.IBD.BC.14570/23.13.004/2014-15 dated
April 01, 2015, as modified from time to time, setting out RBI
directions relating to IFSC Banking Units (IBUs).
2. In terms of para 2.3 of the circular, the parent
bank will be required to provide a minimum capital of USD 20 million or
equivalent in any foreign currency to start their IBU operations and the
IBU should maintain the minimum prescribed regulatory capital on an
on-going basis as per regulations amended from time to time.
3. In this regard, we have received 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 directions stand modified as follows:
4. The existing paragraph No.2.3 of Annex I of the aforesaid circular dated
April 1, 2015 is amended to read as follows:
With a view to enabling IBUs to
start their 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.
5. The existing paragraph No.2.3 of Annex II of the aforesaid circular dated
April 1, 2015 is amended to read as follows:
With a view to enabling IBUs to
start their 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.
6. All other terms and conditions contained in the
aforementioned circular remain unchanged.
7. An updated copy of the RBI circular on IBU dated April 01, 2015 incorporating
the amendments made on January 07, 2016, November 10, 2016, April
10, 2017and May 17, 2018 is available on RBI’s website.
Yours faithfully
(Prakash Baliarsingh)
Chief General Manager
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