2023 Amendments To The IFSC Banking Regulations: Strengthening The Regulatory Framework For Banking In The IFSC

International Financial Services Centres Authority was established on April 27, 2020 under International Financial Services Centres Authority Act, 2019. • Prudential regulatory requirements and norms: The Regulations require units to adhere to norms and guidelines prescribed by IFSCA, from time to time, in relation to maintaining liquidity coverage ratio, net stable funding ratio, leverage ratio; exposure ceiling and ascertaining the liabilities pertaining to reserve ratio requirements, for the Parent Bank/ units. • Risk management: The IFSCA Banking Regulations require deposits of banking units to be insured as per Deposit Insurance and Credit Guarantee Corporation Act, 1961, and rules/regulations thereto. This will reduce unnecessary and irrelevant processing time and involvement for both the applicant and the IFCA; • introduction of prudential regulatory requirements whereby, banking units shall order to the norms and guidelines specified by IFSCA, and in the case of IFSC banking unit - it shall also comply with home regulator directions. Though the requirements under RBI are as per international norms, it would be interesting to see the reason for substituting this with IFSCA, under the present amendment, once the guidelines and norms are issued in this regard; and • from the risk avoidance perspective deposits may be insured as provided under Deposit Insurance and Credit Guarantee Corporation Act, 1961, and any rules or regulations made thereunder.