IFSC banking units can open foreign currency current accounts

The RBI on Monday said IFSC Banking Units can open foreign currency current accounts of entities operating in IFSC and of non-resident institutional investors to facilitate their investment transactions.

However, IBUs are not allowed to open savings accounts.

Issuing instructions regarding permissible activities of IBUs, the RBI further said it will not prescribe any limit for raising short-term liabilities from banks.

“However, the IBUs must maintain LCR (Liquidity Coverage Ratio) as applicable to Indian banks on a stand-alone basis and strictly follow the liquidity risk management guidelines issued by RBI to banks,” it said.

IBUs can also open foreign currency current accounts (including escrow accounts) of their corporate borrowers subject to the provisions of FEMA 1999 and other applicable regulations.

“However, IBUs cannot raise liabilities from retail customers including high net worth individuals (HNIs),” as per the instructions.

Also, no cheque facility will be available for holders of current accounts in the IBUs. All transactions through these accounts must be undertaken via bank transfers.

Further, the IBUs will be required to scrupulously follow Know Your Customer (KYC), Combating of Financing of Terrorism (CFT) and other anti-money laundering instructions.

Besides, IBUs are prohibited from undertaking cash transaction

Source: Financial Express