News

Indian Bank Branches in Gift-IFSC Permitted to Engage in Trading on IIBX

The Reserve Bank of India (RBI) on June 7, 2022, issued guidelines to allow Branches of Indian Banks operating in GIFT-IFSC to act as Professional Clearing Member (PCM) of India International Bullion Exchange IFSC Limited (IIBX), provided they meet all regulatory requirements and abide by the rules in place to guarantee responsible operations and risk management.

 

On review, RBI on February 9, 2024, issued guidelines for the participation of a few more Indian Banks on International Bullion Exchange IFSC Limited (IIBX) vide circular No RBI/2023-24/120, DoR.AUT.REC.74/24.01.041/2023-24. The guidelines permit the branches of Indian banks in GIFT-IFSC to act as a Trading Member (TM) or Trading and Clearing Member (TCM) on International Bullion Exchange IFSC Ltd (IIBX).

 

Here are a few notable highlights of the instructions:

 

  • Only trades on behalf of clients may be executed by the TM/TCM (without proprietary trading). Before requesting TM/TCM status on IIBX for its branch, subsidiary, or joint venture in GIFT-IFSC, the parent bank must obtain a No Objection Certificate (NOC) from RBI.

 

  • If a bank serving as a TM, TCM, or SCC at IIBX changes its function or the range of activities it conducts at IIBX from what is allowed by this circular, it must obtain further approval from RBIs Department of Regulation.

 

  • RBI authorises banks to import gold and silver on an annual basis in accordance with the current Foreign Trade Policy. These banks are now permitted to function as an SCC on IIBX for the import of gold or silver, in addition to the consignment model in the domestic tariff area. However, the SCC will only buy trades on behalf of customers. In addition, one of the IFSC Banking Units (IBUs) will be chosen by the SCCs to serve as a clearing member on their behalf.

 

  • Every client trade on the exchange must be accompanied by a 110 percent advance payment of funds (buy order) of the anticipated value of the bullion (quantity & quality specification) intended to be bought and securities (sell order) in the bank’s account, as applicable.

 

 

The circular is effective from 9 February 2024 and is applicable to all Schedule Commercial Banks (other than Regional Rural Banks).