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IFSC Banking Units (IBUs)
Branch (IBU) at USD 20 million parent-bank net worth or Subsidiary (IFSC Banking Company / IBC) at USD 50 million. Foreign-currency operations across the full deposit, credit, treasury, capital-markets and trade-finance spectrum, save for retail INR deposits. The architectural foundation of GIFT-IFSC — the IBU is the banking layer that underwrites every other business head's settlement, custody, escrow and lending flow.
IFSC Banking Units (IBUs) — The Practitioner's Booklet
A treatise-grade working reference on the licensing, capital, conduct-of-business and tax framework for IFSC Banking Units (IBUs) at GIFT IFSC — every conclusion anchored in verbatim statutory and regulatory text.
The case for IFSC Banking Units (IBUs) — before the rulebook.
GIFT IFSC competes head-on with Singapore, Dubai and Mauritius — on tax, on currency, and on access to India. Here is what actually moves the decision, before the regulatory detail below.
A 20-year tax holiday
100% deduction on business income for any 20 consecutive years in a 25-year block under Section 147 of the Income-tax Act 2025 (Finance Act 2026), then a 15% concessional rate. MAT capped at 9%.
US-dollar, offshore by law
An IFSC unit is treated as a person resident outside India under FEMA — raise, hold and transact in USD / EUR / GBP, with full foreign-currency freedom and no rupee-conversion drag.
100% foreign & NRI capital
Foreign and NRI investors can hold up to 100% — without the aggregate ownership caps that constrain comparable onshore vehicles.
An on-ramp to India
Unlike a purely offshore hub, GIFT IFSC sits on Indian soil and aligns with national policy — an offshore base that is also a door into one of the world's largest growth markets.
Zero STT, CTT & stamp duty
IFSC-exchange transactions are free of Securities and Commodity Transaction Tax and stamp duty; services rendered by IFSC units are zero-rated for GST.
One regulator, India's rule of law
A single unified regulator (IFSCA) under the IFSCA Act 2019, an independent judiciary, and a treaty-anchored legal order — certainty, not just headline rates.
The opportunity is real, but every benefit carries a condition — and that is where counsel at the threshold earns its place.
The framework — at a glance
IBU Licensing Pathway Tool
Map applicant type, entity form, business focus, currency profile, customer base and sanctions overlay to the applicable IFSCA framework (Banking Regulations 2020 or Banking Amendment Regulations 2023), capital requirement, Conduct of Business directions, tax positioning and sanctions calibration.
IFSCA (Banking) Regulations 2020 (consolidated 14 July 2023); IFSCA Banking (Amendment) Regulations 2023 (10 July 2023, introducing IBC); IFSCA Banking Handbook — Conduct of Business Directions v6.0 (5 April 2024); RBI Notification on Setting up of IBUs (consolidated 21 January 2020). Indicative only — not legal advice.
Related reading
- Booklet VIII — Setting Up an IFSC Banking Unit at GIFT City (PDF, May 2026) · Full Firm handbook on the IBU regime.
- Payment Service Providers (Booklet XX) · PSP escrow funds must sit in an IBU or IBC.
- ITFS Platform (Booklet XXI) · IFSC Banking Units are eligible Financiers under the ITFS Guidelines 2024.
- Aircraft Leasing (Booklet XIV) · IBU bank guarantees count as eligible collateral; IBU back-leverage finances lessor books.
- Market Infrastructure Institutions (Booklet XIX) · IBU bank guarantees are eligible collateral at NICCL / ICCL IFSC.
- Resources page · IFSCA Banking Regulations 2020 (consolidated); Banking Amendment Regulations 2023; Banking Handbook v6.0 + Prudential Directions v5.0.
Talk to Bhatt & Joshi about your IBU / IBC licence application