Remote Booking Arrangements for IFSC Banking Units Explained for Global Banks and Business Leaders

Global banking is becoming more location-flexible, but regulation is moving just as fast to ensure risk does not travel unchecked. The International Financial Services Centres Authority has issued draft directions on how IFSC Banking Units can participate in Remote Booking Arrangements, a move that directly affects international banks operating from GIFT City and the businesses that rely on them for cross-border financial services.

This development is important not only for banks but also for startup founders, CFOs, treasury teams, and business owners who use IFSC structures for global transactions, derivatives, trade finance, and structured funding. Clear rules on where and how transactions are booked mean better transparency, stronger risk control, and higher trust in the IFSC ecosystem.

What Is a Remote Booking Arrangement

Remote booking refers to a situation where a financial transaction is booked in one location even though the business activity or client interaction may happen elsewhere. Instead of every branch managing and retaining its own risk, transactions may be routed, recorded, or risk-managed through another office within the same banking group.

Under the proposed framework, a Remote Booking Arrangement allows designated employees of a bank, who may not be directly attached to a specific branch or subsidiary, to undertake transactions for that unit. This is different from a centralized booking arrangement, where risks are transferred back to a central hub through structured internal transactions. Both models are recognized, but they come with different control expectations.

For businesses, this matters because the legal location of booking affects regulatory oversight, capital treatment, reporting, and risk management standards.

Where IFSC Banking Units Fit In

An IFSC Banking Unit can participate in remote booking arrangements of its parent bank, either by booking transactions for other branches or by having transactions booked on its behalf. This is allowed for trading book activities, including cash and derivative products, and for certain banking book products that are not restricted.

However, there is a clear boundary. IBUs cannot be part of remote booking arrangements for traditional banking book activities involving customer loans and deposits from retail and corporate customers. These remain outside the scope of RBA participation, reflecting the regulator’s cautious approach toward core deposit and lending risks.

This distinction helps protect financial stability while still allowing IBUs to play a meaningful role in global market and treasury operations.

Why the Regulator Is Tightening the Framework

Remote booking improves efficiency by centralizing expertise, systems, and risk management. But it also creates additional risk layers. These include differences in time zones, weaker physical oversight, dual regulatory expectations from home and host jurisdictions, and challenges in crisis management or resolution planning.

The Authority expects that any remote booking model involving an IBU must be logical, transparent, and supported by a strong control framework. Banks must be able to show that risks are properly identified, transferred, monitored, and governed not just on paper, but in day-to-day operations.

For business users of IFSC banking services, this translates into stronger operational resilience and lower counterparty risk.

Governance Responsibilities of the IBU

Governance sits at the core of the new directions. The governing body of the IBU must review any remote booking arrangement that includes the unit and must give prior consent before participation. This ensures local accountability rather than passive involvement in group structures designed elsewhere.

Board-approved policies must either be updated or already contain provisions that support effective risk management under such arrangements. The IBU must also have adequate infrastructure and skilled manpower to carry out the functions assigned under the remote booking structure.

In addition, the IBU is expected to maintain a local risk management capability. This means risk oversight cannot be entirely outsourced to a foreign head office. Local teams must understand exposures, controls, and escalation channels.

Responsibilities of the Parent Bank

The parent bank carries primary responsibility for designing and operating the remote booking model. It must clearly document the rationale for including the IBU in the arrangement and obtain proper internal approval for the structure.

A formal control framework must be established, supported by systems and procedures that actually function in practice. It is not enough to define controls; banks must demonstrate that they work effectively. The parent bank must also ensure that the remote booking structure does not interfere with recovery or resolution planning. In other words, the model should not make it harder to manage the bank during stress or failure.

For transparency, the bank must disclose to the Authority the official responsible for oversight of the remote booking arrangement involving the IBU. Full information about the arrangement must be provided to the regulator.

Ongoing Oversight and Independent Review

The operation of remote booking arrangements involving an IBU must be subject to independent review by compliance, operational risk management, and internal audit functions. This multi-layer oversight helps ensure that risks are not hidden within complex booking chains.

The IBU must also be properly compensated for transactions it undertakes under the arrangement. This aligns incentives and ensures the unit is not used merely as a booking shell without economic substance.

What Happens When the Model Changes

Remote booking structures are not static. Markets shift, client bases move, and liquidity concentrates in different locations. When changes occur, the parent bank must inform the Authority at the earliest and provide detailed information.

This includes the business rationale for the change, any updates to systems and controls, possible impact on the IBU’s business model or staffing, and confirmation that the IBU’s governing body has considered the changes. This ensures that regulatory visibility is maintained even as global banking models evolve.

When Do These Rules Apply

The directions take effect immediately once finalised. IBUs that were already operational before the circular must align with the requirements within three months. This timeline signals that the Authority expects swift action and proactive compliance from banks operating in the IFSC.

What This Means for Businesses and Startups

If you are a startup founder raising overseas capital, a CFO managing currency or interest rate risk, or a business owner structuring cross-border transactions through GIFT City, these rules strengthen the environment in which your banking partners operate.

You benefit from:

• Clearer accountability on where your transactions are booked

• Stronger oversight of trading and derivative risks

• Better operational resilience in global banking structures

• Higher transparency between IFSC units and parent banks

In short, your counterparty risk reduces when booking models are well governed and closely supervised.

Conclusion

The proposed framework on Remote Booking Arrangements marks another step in aligning GIFT City with leading global regulatory standards. By setting expectations around governance, transparency, risk control, and regulatory reporting, the Authority is ensuring that IFSC Banking Units remain credible participants in international financial markets.

For banks, this means tighter internal coordination and stronger local capability in GIFT City. For businesses and founders, it means working within a safer and more reliable international banking ecosystem. As cross-border finance becomes more complex, well-defined booking structures are no longer a back-office detail. They are central to trust, stability, and long-term growth.

Looking to Structure IFSC Banking Operations the Right Way?

Remote Booking Arrangements in GIFT City are no longer just an internal banking decision. They directly affect governance, risk visibility, regulatory comfort, and transaction confidence for businesses operating globally.

GIFT CFO works closely with banks, startups, CFOs, and cross-border businesses to:

• Interpret and operationalise IFSCA remote booking rules

• Support IFSC Banking Units with governance, compliance, and documentation

• Help founders and finance teams structure global transactions through GIFT City

• Build regulator-aligned finance, treasury, and risk frameworks from day one

Whether you are a bank strengthening your IFSC presence or a business relying on GIFT City for international finance, we help you move forward with clarity, compliance, and confidence.

Connect with GIFT CFO to ensure your IFSC banking and transaction structures are future-ready and regulator-aligned.

Call: +919726372715 Email: info@giftcfo.com

Consult with the GIFT CFO to build your global financial presence from India.