Gandhinagar

The video presented above contains presentation on highlights of regulatory guidelines notified by union Commerce Ministry, following notifications issued by FEMA, RBI(International Banking Unit guidelines), SEBI, Insurance regulatory authority etc. This video was captured today in Gandhinagar in a function which witnessed release of a booklet containing guidelines for International Financial Services Centre at GIFT(Gujarat International Finance Tech)City.

Banks can’t deal in cash at IFSC: RBI

Reserve Bank Deputy Governor R Gandhi today made it clear that domestic banks setting up shops at the International Financial Services Centre (IFSC) here must adhere to anti-money laundering norms and refrain from doing cash transactions.

He was speaking at the conference on ‘Regulatory Framework for IFSC’ after the launch of the country’s first IFSC at the GIFT City here.

While describing the rules and regulations for domestic banks intending to set up IFSC Banking Units (IBUs) at the centre, Gandhi said such facilities will be governed by the norms laid by RBI.

“The IBUs will be required to scrupulously follow instructions issued by the RBI on combating of financial terrorism (CFT) and other anti-money laundering measures. IBUs are prohibited from undertaking cash transactions. It has to be based on account transfers.”

On April 1, the RBI had issued relaxed norms for setting banking up units in the IFSC by relaxing the mandatory reserve requirements for domestic and foreign banks.

The banking units within the IFSC will be able to transact with non-resident entities, other than individual, retail customers, or HNIs, while all transactions of IBUs would need be done in non-rupee currencies, the RBI had said.

Issuing operational guidelines, RBI said “IBUs will be exempted from liabilities of both cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements. The parent bank will be required to provide a minimum capital of USD 20 million or equivalent in any foreign currency to its IBU.”

RBI further said only those foreign banks which are present in India would be allowed to set up unit at IFSC.

“Each of the eligible banks would be permitted to establish only one IBU in each IFSC. For most regulatory purposes, an IBU will be treated on par with a foreign branch of an Indian bank,” RBI said in a notification.

While IBUs can raise funds, including borrowing in foreign currency, from non-residents, deployment of funds can be for both residents as well as non-residents.

Gandhi said all transactions of IBUs should be in any foreign currency. “In addition, IBUs are not allowed to open any current or savings accounts. They cannot issue bearer instruments or cheques. All payment transactions must be undertaken via bank transfers.”

Further, he said banks interested in setting up IBUs will be required to obtain permission from RBI.

On the issue of minimum requirement of capital, Gandhi said the parent bank will be required to provide a minimum capital of USD 20 million or equivalent in any foreign exchange currency to its IBU.

“Through IFSC India can become re-insurance hub in SAARC”

Putting high hopes on the India’s first International Financial Services Centre(IFSC) at GIFT City here, insurance regulator IRDAI’s chief T S Vijayan said it can make India a leading player in the multi-billion dollar re-insurance segment.

Speaking at a conference on `Regulatory Framework for IFSC in India’ at Mahatma Mandir here, he said that India can become re-insurance hub of SAARC countries.

“Indian insurance industry is very big, as Rs 4 lakh crore is collected as insurance premium every year. Out of that, Rs 7,300 crore is paid to re-insurance companies abroad, because we don’t have the capacity. Globally, USD 220 billion is collected every year towards re-insurance premium. That is the scale of this business,” said Vijayan.

“There are around 100 such re-insurance firms…. Our re-insurnce business goes abroad because we don’t have the capacity. We are targeting these firms. We want to invite them to start their operations at IFSC. This can make India a re-insurance hub of SAARC countries,” said Vijayan.

Re-insurance is the insurance which is purchased by other companies as part of risk sharing strategy. When an insured person pays premium to the original insurance firm, some part of it goes to the re-insurance firms.

Describing the rules and regulations for such Indian as well as foreign firms wanting to start the business at IFSC, Vijayan stated that India too has enough capacity to be a leader in re-insurance business, provided it creates an environment and the required infrastructure.

“IRDA will provide dynamic regulations to attract these re-insurance firms to start their business here, which will ultimately increase our capacity in re-insurance segment. IFSC is capable of making all these things available which were not in the past,” said Vijayan.

– DeshGujarat