Standard Chartered chosen as dollar settlement bank in global finance hub at GIFT City: How will this help you?

Standard Chartered Plc has been picked as the bank for real-time settlement of all dollar-denominated trades in the country’s only global financial centre, likely slated for June 2025. According to a Bloomberg report, banks with units in the Gujarat International Finance Tec-City, or GIFT City, have been asked to set up their trading accounts for further steps with the British bank.

The move aims to speed up trade and boost Prime Minister Narendra Modi's plans to bring rupee-related trading onshore. According to the IFSC regulator, the foreign currency and interest rate derivatives of bank units at GIFT City totalled $249 billion in December, up 68 per cent from the year-ago period.

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How will a dollar settlement bank help customers?

Standard Chartered will help streamline rupee-related trading onshore and settle dollar-denominated trades as the country's dollar settlement bank. Last year, the Clearing Corporation of India Ltd (CCIL), the depository for all onshore forex and bond trading, set up a unit in GIFT City to facilitate local clearing services. 

Trade settlement between different banks in the hub is not instantaneous. According to the Bloomberg report, settling can vary from a few hours to more than a day, depending on the currency and when a trade is initiated. 

Globally, efforts are underway to make cross-border trades faster and less complicated. According to Bloomberg, currently, such transactions rely on a network of correspondent banks, which makes settlements expensive and leads to delays.

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Meanwhile, earlier this month, Chief Minister Bhupendra Patel launched trading in USD-denominated BSE Sensex derivatives at the India International Exchange (India INX) in GIFT International Financial Services Centre (IFSC). The product allows global investors to trade and settle BSE Sensex derivatives in US dollars and international trader and investor participation. 

According to reports, the 22-hour trading window aims to further integrate India's financial market with the global system. Patel stated that GIFT City will become a financial services hub at the launch. "Around 450 fintech companies have a base here. The union budget also has incentives for GIFT International Financial Services Centre (IFSC)," he said.

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