Operational guidelines on International Financial Services Centre (IFSC)

Atten­tion of Autho­rised Deal­ers Cat­e­go­ry – I (AD Cat­e­go­ry — I) banks is invit­ed to the For­eign Exchange Man­age­ment (Inter­na­tion­al Finan­cial Ser­vices Cen­tre) Reg­u­la­tions 2015 dat­ed March 2, 2015, a copy of which is at Annex.

2. In terms of the above Reg­u­la­tions, a finan­cial insti­tu­tion or a branch of a finan­cial insti­tu­tion set up in the IFSC and per­mit­ted / recog­nised as such by the Gov­ern­ment or a Reg­u­la­to­ry Author­i­ty shall be treat­ed as per­son res­i­dent out­side India. There­fore, their trans­ac­tion with a per­son res­i­dent in India shall be treat­ed as a trans­ac­tion between a res­i­dent and non- res­i­dent and shall be sub­ject to the pro­vi­sions of For­eign Exchange Man­age­ment Act, 1999 and the Rules/Regulations/Directions issued thereunder.

3. The finan­cial trans­ac­tion in this con­text shall mean mak­ing or receiv­ing pay­ment, draw­ing, issu­ing or nego­ti­at­ing any bills of exchange or promis­so­ry note, trans­fer­ring any secu­ri­ty or acknowl­edg­ing any debt. Sim­i­lar­ly, finan­cial ser­vice shall mean any activ­i­ty which a finan­cial insti­tu­tion is per­mit­ted to car­ry on by the Respec­tive Act of the Par­lia­ment or Gov­ern­ment of India or any Reg­u­la­to­ry Author­i­ty empow­ered to reg­u­late the con­cerned finan­cial institution.

4 It may be not­ed that sub­ject to the pro­vi­sions of Sec­tion 1 (3) of For­eign Exchange Man­age­ment Act, 1999, noth­ing con­tained in any oth­er Reg­u­la­tions shall apply to a finan­cial insti­tu­tion or a branch of a finan­cial insti­tu­tion set up in an IFSC unless there is some express and spe­cif­ic pro­vi­sion to that effect in the For­eign Exchange Man­age­ment (Inter­na­tion­al Finan­cial Ser­vices Cen­tre) Reg­u­la­tions 2015 or the oth­er Regulations.

5. AD Cat­e­go­ry – I banks may bring the con­tents of this cir­cu­lar to the notice of their con­stituents and cus­tomers concerned.

6. Reserve Bank of India has issued the sub­ject Noti­fi­ca­tion through the For­eign Exchange Man­age­ment (Inter­na­tion­al Finan­cial Ser­vices Cen­tre) Reg­u­la­tions, 2015 which have been noti­fied vide Noti­fi­ca­tion No.FEMA.339/2015-RB dat­ed March 2, 2015, vide G.S.R. No. 218(E) dat­ed March 23, 2015.

7. The direc­tions con­tained in this cir­cu­lar have been issued under sec­tion of 47 For­eign Exchange Man­age­ment Act, 1999 (42 of 1999) and are with­out prej­u­dice to per­mis­sions / approvals, if any, required under any oth­er law.