RBI updates risk management norms for Authorised Dealer banks with IFSC Banking Units, refining inter-bank dealing and compliance protocols under Master Directions.
RBI Updates Risk Management for IFSC Banking Units
On October 12, 2026, the Reserve Bank of India issued A.P. (DIR Series) Circular No. 27, reinforcing risk management and inter-bank dealing norms for Authorised Dealer Category-I banks operating International Financial Services Centre (IFSC) Banking Units and Standalone Subsidiaries. The circular refers to the Master Direction - Risk Management and Inter-Bank Dealings dated July 5, 2016, as amended.
The update, issued under Paragraph 2.3(iii) of Part A, Section I, emphasizes robust governance frameworks for derivative transactions, counterparty risk, and liquidity management in offshore operations. It mandates stricter internal controls, including board-approved policies and segregation of functions. The RBI is tightening oversight as IFSC activity grows in GIFT City and other financial hubs.
Legal advisors must ensure that clients’ IFSC operations comply with the revised framework, especially in cross-border transactions and capital account reporting. This clarifies supervisory expectations ahead of international audits and ratings assessments.
Citations
- Master Direction - Risk Management and Inter-Bank Dealings, RBI, 2016
