IFSCA (Banking) (Second Amendment) Regulations, 2021

INTERNATIONAL FINANCIAL SERVICES CENTRES AUTHORITY

NOTIFICATION

Gandhinagar, the 5th July, 2021

International Financial Services Centres Authority (Banking) (Second Amendment) Regulations, 2021

IFSCA/2021-22/GN/REG013.- In exercise of the powers conferred by sub-section (1) of section 28 read with sub-section (1) of Section 12 and sub-section (1) of Section 13 of the International Financial Services Centres Authority Act, 2019, the International Financial Services Centres Authority hereby makes the following regulations, further to amend the International Financial Services Centres Authority (Banking) Regulations, 2020 (as amended), namely:-

1. (1) These regulations may be called the International Financial Services Centres Authority (Banking) (Second Amendment) Regulations, 2021.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the International Financial Services Centres Authority (Banking) Regulations, 2020 (as amended) (hereinafter referred to as the Principal Regulations), clause (c) of sub regulation (1) of regulation 2 shall be substituted by the following, namely,-

“(c) “IFSC Banking Unit” or “Banking Unit” means a financial institution under clause (c ) of sub-section (1) of Section 3 of the Act that is licensed by the Authority to undertake permissible activities under these regulations;”

3. In the Principal Regulations, the clauses (e), (g), (k) and (l) in sub-regulation (1) of regulation 2 shall be omitted.

4. In the Principal Regulations, after clause (e) of sub-regulation (1) of regulation 2, following clause shall be inserted, namely,-

“(ea) “Home Regulator” means the regulatory authority that is responsible for regulating the Parent Bank in the jurisdiction where the Parent Bank is incorporated, licensed or established;”

5. In the Principal Regulations, clause (a) of sub-regulation (3) of regulation 3 shall be substituted, by the following, namely,-

“(a) The Parent bank shall provide necessary capital for the BU, subject to a minimum of USD 20 million or such other level of capital that may be specified by the Authority. Such capital shall be maintained at the Parent Bank in the manner as specified by the Authority.”

6. In the Principal Regulations, sub-regulation (2) of regulation 4 shall be substituted by the following, namely,-

” (2) Banking Units shall continue to comply with the directions and instructions issued by their Home Regulator, unless otherwise specified by the Authority.”

7. In the Principal Regulations, the regulation 6 shall be substituted by the following, namely,-

“6. Maintenance of Leverage Ratio

(2) Banking Unit shall adhere to the norms and guidelines relating to leverage ratio as may be specified by the Authority, from time to time.”

8. In the Principal Regulations, the regulation 7 shall be substituted by the following, namely,-

“7. Exposure ceiling

Banking Unit shall adhere to the norms and guidelines relating to exposure ceiling as may be specified by the Authority, from time to time.”

9. In the Principal Regulations, the regulation 8 shall be substituted by the following, namely,-

“8. Reserve requirements

The liabilities of a Banking Unit, other than the deposits raised from individuals resident in India or outside India, shall be exempt from Cash Reserve Ratio or other such requirements. The deposits raised from individuals resident in India or outside India shall be subject to such reserve ratios as may be specified by the Authority.”

10. In the Principal Regulations, the regulation 11 shall be substituted by the following, namely,-

“11. Foreign Currency Accounts

(1) Banking Units may open accounts in a freely convertible foreign currency for individuals and corporate or institutional entities, resident in India or outside India, subject to such conditions as may be specified by the Authority.

(2) Individuals who are person resident in India are permitted to open, hold and maintain accounts in a freely convertible foreign currency, with a Banking Unit, for undertaking transactions connected with or arising from any permissible current or capital account transaction or a combination of both as specified in the Liberalised Remittance Scheme (LRS) of the Reserve Bank.”

11. In the Principal Regulations, for the regulation 13, the following regulation shall be substituted, namely:

“13. Permitted Activities

Banking Units may undertake any or all of the activities mentioned under clause (e) of sub-section (1) of Section 3 of the Act or Section 6 of the Banking Regulation Act, 1949, except those expressly prohibited by the Authority, subject to compliance with such terms and conditions or guidelines as may be specified by the Authority, including matters relating to design, execution and risk management.”

INJETI SRINIVAS, Chairperson

[ADVT.-III/4/Exty./143/2021-22]

Note:

1. The International Financial Services Centres Authority (Banking) Regulations, 2020 were published in the Gazette of India Extraordinary vide notification No. IFSCA/2020-21/GN/REG004 on 20^th November 2020, to be read with the International Financial Services Centres Authority Corrigendum published in the Gazette of India Extraordinary vide notification No. CG-MH-E-12052021-226980, on 12^th May, 2021; and

2. The International Financial Services Centres Authority (Banking) (Amendment) Regulations, 2021 were published in the Gazette of India Extraordinary vide notification No. IFSCA/2020-21/GN/REG009 on 25^th March, 2021.