Banking assets in GIFT City jump 60% to $193 bn in 3 months as credit grows | Banking

By Haslinda Amin and Saikat Das

Banking assets in India’s international financial hub have surged about 60 per cent since June, a top official said, as growth in the nation’s credit markets boosts GIFT City that’s competing with Singapore and Hong Kong in attracting foreign capital.

Assets held by banks in the hub have reached about $193 billion as of end-September, K. Rajaraman, chairman of the International Financial Services Centres Authority, said in an interview with Bloomberg Television on Thursday. That compares with $120.69 billion as of June, according to data published by IFSCA.

“Sustained growth has come through credit markets, especially offered by the banks,” Rajaraman said. He said separately that the increase in banking assets was primarily due to foreign currency deposits and external commercial borrowings.

Banks in the hub are poised to become one of the biggest sources of capital for Indian companies seeking to fund their domestic operations as well as their global expansion, he said. The Reserve Bank of India’s special swap facility for foreign-currency non-resident deposits which ran from June till the end of August helped boost activity in GIFT City, or the Gujarat International Finance Tec-City.

The economic zone, in which firms including HSBC Holdings Plc, Standard Chartered Plc and Mitsubishi UFJ Financial Group Inc. have built huge businesses, offers exemptions from certain taxes and regulatory restrictions, boosting its appeal as an international capital-raising venue.

Asset managers including Mirae Asset Investment Managers (India) and Jio BlackRock Asset Management have also established operations in the hub.

The rapid growth comes as authorities confront concerns over the tax policy in the financial hub. Some investment funds in GIFT City have recently received tax notices for the 2024-25 and 2025-26 assessment years despite exemptions available to such entities, raising questions over the implementation of tax incentives that are central to the hub’s appeal, according to a local media report.

Rajaraman said the government and IFSCA are working together to make sure that the tax incentives and other policies meant to draw in and keep multinational companies in GIFT City are being implemented.

There are also plans by authorities to allow Indian companies to tap global investors through dual listings in GIFT City. The Securities and Exchange Board of India and IFSCA are working on the framework, Rajaraman said. “Dual listing is certainly a goal.”