The International Financial Services Authority (IFSCA) on May 29, 2023, issued a consultation paper on the proposed IFSCA (Banking) (Amendment) Regulations, 2023 to seek comments/views/suggestions from the public.
The following has been stated: -
•The IFSCA (Banking) Regulations, 2020 (as amended) currently permit a parent bank to set up only one Banking Unit in an IFSC and only as a branch. The banking business in IFSC has witnessed steady growth since the banking regulations were first notified on November 20, 2020. While the branch model is a useful starting point for the commencement of banking operations, especially in new jurisdictions like GIFT-IFSC, future growth of the sector requires consideration of other models including operating as a subsidiary company of the parent bank.
•The relative advantages and disadvantages of different organisational models have to be looked at both from the point of view of the Parent bank and of the home/host regulators.
•In the above context, it is felt necessary to enable the banking business to be conducted in IFSC under the subsidiary model to complement and as an evolution from the branch model. Accordingly, the proposed amendments to the banking regulations, inter alia, propose to :
a. Permit IBUs to be set up as a subsidiary company of the parent bank
b. Specify the base capital required to commence operation as a subsidiary company of the parent bank at USD 50 million with the discretion provided
to the Authority to specify any other level of capital.
•The draft amendment regulations are placed on the website of the IFSCA. The general public and stakeholders are requested to forward their comments/suggestions through e-mail to Mr. Supriyo Bhattacharjee at [email protected] and Mrs. Manisha Khuntia at [email protected] on or before June 19, 2023, in the format attached to the document. The comments may be provided in MS Word or MS Excel format only.
