IFSCA permits asset banking units to transfer assets using participation agreements: Finance Ministry

New Delhi: The International Financial Services Centres Authority (IFSCA) has allowed Banking Units (BUs) to transfer assets to and from other financial institutions, persons resident in India, and persons resident outside India through any internationally recognised standard risk participation agreement beginning Wednesday, 30th December, according to a statement from the Ministry of Finance.

Transfer of assets through the risk participation agreement route is a common practice in many jurisdictions, especially in the field of trade finance, stated the Finance Ministry, adding that 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), as per the Finance Ministry’s statement.

The above dispensation is expected to encourage risk participation of foreign currency assets through BUs in IFSC instead of banks in foreign jurisdictions.


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The ID Staff

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