Banking News

gift city: Public sector banks weigh consolidating foreign business at Gift City

The government has asked state-run lenders to explore consolidating their overseas business currently done through foreign branches in the International Financial Services Centre (IFSC) housed in the Gujarat International Financial Tech (Gift) City.

It has initiated initial discussions with lenders, a senior official told ET, adding that State Bank of India, Punjab National Bank, Bank of Baroda, and Indian Bank have been directed to share their detailed inputs and strategies.

“There was a suggestion that in order to further scale up operations at Gift City and compete at a global level, public sector banks (PSBs) can consolidate their businesses. We sought views from banks, and it is being looked at,” the official said.

Set up in 2020, Gift City seeks to provide a conducive business ecosystem on a par with, or above, leading global financial hubs, and attract onshore Indian business currently conducted overseas.

Boost for Int’l Transactions
In April, finance minister Nirmala Sitharaman, in a review meeting, asked PSBs operating out of Gift City to identify international opportunities, including prospects related to persons of Indian origin.

A senior executive with Bank of Baroda said its branch in Gift City had already become the fourth-largest overseas branch for the bank’s international operations. “Our aim is that through Gift City, we support most of our international operations, including raising funds for our borrowers,” he said, adding that the bank is setting up international treasury operations in Gift City for all its international jurisdictions. This is expected to reduce the need for opening branches outside India.

Last year, Punjab National Bank opened its international banking unit at Gift City with the aim of expanding options available to customers to carry out international business transactions.As per the latest available data, banking assets at Gift City have touched $36 billion and around 23 banks, including 10 foreign banks, are licensed to operate there.

Last month, Injeti Srinivas, chairperson of the International Financial Services Authority (IFSCA), said more than 60 funds have set up at Gift City and a lot are relocating from Mauritius, Dublin and other such jurisdictions. “The commitments of these funds are up to $12 billion in a short span of less than one year,” he said.

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