GIFT SEZ is WIP but not for too Long and it Could Emerge as Next Financial Hub

  • Market Overview

In April of 2022, ICICI Bank (NS: ICBK ) and GIFT SEZ have signed a Memorandum of Understanding (MoU) to promote GIFT SEZ to Indian as well as global businesses including IT / ITeS and financial services. GIFT SEZ is the country’s first International Financial Services Centre (IFSC) which is being developed as a global financial services hub. ICICI Bank has been a prominent player in GIFT SEZ with its banking business since 2016.

Ms. Vishakha Mulye, Executive Director, ICICI Bank and Mr. Tapan Ray, MD & Group CEO, GIFT City, signed the MoU at a virtual event today. GIFT City, promoter of GIFT SEZ, provides a planned business district that offers an ecosystem to financial and technology service providers with the walk-to-work concept, state-of-the-art infrastructure, tax benefits, various incentives, unified regulator, and competitive regulatory regime.

As per the MoU, ICICI Bank and GIFT SEZ will jointly work towards attracting global investors and capital market firms to set up operations in GIFT SEZ. Further, both the organisations will promote GIFT SEZ among Indian and foreign MNCs as the preferred location for availing cross-border trade finance. GIFT SEZ and ICICI Bank aim to promote the development of GIFT SEZ as a fintech hub of India and will make concerted efforts to support start-ups and fintech firms.

They will act in a coordinated manner to promote GIFT SEZ as a hub for wealth management business. Both organisations intend to spread awareness about the attractive proposition that GIFT SEZ poses for the setting up of Global In-house Centres (GICs).

Another objective of the MoU is to promote GIFT SEZ as the destination of choice for offering a competitive regime for setting up capital markets business among industry stakeholders such as Alternate Investment Fund (AIF), Portfolio Management Services (PMS), Broking Entities, Venture Capital, Private Equity Funds and Custodians.

Speaking on the occasion, Ms. Vishakha Mulye, Executive Director, ICICI Bank said, “Over the years, India has emerged as a preferred destination for foreign investment. The young demographic profile, strong consumer demand, and supportive Government initiatives have boosted India’s economic outlook significantly. GIFT SEZ will play an important role and become a gateway for Indian businesses to connect with the world and global businesses to participate in the fast-growing Indian economy."

"At ICICI Bank, our strategy is to provide 360-degree banking to all our customers and their entire ecosystem. Accordingly, our branch at GIFT SEZ is an integral part of our strategy, providing foreign currency banking solutions across trade, transaction banking, capital markets, treasury, and wealth management. We are excited to work with GIFT SEZ and to continue building the entire financial services ecosystem at GIFT SEZ,” Vishakha added.

Mr. Tapan Ray, MD & Group CEO, GIFT City said, "With GIFT IFSC making giant strides in recent times, it is imperative to create synergies with leading financial institutions to take the progress forward. This MoU with ICICI Bank will stimulate participation by global financial institutions and further promote GIFT City as a preferred business destination for international financial services and products. ICICI Bank's early mover advantage in the digital space will also help in attracting fintech companies and help in the development of a fintech hub at GIFT City."

The Bank and GIFT SEZ will jointly collaborate on the preparation of literature and reports to address the requirements of global investors, institutions, and businesses. Further, both will work closely to create awareness about the IFSC regime through seminars, knowledge series, webinars, conferences, physical and virtual roadshows.

GIFT City Background

Gujarat International Finance Tech-city (GIFT) SEZ is India’s first International Financial Services Centre (IFSC) under Special Economic Zone Act, 2005 (“SEZ Act 2005”). It is being developed as a global financial services hub. GIFT IFSC is a Multi-Services Special Economic Zone with 105 hectors of land and commenced its business in April 2015.

The government of India operationalized International Financial Services Centre (IFSC) at GIFT Multi Services SEZ in April 2015. The Union Budget 2016 provided a competitive tax regime for the IFSC at GIFT SEZ. It is the vision of the Hon’ble Prime Minister that GIFT IFSC emerges as a hub for international financial services activities.

Ministry of Finance, Government of India provided a new initiative for undertaking international financial services business in India. The Indian Regulators namely the Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), and Insurance Regulatory and Development Authority (IRDAI) have also issued guidelines for Capital Markets Intermediaries, Banks and Insurance companies/Insurance Brokers respectively. Thus, allowing financial institutions to set up IFSC Units under various areas of business at GIFT City.

The new Regulatory approvals at GIFT IFSC is poised to attract foreign investments and particularly financial institutions and intermediaries to its precinct. Therefore, In a short span of 3 years of its operations, it is already hosted to more than 125 financial entities licensed by financial services regulators namely RBI, SEBI, and IRDAI. GIFT IFSC provides a very competitive cost of operations with a very competitive tax regime, single-window clearance, relaxed company law provisions, international arbitration center with overall facilitation of doing business.

GIFT IFSC is now moving toward a unified regulatory mechanism.

Disclaimer: The above article is for self-educational purposes. Research conducted by students: Yogita & Maniben for learning purposes.

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