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The two main objectives of treasury centres are centralised management of funds and use of global funds in the group.
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VIJAY SONEJI
The International Financial Services Centres Authority (IFSCA) has eased the framework for setting up global and regional corporate treasury centres to bolster GIFT City’s appeal as a global investment destination.
Activities such as capital raising, borrowing, derivative and foreign exchange transactions have been permitted.
“The updated framework brings much-needed clarity to permissible business activities. Additionally, the introduction of specific permissibility for holding companies marks a significant step forward, offering greater flexibility for corporate structures and further strengthening GIFT City’s appeal as a global investment platform,” said Jaiman Patel, Partner, EY India.
Capital can be raised through issue of equity shares. Borrowing includes inter-company deposits and credit arrangements. Transacting or investing in financial instruments issued in IFSC or outside IFSC, undertaking derivative transactions and foreign exchange transactions; factoring and forfaiting, as well as liquidity management are now allowed.
The framework aims to bring financial services and transactions currently carried out in offshore financial centres by Indian corporate entities as well as by overseas branches or subsidiaries of financial institutions to GIFT IFSC.
A treasury centre acts as an in-house bank in any multinational corporation. The two main objectives of treasury centres are centralised management of funds and use of global funds in the group.
Conditions apply
Entities wanting to set up these treasury centres have to set up the necessary infrastructure in IFSC, including adequate office space, equipment and communication facilities to undertake the permissible activities. The entity has to employ at least five qualified personnel, based in IFSC, including a head of treasury and compliance officer before commencement of operations.
The entity must have a corporate governance and risk management policy in place. Any change in control of 20 per cent of total share capital due to business restructuring, must seek prior approval of the IFSCA. It has to demonstrate the ability to meet the owned fund requirements and its parent must not be from a high risk jurisdiction as identified by the Financial Action Task Force.
Published on April 13, 2025
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