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GUIDELINES FOR IFSCs

  • While officially inaugurating the IFSC, the Finance Minister released a booklet on the rules for IFSCs.
  • The booklet is a compilation of the guidelines issued by the various statutory regulatory authorities of India.
  • Some of the salient guidelines issued by various Regulators for setting up offices are:

Reserve Bank of India (RBI)

  • Domestic and Foreign Banks already having a presence in India can set up its offices in IFSCs.
  • Such banks aspiring to set up operations should have a capital of USD 20 million
  • Banking units will not be permitted to cater to individuals
  • The branches will be exempt to adhere to the various regulatory requirements related to Priority Sector lending, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR)
  • The banks will not have any cash transactions
  • Banks will be allowed to have only non-rupee denominated transactions.

Securities and Exchange Board of India (SEBI)

  • Any existing Indian Stock Exchange (SE) which is already recognized by SEBI or a SE of foreign jurisdiction can form a subsidiary to provide the services of a Stock Exchange in IFSC.
  • Exchanges desirous of setting up operations should have at-least 51% paid-up equity share capital held by it and the remaining shares can be held by any other recognized SE, even of foreign jurisdiction.
  • This ensures that the share-holding norms are relaxed for the Stock Exchanges
  • Indians who are resident in India can trade in contracts offered in IFSC as per the liberalized remittance scheme of RBI
  • Under the Foreign Exchange Management Act, Resident Indians with a net-worth of at-least USD 1 million during the previous fiscal year can invest funds off-shore

Insurance Regulatory and Development Authority (IRDA)

  • Any existing Indian Insurance Company can open an IFSC Insurance Office in the SEZ.
  • Foreign Insurance and Companies undertaking re-insurance business should have a minimum capital of INR 10 crores.
  • Such offices are allowed to accept re-insurance business from outside the country.
 
 
 
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