Federal Bank gets RBI nod for setting up IFSC Banking Unit in GIFT City
Source: IRIS | 20 Jul, 2015, 09.14AM
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Federal Bank, a private sector lender, has obtained RBI permission for setting up International Financial Services Centre (IFSC) Banking Unit (IBU) in Gujarat International Finance Tec-City (GIFT City). A unit at GIFT City is equivalent to a foreign branch and hence facilitates the Bank to function as such from within the Indian shores.
Once the IBU is opened, Federal Bank will be able to meet the funding requirements of overseas entities other than individual or retail customers or HNIs, including the buyers of exporters from India, and undertake their transactions in currencies other than INR.
The Bank can also deal with the wholly owned subsidiaries or joint ventures of Indian companies registered abroad. It also permits the Bank to accept borrowings in foreign currency with original maturity period greater than one year. Besides, through the IBU, the Bank will be enabled to lend under External Commercial Borrowings (ECB) to meet foreign currency requirement of Bank's domestic clients.
A Bank with a strong NRI client base, Federal Bank accounts for nearly 9% of the total NRI remittances to India. The Bank has a representative office at Abu Dhabi and has plans to open the second office in Dubai soon. The bank also has Rupee Drawing Arrangement with 6 Banks and 71 Exchange Houses. With the setting up of the IFSC Banking Unit in GIFT City, the Bank will now be able to cater to the needs of NRI clients around the globe in terms of meeting their overseas funding requirements. Shares of the bank declined Rs 1.85, or 2.44%, to trade at Rs 74. (9.02 a.m., Monday).
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