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

Harbour Marine Leasing IFSC, a finance company in GIFT City, leases a bulk carrier to a shipping line incorporated in Singapore, with rentals payable in US dollars. Under the IFSC framework, how is this transaction viewed for foreign exchange purposes?

The transaction is permitted. An IFSC unit is treated as a person resident outside India under foreign exchange law and conducts business in freely convertible foreign currency, so leasing a ship to a Singapore lessee with dollar rentals needs no rupee settlement or per-receipt RBI approval.

  1. AIt is barred because the lessee is not an Indian resident
  2. BIt requires RBI approval for every rental receipt
  3. CIt must be settled in rupees through an authorised dealer in the domestic area
  4. DIt is permitted, as the IFSC unit is treated as a person resident outside India and transacts in foreign currencyCorrect

Explanation

IFSC units are treated as non-residents under FEMA for their IFSC business and deal in freely convertible foreign currency, so leasing a ship to a foreign lessee with dollar rentals is a normal activity. Rupee settlement is not required.

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