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

Sagar Bank's IBU in GIFT IFSC mainly lends in US dollars to foreign corporates. Its compliance head reviews which currency framework applies to its books. Which statement is correct?

An IBU generally transacts in permitted foreign currencies and keeps separate books for its IFSC operations, apart from the parent bank's domestic business. This separation supports distinct supervision and reporting by IFSCA of the offshore-style activity carried on in GIFT City.

  1. AIts transactions are generally conducted in permitted foreign currencies, and the IBU maintains books separately from the domestic operations of the bankCorrect
  2. BIts transactions must be denominated only in Indian rupees, with foreign currency converted at each transaction
  3. CIts books are merged with the domestic banking books and reported as a single balance sheet line
  4. DIts transactions are conducted in any currency, but need not be separately accounted from domestic operations

Explanation

IBUs deal mainly in permitted foreign currencies and are required to keep separate books and financial statements for the IFSC operations, which supports regulatory supervision. Merging with domestic books or rupee-only dealing is incorrect.

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