Foreign Currency Settlement System at GIFT City launched by Finance Minister Nirmala Sitharaman
Learn about the Foreign Currency Settlement System at GIFT City and how it enables real-time foreign currency transactions, boosts liquidity, reduces risks, and strengthens India’s position as a global financial hub.
Foreign Currency Settlement System at GIFT City
In October 2025, the Union Finance Minister introduced the Foreign Currency Settlement System (FCSS) at Gujarat International Finance Tec-City (GIFT City). This system allows foreign currency transactions to be settled in real time within GIFT City, eliminating the previous 36–48 hour delays of correspondent banking.
With FCSS, GIFT City joins a select group of global financial hubs that have local infrastructure for foreign currency settlements. This move is expected to boost liquidity, lower risks, and make international financial operations more efficient.
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Understanding the Foreign Currency Settlement System
The Foreign Currency Settlement System (FCSS) lets Indian banks in GIFT City settle foreign currency transactions locally, instead of relying on overseas correspondent banks, which often caused delays and extra costs.
In this system, a local settlement bank acts as a hub, where member banks maintain accounts to carry out direct inter-bank settlements. At first, it handles US dollar transactions, with plans to include other currencies in the future.
The FCSS operates under the Payment and Settlement Systems Act, 2007, and is regulated by the International Financial Services Centres Authority (IFSCA).
The Impact of FCSS on International Banking Transactions
By avoiding the long chain of Nostro accounts, the FCSS cuts settlement times from several days to just seconds. For US dollar transactions, Standard Chartered Bank serves as the partner bank.
The system is run by CCIL IFSC Ltd, a subsidiary of the Clearing Corporation of India, while the software is developed by Indian Financial Technology & Allied Services. This setup reduces settlement risks, improves liquidity management, and strengthens GIFT City’s position as a global financial hub.
An Overview of GIFT City
GIFT City is India’s first special economic zone focused on global finance, insurance, fintech, and capital markets. Spanning 886 acres between Ahmedabad and Gandhinagar, it aims to provide an international financial ecosystem within India, competing with major hubs like London, Singapore, and Dubai.
Established in 2007 and regulated by the IFSCA since 2020, GIFT City operates under special rules that allow foreign currency transactions, offer tax benefits, and follow a flexible regulatory framework.
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The Vision Behind GIFT City
Before GIFT City, many Indian companies relied on foreign financial hubs like Singapore or Mauritius for offshore transactions because of their favorable tax and regulatory policies. This caused loss of revenue and limited India’s presence in global finance.
GIFT City was established to change this, offering an onshore alternative with similar convenience and flexibility. Operating almost like a separate jurisdiction under Indian law, it aims to attract international financial activity to India.
The Contribution of GIFT City to India’s Growth
GIFT City plays a key role in India’s goal of becoming a global financial hub. It attracts multinational banks, investment firms, and fintech companies, creating high-value jobs and bringing international capital into the country.
The city also helps minimize financial outflows to offshore centres. By 2025, GIFT City is home to nearly 1,000 organizations, including banks, insurers, asset managers, and capital market intermediaries.
GIFT City’s Outstanding Contributions
GIFT City hosts India INX and the NSE International Exchange, providing extended trading hours for global securities. It is also home to India’s first aircraft and ship leasing companies.
Major international firms such as Morgan Stanley, HSBC, and MUFG Bank operate here. Additionally, GIFT City is becoming a hub for offshore derivatives and sustainable finance, including green bonds and ESG-focused funds.
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