As per RBI’s latest notification IBUs (IFSC Banking Units) cannot open SB account. IBUs are also prohibited from undertaking cash transactions. They can open foreign currency current accounts (including escrow accounts) of units operating in IFSC and of non-resident institutional investors to facilitate their investment transactions subject to the provisions of FEMA 1999 and other applicable regulations. Also, no cheque facility will be available for holders of current accounts in the IBUs and all transactions through these accounts must be undertaken via bank transfers.”
The notification further mentions that “IBUs cannot raise liabilities from retail customers including high net worth individuals (HNIs)”. Issuing instructions regarding permissible activities of IBUs, the Central Bank said that it will not prescribe any limit for raising short-term liabilities from banks. “RBI 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. Further, NSFR will also be applicable to IBUs as and when it is applied to Indian banks,” the notification said.
It is obligatory on the part of IBUs to meticulously follow “Know Your Customer (KYC)”, Combating of Financing of Terrorism (CFT) and other anti-money laundering instructions issued by RBI from time to time, including the reporting thereof, as prescribed by the Reserve Bank /other agencies in India.
