Bank Assets at India's GIFT City Jump 60% to $193 Billion, Challenging Singapore

Banking assets at India's GIFT City financial hub jumped roughly 60% since June to about $193 billion by the end of September, according to K. Rajaraman, chairman of the International Financial Services Centres Authority, the regulator that oversees the zone. The surge marks one of the fastest stretches of growth yet for the Gujarat-based district as it works to position itself as a credible rival to Singapore, Hong Kong and Dubai for foreign financial activity.

A temporary swap facility did much of the heavy lifting

Much of the jump traces back to a special swap facility the Reserve Bank of India ran for foreign-currency non-resident deposits between June and the end of August, which made it considerably more attractive for banks to book foreign-currency deposits and external commercial borrowings through GIFT City rather than through traditional offshore centers. Those two categories, foreign-currency deposits and external commercial borrowings, accounted for most of the increase in the hub's banking assets over the three-month stretch.

The RBI's facility has since lapsed, raising the question of how much of the recent growth will prove durable once the extra incentive is gone. GIFT City officials have pointed to a longer-running trend as reassurance: banking assets at the hub have grown roughly sevenfold since 2020, when they stood at a fraction of today's total, suggesting the zone has been building real institutional presence well beyond any single policy boost.

Global banks are setting up shop for the tax breaks

GIFT City's pitch to foreign banks rests on a combination of tax holidays, lighter regulatory requirements than apply to onshore Indian banking, and direct access to India's fast-growing economy without the compliance burden of operating through a full domestic banking license. HSBC and Mitsubishi UFJ Financial Group are among the global institutions that have expanded their presence in the zone to take advantage of that structure, part of a broader push by Wall Street and other international banks to build out India operations as the country's capital markets and corporate borrowing needs continue to grow.

Whether GIFT City can sustain growth at anything like this pace once the RBI's swap window stays closed is likely to be the real test of its ambitions to rival Singapore and Hong Kong, rather than the headline jump itself. Officials have been careful to attribute the latest surge to a specific, temporary policy rather than claim it as evidence of a permanent step-change in the hub's competitive position, a distinction foreign banks weighing whether to expand their own GIFT City operations are watching closely.