Offshore Banking Unit

 An offshore banking unit (OBU) is a financial services unit (usually a branch or subsidiary of a non-resident bank) that acts as an intermediary between non-resident orrow borrowers and lenders. Usually an offshore banking unit is located in an international financial center or in the case of India. Available in special economic zones. Offshore banking units allow deposits from foreign banks and other offshore banking units to accept deposits from some foreign banks that allow deposits, and OBU may also provide loans to non-resident organizations.

The advantage of offshore banking unit as compared to offshore bank is that foreign banking unit is generally free from regulations and restrictions on domestic financial institutions as it is related to foreign currency and sometimes tax exemption and relief packages. The activities of an offshore banking unit that may have foreign exchange or other banking activities or regulations are not subject to local restrictions. Under the law, the Offshore Banking Unit (OBU) is not authorized to accept domestic deposits or conduct activities with local agencies or clients. All business activities of the offshore banking unit must be offshore.