ifsca: IFSCA will ensure better access to credit for Indian businesses in GIFT City: Chairman

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The International Financial Services Centers Authority, the unified regulator of Gujarat GIFT City, is expected to complement the efforts of local regulators to bring back the flow of foreign capital to India. The regulator’s efforts will give Indian businesses better access to global capital with nearly two dozen banks, including HSBC and Standard Chartered, offering fundraising, financial market transactions and retail dollar deposits, said a senior official.

The banks of which

and have doubled the size of the consolidated balance sheet to $35 billion in the past two years since the unified regulator took on official status. Prime Minister Narendra Modi is expected to visit GIFT City this Friday after a five-year hiatus, launching a host of new initiatives.

“As a unified regulator in a specially created international financial zone, IFSCA essentially complements and supplements national financial regulators by attracting foreign capital in addition to outsourcing international financial services,” Srinivas Injeti, chairman of the ET, told ET. ‘IFSCA. “There is absolutely no regulatory arbitrage between us. It’s a misperception,” he said. There are around 900 funds operating in India under the aegis of the Securities Exchange Board of India.

They receive foreign capital from their offshore feeder funds, which operate from international centers such as Hong Kong, Singapore or London. “We are creating pull factors for these existing offshore funds to re-domicile to GIFT and make it a preferred destination for new funds,” the chairman said. Some of those potential funds may include PIMCO, Blockrock, WestBridge, Ontario Teachers’, CPPIB and some Middle East-based funds, market sources said.

Banks and individual investors could not immediately be reached for comment. Standard Chartered Bank has likely sanctioned loans as low as Rs 50 lakh (about $62,620) under the external single-entity commercial borrowing route from this facility. “MSMEs are getting wide access to credit, which was not possible otherwise traditionally,” Srinivas said, without disclosing details. HSBC has built a book of $3 billion in just a year and a half, which is believed to be one-fifth the size of India’s balance sheet, raked in over a century, a market source said.

More than half the size of the banks’ consolidated balance sheet was achieved between April 2015 and March 2020, marking a surge in business activities in Gujarat GIFT City, for which North Block appointed IFSCA as regulator two years ago. Cumulative OTC derivatives transactions, including non-deliverable futures, crossed $313 billion, doubling in a year.

About two years ago, the RBI allowed local banks to trade in the NDF market through GIFT City, essentially opening the door for central bank intervention in this market, which used to give sleepless nights at Mint Road in 2013 amid wild swings. “For us, it’s the Hong Kong of India,” said Srinivas, who went on a roadshow in London a few weeks ago.

“This time the experience was different because we had evidence to show,” he said. Key reforms included aircraft leasing regulations, tax exemptions and a 10-year tax holiday on business profits.

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