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CS Professional · IFSCA - Regulations, Listing and Compliances · Banking Services and Finance Companies in IFSC

An IBU is run by Sahyadri Bank. Its head office asks the IBU to show its IFSC assets mixed with the parent's domestic books, without separate accounts, to save cost. Which is the correct position?

The request is not acceptable. An IBU must function as a separate business unit and keep separately identifiable books and financial statements for its IFSC business, so that foreign currency operations stay distinct from the parent bank's domestic operations. Auditor consent or small customer numbers cannot override this.

  1. AAcceptable if total consolidated profit is reported
  2. BAcceptable if the IBU has fewer than ten customers
  3. CAcceptable with approval of the statutory auditor alone
  4. DNot acceptable; the IBU must be a separate business unit with its own separately identifiable books and financial statements for its IFSC businessCorrect

Explanation

The IBU is a separate business unit with distinct accounting so that IFSC operations are identifiable and the foreign currency business is ring-fenced from domestic operations. Mixing books, even with auditor consent or low volume, defeats this and is not permitted.

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