What does IBU mean in BANKING

Functions of an IBU

• Accepting Deposits: IBUs accept deposits in foreign currencies from non-resident individuals and companies.
• Providing Loans and Advances: They provide loans and advances in foreign currencies to non-resident borrowers.
• Foreign Exchange Transactions: IBUs conduct foreign exchange transactions, facilitating the exchange of currencies for non-resident customers.
• Trade Finance: IBUs offer trade finance services, such as letters of credit and guarantees, to support international trade transactions.
• Investment Services: Some IBUs provide investment services, including portfolio management and advisory services, to non-resident clients.

Benefits of Using an IBU

• Tax Advantages: IBUs may enjoy favorable tax treatment, such as exemptions or reduced tax rates, on their offshore income.
• Currency Flexibility: IBUs allow non-resident customers to hold and transact in foreign currencies, providing greater flexibility in their financial management.
• Access to International Markets: IBUs provide access to international financial markets, enabling non-resident customers to invest and borrow globally.
• Regulatory Protection: IBUs operate under separate regulations, which may provide greater protection and stability for non-resident customers.