RBI allows banking units in Gift City to open foreign currency accounts

MUMBAI: Reserve Bank of India (RBI) has allowed local banking units to open foreign currency current accounts for companies and non resident Indians (NRIs) in the Gujarat based international financial services centre (IFSC), changing an earlier policy that did not allow for any savings or current accounts in this centre.

Companies based in the IFSC can now open current account while NRIs can also open accounts to facilitate their investment transactions, RBI said. However, these banking units will not be able to raise deposits from retail customers like high net worth individuals (HNIs).

"Also, no cheque facility will be available for holders of current accounts in the IBUs. All transactions through these accounts must be undertaken via bank transfers," RBI said.

RBI has also done away with the limit for raising short-term liabilities for banks. However, these units will have to maintain a liquidity coverage ratio (LCR) on par with onshore banks.

Liquidity coverage ratio is the percentage of liquid assets a bank should hold in order to meet its short-term obligations. Indian banks have to maintain 70% LCR starting from January 1 this year. This ratio will increase to 100% in January 2019.