India starts real-time forex settlement to woo global investors to hub
The move will also enhance liquidity management and operational resilience, ensuring compliance with regulatory oversight
[MUMBAI] India has introduced real-time foreign exchange settlement operations at the Gujarat International Finance Tec-City (GIFT City), a move aimed at making the flagship international financial hub more attractive to global investors.
“The foreign currency settlement system will facilitate seamless and efficient settlement of foreign currency transactions within the IFSC (International Financial Services Centre) on a real-time basis,” Finance Minister Nirmala Sitharaman said on Tuesday (Oct 7), while inaugurating the facility at a fintech summit in Mumbai.
At present, settlement of trades between different banks in the hub is not instantaneous. Depending on the currency and the time a trade is initiated, it can take a few hours to more than a day to settle a trade.
GIFT City is an initiative of Prime Minister Narendra Modi to position India as a global financial hub to rival Dubai or Hong Kong. The zone offers exemptions from certain taxes and regulatory restrictions, making it more attractive for international capital raising.
The move will also enhance liquidity management and operational resilience, ensuring compliance with regulatory oversight, noted Sitharaman.
GIFT City will join select financial centres such as Hong Kong, Tokyo and Manila that have infrastructure to settle foreign currencies locally, she said.
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Standard Chartered is the designated bank which will facilitate US dollar settlement. The British lender will facilitate the clearing through its 50-plus member unit in the financial hub, PD Singh, the bank’s chief executive for India noted last month.
“Real time foreign currency settlement, especially for the US dollar, has been a longstanding demand of market participants in GIFT IFSC,” said Supriyo Bhattacharjee, chief general manager, banking and payments at International Financial Services Centres Authority, the regulator for the hub. “With settlement going live, transactions will now settle in four to five seconds that would earlier take anywhere between eight hours to two days.”
The authorities are also working to strengthen factors that support global capability centres (GCCs) in India, Sitharaman added. India’s GCCs have evolved from cost arbitrage hubs to engineering, high-value research and development sectors, she said.
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