New Delhi: The International Financial Services Centres Authority (IFSCA) today allowed banking units to transfer assets to/from other financial institutions, persons resident in India and persons resident outside India through any internationally recognised standard risk participation agreement.
Transfer of assets through the risk participation agreement route is a common practice in many jurisdictions especially in the field of trade finance. Such risk participation is undertaken as a bilateral contract under a standard document called a risk participation agreement between the two institutions (buying and selling entity). One of the common standard risk participation agreement is the Master Risk Participation Agreement (MRPA) developed by the Bankers Association for Finance and Trade (BAFT).
The above dispensation is expected to encourage risk participation of foreign currency assets through banking units in IFSC instead of banks in foreign jurisdictions, the IFSC said in a statement.
The IFSCA was set up on April 27 this year with its head office in Gandhinagar.
In December 2019, Parliament passed a bill to set up a unified authority for regulating all financial activities at IFSCs in the country.
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