BS BFSI Summit: 'Investors flock to GIFT City as opportunities open up'

List of banks, asset managers, insurers swells amid growing business opportunities

GIFT City is increasingly gaining prominence with more banks, asset managers, insurance companies, and foreign investors opting to set shop at India's first and only International Financial Services Centre (IFSC), sensing growth potential.

 

Speaking at the Business Standard BFSI Insight Summit in Mumbai on Friday, representatives from the GIFT City ecosystem shared their experiences, while highlighting opportunities and challenges in operating from India's “offshore” financial hub, which is aiming to redirect flows from traditional centers like Dubai, Singapore, and London.

 

Dipesh Shah, Executive Director, International Financial Services Centres Authority (IFSCA) said the number of registered firms has increased from 129 to over 725 after the government established the IFSCA, the unified regulator for GIFT City. It is tasked with registering and regulating entities such as banks, exchanges, asset managers, insurance companies, and ship leasing companies.

 

“The concept of IFSC is very good. However, the challenge is you are creating an offshore center within onshore India. As we know, India is not full capital account converting, which means that you are now converting a full capital account zone within India, which is outside the foreign exchange laws of India,” said Dipesh.

 

“Mauritius was considered the most-favoured jurisdiction to set up funds about a decade ago. The opening of GIFT City as a platform has actually helped multiple firms and general partners (GPs) set platforms in the most efficient manner,” said Kunal Shah, Partner, PwC.

 

Most panelists noted that GIFT City’s proximity to Mumbai vis-à-vis other popular overseas jurisdictions was a big advantage.

 

Ganeshan Murugaiyan, head of corporate coverage and advisory at BNP Paribas which set up a bank branch at GIFT City in July, expects more players to join due to the growing business opportunities.

 

“We see a lot of Indian corporate bonds moving there. From an overall corporate perspective, GIFT City is becoming increasingly important. A lot of what we were doing through Singapore and other branches are clearly moving to GIFT,” Murugaiyan said.

 

The special economic zone (SEZ) has gotten a fillip in the last few years with the regulations firming up for most of the sector and a growing list of players helping create a vibrant financial centre.

 

Vaibhav Shah, Head Business Development Strategy & International Sales, Mirae Asset Investment Managers (India) said GIFT City’s appeal goes beyond non-resident Indians (NRIs) and can also draw a lot of foreign nationals seeking exposure to India.

 

“The GIFT City route is one of the easiest ways for a foreign national to invest in Indian markets,” said Vaibhav, adding that Mirae is planning to launch new products at GIFT City.

 

A healthy pipeline of foreign entities, insurance firms, and mutual funds seek to set up offices at the financial hub, the panelist said.

 

Rahul Prasad, CEO, HDFC Life International and Reinsurance said GIFT provides insurers the option to offer both life and health products, which will appeal to foreign nationals, mainly NRIs, who want to buy dollar-denominated policies.

 

“Life insurance plans available domestically are all rupee-denominated. If NRIs want solutions that are cross-border and truly global in nature, and they need to be dollar-denominated, that is possible from GIFT City,” Prasad said.

 

“There is a lot of interest from distributors who are interested in taking these products to their customers,” he added.

 

Experts called for measures such as easy transfer of funds to further increase the appeal of GIFT City. On concern over onshore money moving to India via GIFT City, Kunal of PWC said there are enough checks and balances to prevent that. “The overall interest that we are largely seeing is from overseas funds who want to actually access domestic liquidity.”