NEW DELHI: Six Indian banks and four foreign banks will open offices in Gujarat International Finance Tec-City (GIFT), managing director and group CEO Ajay Pandey said on Wednesday, adding that RBI’s approval is awaited.
This will take the total number of banks in the city to 21. Currently, 11 domestic lenders including State Bank of India, HDFC Bank, ICICI Bank, Syndicate Bank, Kotak Mahindra Bank and Bank of Baroda have opened businesses at GIFT City.
The financial transactions by these banks have crossed $8 billion. Also, insurance business has crossed the $20-billion mark and exchange business has so far done transaction worth $10 billion.
India’s first global exchange -- India International Exchange (India INX) – on Wednesday witnessed an all-time high daily trading turnover of Rs 2,500 crore ($404.69 million). This is notable as the average daily transaction done at the exchanges here are $250 million.
According to Pandey, regulatory hurdles make GIFT less competitive and attractive compared to other financial centres like Singapore and Dubai.For instance, foreign portfolio investors currently pay 30 per cent short-term capital gains on derivative trades at IFSC platforms at GIFT, while there is zero tax in Singapore and Dubai.
“The reason behind setting up the IFSC at GIFT City was to rein in the export of financial markets. However, 30 per cent short-term capital gains on derivative trades is a big hurdle. If it is waived off, business will get a major boost,” Pandey added.
Also, the recent move by the Insurance Regulatory and Development Authority of India (Irdai) to allow foreign insurance and reinsurance companies to open offices at GIFT has generated a lot of interest among insurance players.
“Currently, there are 6-7 players in the City. With the recent Irdai policy change, 60 more players have expressed their interest in GIFT,” Pandey added.