Gift City sops tempt banks to shift foreign ops back home

Bankers said being at Gift City’s international financial services centre (IFSC) helps them offer better tax incentives to clients, and serve the global requirements of borrowers without tapping multiple geographies. Given that some banks are reducing their international branches, having a presence at Gift City allows them to tap dollar business from India. For instance, state-run Bank of Baroda is consolidating its global treasury operations, except for the US, at Gift City. The process is expected to be completed in the current financial year. Its total business at the IFSC is about $5 billion, including loans of $2.7 billion.

“There are a lot of lending opportunities at the Gift City and since a significant part of the international book of Indian banks is in external commercial borrowings (ECBs) of Indian corporates, it can be done using liquidity available at Gift City," said Sanjiv Chadha, chief executive, Bank of Baroda. Chadha said the bank has been growing fast overseas, but has shrunk its physical footprint by closing some branches. “I believe that Gift City along with New York should become two of the major centres for us for wholesale business," he said.

At India’s largest lender, State Bank of India (SBI), the South Asian operations are being overseen by the regional head operating from Gift City.

“SBI’s IFSC banking unit (IBU) branch at Gift City is one of the leading IBUs in IFSC in the rupee non-deliverable forwards. This was earlier being done mainly from Singapore," said Challa Sreenivasulu Setty, managing director, international banking, global markets and technology, SBI.

Setty said SBI is developing its IFSC banking unit as one of the main centres for resource mobilization. “At the same time, we are increasing our asset book mainly by way of external commercial borrowing (ECB) issuance from the IFSC, and examining what all other business opportunities are available," he said. As per SBI’s disclosures, about 6% of its ₹4.92 trillion international loan book is based in the Gift City, up from 4% of its ₹4.1 trillion book in FY22.

Private lenders are also seeing strong growth opportunities at Gift City.

“Our domestic branches serve our customers for their banking requirements in Indian rupees. Similarly, IBU Gift City is a one-stop shop for foreign currency requirements of our Indian clients and their overseas entities across the globe," said Anupam Verma, head of IBU, Gift City, ICICI Bank.

Traditionally, Indian clients approach banks across geographies to meet their international banking needs. Verma said at Gift City, ICICI Bank is well-equipped to take care of global requirements, irrespective of where the clients are based.

Vivek Gupta, president and head, wholesale banking products, Axis Bank said the lender made a strategic choice in reducing its branch presence in Hong Kong, Shanghai, Colombo and the UK, and centralizing it into Gift City three to four years ago. “That continues to be a preferred location for us to raise long-term funds. We have made a strategic choice to book our overseas business largely out of Gift City," said Gupta.