IFSCA FAQs on Banking Regulations for IBUs in GIFT IFSC: 5 November 2026 — Clarity, Not New Rules

The International Financial Services Centres Authority (IFSCA) has published a single, consolidated set of answers to the most common questions about banking in GIFT IFSC — and the first thing to understand is what it is not. The document, listed on the IFSCA website on 5 November 2026 and headed "Frequently Asked Questions (FAQs) On IFSCA (Banking) Regulations, 2020 (as amended), IFSCA Banking Handbook and the Circulars on Internet Banking", is an 8-page FAQ carrying 23 questions: 16 in Section I on the Banking Regulations and the Banking Handbook, and 7 in Section II on internet banking. It introduces no new rule, no new deadline and no changed requirement — it clarifies and restates the instruments that already apply to IFSC Banking Units (IBUs). No reference number or signatory is printed on the document, and no date appears inside the PDF itself; the listing date is 5 November 2026.

In plain business-owner language: if you are a bank weighing an IFSC presence, or an existing IBU checking whether the goalposts have moved, they have not. This FAQ is a reference sheet — a single place to find the licensing route, the capital and liquidity numbers, the governance rules, and the internet-banking expectations — not a new compliance burden. The only change the document notes is one that already happened: a 30 June 2026 amendment that made displaying live market FX rates on the customer dashboard non-mandatory.

What the FAQ covers

The FAQ is organised in two sections. Section I (Questions 1–16) deals with the IFSCA (Banking) Regulations, 2020 (as amended) and the IFSCA Banking Handbook: the legal form of a banking unit, licensing, the structure of the Handbook, governance, permissible activities, prudential requirements, fees, anti-money-laundering compliance, global administrative offices and representative offices. Section II (Questions 1–7) deals with the circulars on internet banking, referring to the circulars dated 2 April 2024 and 29 December 2025, as amended.

Because the document is a clarification, the article below reports what the FAQ says — and where it restates an existing position rather than creating one, it says so. Nothing in this article goes beyond the FAQ and the instruments it cites.

The only legal form: a branch of the parent bank

The FAQ's first answer settles the most basic question. At present, the only legal form in which a banking unit can be set up in an IFSC is a branch of the parent bank — called an IFSC Banking Unit (IBU). There is no separate-subsidiary route for banking in the IFSC under the current framework. That single point frames everything that follows: capital, liquidity and governance are all applied at the level of the parent bank and its branch, not a standalone IFSC entity.

The FAQ also confirms the reach of Indian law in the IFSC. Unless specifically exempted, all domestic laws of India apply to an IFSC, and transactions with persons resident in India are subject to the Foreign Exchange Management Act, 1999 (FEMA). Banks planning an IBU should not assume the IFSC is a carve-out from Indian law generally — it is a carve-out only where an exemption has specifically been made.

Licensing: how a bank applies for an IBU

A banking company needs a licence from the Authority to set up an IBU. The Parent Bank applies on the Single Window IT System portal — swit.ifsca.gov.in — under regulation 3 of the IFSCA (Banking) Regulations, 2020 (as amended) and module 1 on Licensing in the Banking Handbook: General Directions.

The application must be supported by four things:

• Regulatory capital: an undertaking by the Parent Bank to maintain the necessary regulatory capital for the IBU, "subject to a minimum of USD 20 million or such other level of capital that may be specified by the Authority", maintained at the Parent Bank as specified.
• Home-regulator clearance: a No Objection Letter from the Parent Bank's Home Regulator.
• Prudential undertakings: undertakings on adequate liquid assets and financial resources, compliance with the home regulator's prudential requirements, sharing the capital-adequacy, liquidity-risk and leverage-ratio reports submitted to the home regulator, and notifying the Authority forthwith on any breach of the CRAR, LCR, NSFR and Leverage Ratio(s) set by the home regulator.
• Any other requirement specified by the Authority.

A banking company with no presence in India may also apply. In that case it must additionally meet section 22(3A) of the Banking Regulation Act, 1949; the Authority may seek the opinion of the Government of India; and additional conditions apply under para 6 of the IFSCA Banking Handbook: General Directions. The FAQ does not list those additional conditions — the Handbook text itself is the source to check.

The Banking Handbook in three parts

The IFSCA Banking Handbook is not a single rulebook; it has three components, and the FAQ sets out what each does:

• General directions (GEN): licensing, "controlled" and "designated" functions, "approved/authorized individuals", broad principles, and the Authority's supervisory functions.
• Conduct of Business directions (COB): minimum conduct standards, how clients are treated, dealings with counterparties and markets, and market integrity.
• Prudential directions (PRU): the prudential guidelines of the home regulator apply unless otherwise specified, plus the Handbook's minimum non-quantitative prudential requirements.

That division matters in practice. A question about who may run an IBU sits in GEN; a question about how the IBU treats a client sits in COB; a question about liquidity sits in PRU — and the FAQ's answers point back to the relevant module each time.

Governance: the Governing Body and Approved Individuals

Every IBU is overseen by a Governing Body. Its composition is set out in para 2(1) of module 2 of the General Directions (as amended); its duties are in para 5 of the same module. The banking company must appoint the Governing Body before the IBU commences operations and inform the Authority in writing. The FAQ states the Governing Body "shall have at least 3 members".

The FAQ also defines an "Approved Individual": an employee of the IBU working out of the IFSC, approved by the Authority for specific functions. Two roles must be Approved Individuals at all times — the CEO or Head of the IBU, and the Compliance Officer. A bank setting up an IBU should therefore plan its senior appointments and approvals in parallel with the licence application, not after it.

What an IBU may do

An IBU may undertake any or all of the activities in clause (e) of sub-section (1) of Section 3 of the IFSCA Act, 2019 and Section 6 of the Banking Regulation Act, 1949 — except those explicitly prohibited by the Home Regulator of the Parent Bank or by the Authority — subject to the terms, conditions and guidelines specified by the Authority. Outsourcing is addressed in para 3 of the module on Systems and Controls in the General Directions; the FAQ points to that module rather than restating the guidelines.

The prudential numbers at a glance

The prudential answers are the part of the FAQ most likely to be quoted, because they carry hard figures. They are collected in the table below, exactly as the FAQ states them:

Two points in that table deserve attention. First, the LCR and NSFR are maintained on a standalone basis at a level that is the higher of the minimum ratio prescribed by the home regulator of the banking company (of which the IBU is a branch) or as specified by the Authority from time to time — so an IBU whose home regulator demands more than 100 per cent LCR must meet the higher figure. Second, the NSFR position is explicitly "not specified at present", which is a statement about the current position, not a promise that it will stay that way.

On reporting, IBUs must submit copies of the prudential reports they submit to their home regulator; the formats are available under Downloads > Banking on the Authority's website. The FAQ does not list the report formats or their due dates — those sit on the IFSCA website.

Fees: three categories, no amounts in the FAQ

Fees fall into three categories: (a) a one-time application fee payable with the application; (b) a one-time Licence fee payable after In-principle approval; and (c) a recurring annual fee based on the annual turnover of the IBU. The details are in the circular "Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC or persons seeking guidance under the Informal Guidance Scheme" dated 2 March 2026. The FAQ itself states no fee amounts — none are given in this article, and any figure quoted elsewhere should be checked against that circular.

AML, KYC and third-party reliance

IBUs must comply with the IFSCA (AML, CFT and KYC) Guidelines, 2022 (as amended). The FAQ confirms that an IBU may rely on a third party for KYC, to the extent and subject to the conditions in those guidelines — Chapter VI of the guidelines deals with third-party reliance on Customer Due Diligence measures. Banks should read Chapter VI itself before relying on a third party for any part of customer due diligence; the FAQ confirms the route exists, it does not set out the conditions.

Global Administrative Offices and Representative Offices

Global Administrative Office (GAO). A GAO is a financial institution set up in the IFSC by a Banking Company that (a) manages, administers or coordinates the operations of the Parent Bank or Group entities in the IFSC or outside, and (b) provides support services for the execution of permitted activities in the IFSC or outside. The governing text is Module No. 17 on Global Administrative Office in the Conduct of Business Directions.

Three separation rules apply. A GAO must be in the IFSC but "not on the same or contiguous premises as the branch of the same bank, unless specifically permitted by the Authority". An existing IBU setting up a GAO must seek approval for broad banding of the existing SEZ Unit. And the GAO's resources — including the Head-GAO and its personnel — must be kept separate and distinct from the IBU or Representative Office. A bank planning a GAO alongside an IBU should budget for separate premises and separate staff from the start.

Representative Office (RO). A banking company incorporated in India or outside India may set up a Representative Office under section 3(9) of the IFSCA (Banking) Regulation, 2020 (as amended). Its permitted activities are set out in para 6 of module 12 ("Representative Office") in the Conduct of Business Directions. The FAQ does not list those activities — module 12 is the source to check.

Internet banking: the seven answers in Section II

Section II of the FAQ deals with the internet-banking circulars dated 2 April 2024 and 29 December 2025, as amended. Its seven answers are practical, and one of them contains the document's only noted change:

• Live FX rates (Q1): live market rates for currency conversions, including the applicable spread, must be displayed on the customer's digital dashboard — not card rates. But per para 4 of the Amendment dated 30 June 2026, "the ability to view live market rates for currency conversions including the applicable spread offered to its customers has been made non mandatory." This is the FAQ's only change, and it predates the FAQ itself.
• Statement formats (Q2): CSV, JSON and XML are illustrative sample formats only. Statements may be in any other machine-readable format; the customer's requirement is the guiding principle.
• Fintech partnerships and APIs (Q3): if the IBU partners with a fintech entity, it may provide access to selected APIs for specific purposes such as account verification and payments.
• Automated payouts (Q4): the customer must be given the facility to set up an automated payout schedule — one-time, date-based, recurring or rule-based. The IBU may proceed subject to verification and the prescribed procedures.
• Pre-execution validation (Q5): IBUs are expected, to the extent feasible, to avail third-party validation tools to identify incorrect account numbers, currency mismatches or regulatory non-compliance before a transaction is executed.
• Corporate account access (Q6): corporate current-account user access management, including Master User access, "may be according to bank's policy".
• Consent (Q7): the requirement of explicit consent for registering or de-registering internet banking "applies only for existing customers".

For IBU technology and product teams, Q1 is the one to act on — or rather, to stop acting on: the live-rate display that the earlier circulars appeared to require is now expressly non-mandatory. The other six answers confirm existing practice rather than changing it.

Who is affected

• Banks planning an IBU in GIFT IFSC — the FAQ is effectively the entry checklist: branch form only, licence via the Single Window portal, USD 20 million minimum capital undertaking, home-regulator No Objection Letter, and the prudential undertakings listed above.
• Banks with no presence in India — they may apply, but must also meet section 22(3A) of the Banking Regulation Act, 1949, and the Authority may seek the Government of India's opinion.
• Existing IBUs — the FAQ restates their standing obligations: Governing Body of at least 3 members, CEO/Head-IBU and Compliance Officer as Approved Individuals at all times, LCR of at least 100 per cent, RDRR of 3 per cent on retail deposits, quarterly leverage-ratio certification, and home-regulator prudential reporting.
• IBU customers using internet banking — the Section II answers set the expectations for dashboards, statement formats, automated payouts and consent, and confirm that live FX-rate display is now non-mandatory.
• Banks planning a GAO or Representative Office — the separation rules for a GAO and the module-12 basis for an RO are restated, with premises and staffing separation as the practical consequence.
• Compliance, legal and technology teams at parent banks — the FAQ points to the Handbook modules, the March 2026 fee circular and the AML Guidelines rather than replacing them, so each still needs to be read in full.

What to do next

For a bank planning an IBU:

1. Confirm the branch-only form with your board — an IBU is a branch of the parent bank, so the capital undertaking (minimum USD 20 million) and the home-regulator No Objection Letter sit at parent level.
2. Apply on the Single Window IT System portal (swit.ifsca.gov.in) under regulation 3 of the IFSCA (Banking) Regulations, 2020 (as amended) and module 1 on Licensing in the Banking Handbook: General Directions, with the undertakings listed in this article.
3. Appoint the Governing Body before commencement of operations — at least 3 members — and inform the Authority in writing; line up Approved Individual approvals for the CEO/Head-IBU and the Compliance Officer in parallel.
4. Read the Handbook modules the FAQ points to — module 2 (Governing Body), the module on Systems and Controls (outsourcing), module 12 (Representative Office) and Module No. 17 (Global Administrative Office) — plus the 2 March 2026 fee circular for the actual fee amounts, which the FAQ does not state.

For an existing IBU:

1. Check the internet-banking position against Q1 — live FX-rate display is now non-mandatory following the 30 June 2026 amendment; confirm your dashboard approach is a deliberate choice, not an unfinished build.
2. Confirm the prudential numbers — LCR at least 100 per cent (or the home regulator's higher minimum), RDRR at 3 per cent of retail deposits daily, quarterly leverage-ratio certificate signed by an authorized official of the parent bank.
3. Review third-party KYC reliance against Chapter VI of the IFSCA (AML, CFT and KYC) Guidelines, 2022 (as amended), before relying on a third party for customer due diligence.
4. If a GAO is planned, keep it separate — separate premises from the branch unless specifically permitted, approval for broad banding of the existing SEZ Unit, and separate Head-GAO and personnel.

What the FAQ does not cover

The following are marked NOT CHECKED — the FAQ as read does not address them, or they were not compared:

• The fee amounts. NOT CHECKED — the FAQ states only the three fee categories; the amounts are in the 2 March 2026 fee circular, which was not read for this article.
• The additional conditions for a banking company with no presence in India. NOT CHECKED — para 6 of the IFSCA Banking Handbook: General Directions was cited by the FAQ but not read.
• The composition and duties of the Governing Body in detail. NOT CHECKED — para 2(1) and para 5 of module 2 of the General Directions were cited but not read; only the "at least 3 members" figure is stated in the FAQ.
• The Representative Office activities in module 12. NOT CHECKED — para 6 of module 12 was cited but not read.
• The prudential report formats and due dates. NOT CHECKED — the FAQ points to Downloads > Banking on the IFSCA website; the formats were not read.
• Whether the LCR, NSFR, leverage-ratio or RDRR positions changed from earlier circulars. NOT CHECKED — the FAQ restates the current position; no earlier circular was compared.

FAQs

What is the IFSCA FAQ on Banking Regulations, 2020?
It is the document headed "Frequently Asked Questions (FAQs) On IFSCA (Banking) Regulations, 2020 (as amended), IFSCA Banking Handbook and the Circulars on Internet Banking", listed on the IFSCA website on 5 November 2026. It carries 23 questions over 8 pages — 16 on the Banking Regulations and the Banking Handbook, and 7 on internet banking — and clarifies existing rules rather than introducing new ones.

What is the only legal form for a banking unit in an IFSC?
A branch of the parent bank, called an IFSC Banking Unit (IBU). The FAQ states this is the only legal form at present. Unless specifically exempted, all domestic laws of India apply to an IFSC, and transactions with persons resident in India are subject to FEMA, 1999.

How does a bank apply for an IBU licence?
The Parent Bank applies on the Single Window IT System portal (swit.ifsca.gov.in) under regulation 3 of the IFSCA (Banking) Regulations, 2020 (as amended) and module 1 on Licensing in the Banking Handbook: General Directions, with an undertaking to maintain regulatory capital subject to a minimum of USD 20 million, a No Objection Letter from its Home Regulator, and the prudential undertakings set out in the FAQ.

Can a bank with no presence in India set up an IBU?
Yes. It must also meet section 22(3A) of the Banking Regulation Act, 1949, the Authority may seek the opinion of the Government of India, and additional conditions in para 6 of the IFSCA Banking Handbook: General Directions apply.

What is the minimum LCR for an IBU?
The minimum LCR prescribed at present is 100 per cent, maintained on a standalone basis at the higher of the home regulator's minimum or the level specified by the Authority. LCR may be maintained at parent level with the Authority's permission. The Authority has not specified an NSFR requirement at present.

What is the Retail Deposit Reserve Ratio for IBUs?
3 per cent of the deposits raised from individuals, outstanding at the end of the previous working day, maintained on a daily basis in any specified foreign currency — as a balance in the IBU's nostro account or in holdings of sovereign debt securities (including T-bills) rated investment grade or above by at least two rating agencies of international standing.

What are the fees for setting up an IBU?
Three categories: a one-time application fee with the application, a one-time Licence fee after In-principle approval, and a recurring annual fee based on the IBU's annual turnover. The amounts are in the circular "Fee structure for the entities undertaking or intending to undertake permissible activities in IFSC or persons seeking guidance under the Informal Guidance Scheme" dated 2 March 2026; the FAQ states no amounts.

Is displaying live FX rates on the IBU internet-banking dashboard mandatory?
No — not any longer. The FAQ restates that live market rates including the applicable spread must be displayed on the customer's digital dashboard, but per para 4 of the Amendment dated 30 June 2026, the ability to view live market rates for currency conversions including the applicable spread has been made non-mandatory.

What is a Global Administrative Office (GAO) in GIFT IFSC?
A financial institution set up in the IFSC by a Banking Company that manages, administers or coordinates the operations of the Parent Bank or Group entities in the IFSC or outside, and provides support services for the execution of permitted activities. It must be in the IFSC but not on the same or contiguous premises as the branch of the same bank unless specifically permitted, and its resources must be kept separate from the IBU or Representative Office.

Does the FAQ introduce any new rule or deadline?
No. It clarifies and restates the IFSCA (Banking) Regulations, 2020 (as amended), the Banking Handbook and the internet-banking circulars. The only change it notes is pre-existing: the 30 June 2026 amendment making live FX-rate display non-mandatory. There is no new compliance date in the FAQ.

Related reading

• IFSCA Financial Soundness Criteria for Payment System Operators in IFSC, 2026

Sources

• Primary source: International Financial Services Centres Authority — "Frequently Asked Questions (FAQs) On IFSCA (Banking) Regulations, 2020 (as amended), IFSCA Banking Handbook and the Circulars on Internet Banking", listed 5 November 2026 (8 pages, 23 questions) — ifsca.gov.in (official PDF)
• Additional source: IFSCA — New Section listing — ifsca.gov.in

Last verified by team: 6 November 2026, against the official IFSCA FAQ PDF listed on 5 November 2026. No reference number or signatory is printed on the document and no date appears inside the PDF. Unaddressed or uncompared points are marked "NOT CHECKED" above.