Gujarat's new financial hub aims for real-time dollar settlement by 2025

India's upcoming financial hub in Gujarat is preparing to launch a real-time dollar settlement, and it is expected to start operations by late 2024 or early 2025. This initiative within Gujarat International Finance Tec-City (GIFT City), a flagship project under Prime Minister Mr. Narendra Modi, aims to streamline financial transactions and enhance India's appeal to global investors. With growing foreign interest in India and the impending inclusion of Indian sovereign bonds in JPMorgan Chase & Co's emerging market index, real-time settlement could significantly expedite transactions and improve market efficiency.

Chairman of the International Financial Services Authority (IFSCA), Mr. K Rajaraman, overseeing GIFT City, highlighted that the real-time settlement system would boost operational efficiency and support GIFT City's aspiration to rival global financial centres like Singapore and Dubai. India has eased capital controls and simplified tax structures specifically for GIFT City, creating a favourable environment for financial institutions and investors seeking alternative trading options.

In addition to the real-time settlement, GIFT City has already launched a domestic non-deliverable forward market settled in dollars, attracting foreign banks offering derivative products to investors keen on India exposure without physical presence. Globally, efforts are underway to modernize cross-border transactions, aiming to reduce costs and delays associated with traditional correspondent banking networks. Initiatives like the Bank for International Settlements’ bridge project, utilizing blockchain for instant settlement, exemplify global advancements towards more efficient financial infrastructure.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.