India’s GIFT City steps up as global finance hub with real-time settlement system
Ahmedabad: In a move that quietly marks India’s arrival on the map of global finance, the government has equipped GIFT City with a real-time foreign currency settlement system—cutting transaction times from days to mere seconds.
As Union Finance Minister Nirmala Sitharaman on October 7 inaugurated the Foreign Currency Settlement System (FCSS) at the International Financial Services Centre (IFSC) in Gujarat International Finance Tec-City (GIFT City), India’s financial infrastructure took a major leap.
The new mechanism enables real-time or near real-time settlement of foreign currency transactions carried out by entities operating in GIFT IFSC—reducing the existing lag of 36 to 48 hours seen in traditional correspondent banking.
This launch places GIFT City alongside leading global hubs such as Hong Kong, Tokyo, and Manila, which have their own systems to settle foreign currency trades locally. The infrastructure is expected to significantly cut settlement delays, strengthen liquidity management, reduce risks, and enhance operational efficiency.
How FCSS changes the system
Previously, transactions in global currencies such as the US dollar, euro, or yen from GIFT City had to be routed through foreign banks abroad. This not only increased costs but also led to heavy dependence on overseas systems and longer processing times.
To counter that, the Reserve Bank of India (RBI) and the International Financial Services Centres Authority (IFSCA) have introduced the FCSS — allowing Indian banks in GIFT City to clear and settle international transactions domestically.
Under this new model, a locally selected settlement bank will serve as the clearing hub, with IFSC Banking Units maintaining accounts directly with it. This bypasses the traditional Nostro route involving multiple foreign intermediaries.
Initially, the FCSS will handle US dollar settlements, with other major currencies to be added later. The system functions under the Payment and Settlement Systems (PSS) Act, 2007, and has been authorised by the IFSCA.
CCIL IFSC Ltd, a subsidiary of the Clearing Corporation of India, will operate the system, while Indian Financial Technology & Allied Services (IFTAS), a wholly owned RBI arm, has developed the software. Standard Chartered Bank, through its IFSC unit, is the designated partner for US dollar settlements—reducing transaction times from nearly two days to just 4–5 seconds.
About GIFT City
Located between Ahmedabad and Gandhinagar, GIFT City is India’s first special economic zone designed for global finance, fintech, insurance, and capital markets.
Spread across 886 acres, it was envisioned as a “city within a city” where firms can trade in foreign currencies under globally aligned regulations.
The project, conceived in 2007 with joint backing from the Centre and the Gujarat government, is regulated by the International Financial Services Centres Authority (IFSCA), established in 2020.
The IFSCA oversees GIFT City’s operations in the same manner as Sebi, RBI, IRDAI, and PFRDA regulate their respective domains.
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