ifsca: IFSCA to ensure better access to credit for Indian companies at GIFT City: Chairperson
and have doubled consolidated balance sheet size to $35 billion in the last two years since the unified regulator assumed formal status. Prime Minister Narendra Modi is likely to visit GIFT City this Friday after a gap of five years, launching a host of new initiatives.
“Being a unified regulator in a specially created international financial zone, IFSCA essentially supplements and complements the domestic financial regulators in attracting foreign capital besides onshoring international financial services,” Srinivas Injeti, the chairperson at IFSCA, told ET. “There is absolutely no regulatory arbitrage among us. It is a wrong perception,” he said. There are about 900 funds operating in India under the ambit of the Securities Exchange Board of India.
They receive foreign capital from their offshore feeder funds, which are functioning from international centres such as Hong Kong, Singapore or London. “We are creating pull factors for these existing offshore funds to redomicile to GIFT and make it a preferred destination for new funds,” said the chairperson. Some of those potential funds may include PIMCO, Blockrock, WestBridge, Ontario Teachers’, CPPIB and some Middle East based funds, said market sources.
Individual banks and investors could not be reached immediately for comments. Standard Chartered Bank has likely sanctioned loans as low as Rs 50 lakh (about $62,620) under the external commercial borrowing route to a single entity from this facility. “MSMEs are obtaining wide access to credit, which was otherwise not possible traditionally,” Srinivas said, without disclosing details. HSBC has built a book of $3 billion in just one and a half years, which is supposed to be a fifth of the India balance sheet size, garnered over a century, said a market source.
More than half of the banks’ consolidated balance sheet size was achieved between April 2015 and March 2020 marking a spurt in business activities at Gujarat GIFT City, for which North Block marked IFSCA as the regulator two years ago. The cumulative over the counter derivative transactions, including the non-deliverable forwards, have crossed $313 billion, doubling in a year.
About two years ago, the RBI permitted local banks to trade in the NDF market via GIFT City essentially opening the door for the central bank intervention in that market, which used to give sleepless nights to Mint Road in 2013 amid wild swings. “For us, it is India’s Hong Kong,” said Srinivas, who went to a London roadshow a few weeks ago.
“This time the experience was different as we had evidence to demonstrate,” he said. Key reforms encompassed aircraft leasing regulations, tax exemptions and a 10-year tax holiday from business profits.