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

Vikram Finserv IFC, an IFSCA-registered Finance Company, proposes to lend to an Indian resident individual for personal consumption in rupees. Which view is correct?

This is not permitted. A Finance Company in IFSC is limited to specified financing activities and operates in foreign currency, so rupee consumption lending to a resident individual falls outside its permitted business, whatever the loan size or Indian branch arrangement.

  1. APermitted, since any retail lending is allowed to a Finance Company
  2. BPermitted only if the loan is below USD 10,000
  3. CNot permitted, as Finance Company activities are in foreign currency and for specified financing activities, not rupee retail lendingCorrect
  4. DPermitted if the lending is done through an Indian branch

Explanation

IFSC entities generally transact in permitted foreign currencies, and a Finance Company is confined to the specified financing activities. Rupee personal loans to a resident individual are outside that scope. A small value limit does not change this.

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