Tag: gift city

Kotak, BFSI News, ET BFSI

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Mumbai: Veteran banker Uday Kotak on Friday raised several concerns over the domination of Google Pay and PhonePe in the payments business. He said that while banks have been caught napping, policymakers also need to look at the issue from a financial stability point of view.

Speaking at an event organised by India’s International Financial Services Centres Authority and Bloomberg at GIFT City, Kotak said that Indian banks have been behind the curve and have allowed the growth of UPI payments to be monopolised by Google Pay and Walmart-owned PhonePe, who have got 85% of the market.

“It is a wake-up call for Indian banking: Wake up, or you will see a large part of the financial market move out. From a policy and financial stability point of view, which policymakers have to look at,” said Kotak. He said that bankers were shortsighted in the last two years. “They said there is no money in payments and let the payment market be taken by these two-three companies.”

Kotak said that bankers need to keep in mind that consumer tech companies have revenue models outside finance. “For example, the e-commerce model. Banks under section 6 of the Banking Regulation Act cannot get into non-financial business. There are serious issues of how we are going to draw the line and simultaneously there is an issue of financial stability,” said Kotak.

The chief of the country’s third-largest private bank also made a reference to the raising of deposits by payment platform Google Pay and to the central bank’s move to ban first loss default guarantees provided by lending platforms. He said that there was a need to establish who was responsible for the deposits and who was bearing the risk on loan assets.

According to Kotak, a competition between a regulated entity and a fintech or consumer tech usually ends up with the tech company being fast and loose on regulation and gaining market share at great speed. “I am not against competition. All I am saying, in the name of competitive service, we do not have a systemic and stability challenge at the same time,” he said. He urged authorities to take UPI and the Aadhaar-Enabled Payment Systems global. He said that there is already a partnership with Singapore, but there was a need to take this to other developing markets such as Bangladesh and African countries.



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Time to convert fintech initiatives into revolution: PM Modi

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Prime Minister Narendra Modi on Friday urged the fintech industry in India to convert their Fintech initiatives into a Fintech revolution.

“Now it is time to convert these Fintech initiatives into a Fintech revolution. A revolution that helps to achieve financial empowerment of every single citizen of the country”, Modi said after virtually inaugurating the InFinity Forum, a leadership forum on Financial Technology, jointly hosted by the Gift City regulator IFSCA and Bloomberg.

Modi highlighted that the Fintech industry in India is already innovating to enhance access to finance and the formal credit system to every person in the country.

He also said that technology is making a big shift in finance, and mobile payments last year exceeded ATM cash withdrawals for the first time. Without any physical branch offices, fully digital banks are already a reality, and may become commonplace in less than a decade, Modi added.

The two-day summit will see participation from more than 70 nations, while Indonesia, South Africa and the United Kingdom are partner countries.

This InFinity Forum has brought together the leading minds of the world in business and technology to discuss how technology and innovation can be leveraged by the Fintech industry for inclusive growth and serving humanity at large.

Modi said that India has proved that it is second to none when it comes to adopting technology or innovating around it.

Issues that need attention

While noting that common Indian has shown immense trust in the Indian Fintech ecosystem by embracing digital payments and such technologies, Modi highlighted that this trust is a responsibility. “ Trust means that you need to ensure that the interest of people are secured. Fintech innovation will be incomplete without fintech security innovation”, he said.

Gift City

On Gift City in Gujarat, Modi said that it is not merely a premise, it represents the promise of India’s democratic values, demand, demography and diversity. “ It represents India’s openness to ideas, innovation and investment. Gift City is a gateway to the global Fintech world. IFSC at Gift City was born out of the vision that finance combined with technology would be an important part of India’s future development. Our aim is to provide the best international financial services not just for India but for the world”, Modi said.

Prime Minister said that finance is the lifeblood of an economy, and technology is its carrier. Both are equally important for achieving “Antyodaya and Sarvodaya”.

He said that the flagship infinity forum is part of the endeavour to bring together all key stakeholders of the global Fintech industry to explore the limitless future of the industry.

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GIFT City regulator eases reinsurance biz norms to lure foreign, Indian companies, BFSI News, ET BFSI

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GIFT City

The International Financial Services Centre Authority (IFSCA), the regulator for Gujarat-based International Financial Services Centre (IFSC), has announced a new liberal regulatory regime for facilitating the formation of various international and Indian insurance businesses in the Gujarat International Finance Tec-City (GIFT City).

Global reinsurers can procure business from regions around India, by setting up operations at GIFT City.

No foreign reinsurer has set up operations at the centre till now, despite zero tax provision.

Eased rules

Under new regulations, foreign insurers and reinsurers can set up branch offices or subsidiaries as IFSC Insurance Offices (IIOs) to undertake insurance or reinsurance business from IFSC. Indian insurance and reinsurance companies, including foreign reinsurance branches (FRBs), registered with Insurance Regulatory and Development Authority of India, can also set up branch offices to undertake insurance or reinsurance business from IFSC.

In the case of a branch, a company does not need to bring in any capital, and in the case of subsidiaries, the companies will require a paid-up capital, as per Insurance Act, 1938, of Rs 100 crore for insurance and Rs 200 crore for reinsurance.

Onshore capital

No onshore assigned capital will be required for foreign insurers or foreign reinsurers setting up IIOs as branches. The assigned capital of $1.5 million can be maintained in home jurisdictions. Further, there’s no onshore solvency requirement for IIO in the IFSC. The assigned capital solvency margin will have to be maintained in the home jurisdiction.

The new regulations allow managing general agents under a binding agreement.

IFSCA efforts

The IFSCA has been making structured efforts to boost global investments in GIFT City, and to make IFSC a global financial hub at par with other IFSCs in the world. To boost the establishment of IFSC alternate investment funds, the IFSCA released a circular providing benefits with respect to leveraging activities, co-investment opportunities and relaxation of diversification norms. The desire of the IFSCA to form regulations that are intended to quickly bring the funds set up in IFSC at par with offshore funds is an important consideration for both foreign and Indian companies, while deciding on the jurisdiction of the fund.



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International arbitration centre at Gift City: IFSCA in talks with Law Ministry

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Gift City regulator IFSCA is close to setting up an international arbitration centre in Gift-IFSC, its Chairman Injeti Srinivas has said.

This international arbitration centre will be on the lines of Singapore international Arbitration Centre or London Commercial Arbitration centre.

“We will be able to do this by little tweaking of the Arbitration & Conciliation Act. IFSCA has already prepared a proposal and is in discussion with Union Law Ministry on this”, Srinivas said at a recent CII organised Financial Summit.

Gift-IFSC, which is currently the country’s sole international financial services centre, has an entirely separate financial jurisdiction with the International Financial Services Centre Authority ( IFSCA) as the unified regulator that has a holistic view of financial sector and enables its seamless integration. IFSCA has been empowered under 14 separate Central Acts

Srinivas said that IFSC should be looked at as a great opportunity for making India global and be treated as project of national importance.

IFSCA Chairman urged Corporate India to look at IFSC with more greater intent and integrate it with their plans to expand their global footprint.

Foreign bank branches

Today in less than a year, six foreign banks have opened their branches, Srinivas said. There are another eight in the pipeline, he added. “Gradually concentration of financial institution is also taking place in Gift City. Banks are the backbone of financial centre. Banks have much more liberty in terms of activities that can be undertaken in IFSC”, he added.

Fintechs

Srinivas said that IFSCA wants to leverage “our strength” with respect to cross border fintechs. “We are in the process of coming up with a fintech incentive scheme’, he added.

Company Law

Srinivas also said that IFSCA is looking at the company law tweaks to encourage SPACs (Special Purpose Acquisition Company) so as to enable them to look at Indian conpanies.

He highlighted that company law has been amended to allow unlisted companies to directly list abroad. ” The rules are yet to come for this. We are hopeful this would soon happen”, he said. It would then encourage Indian startups to first list at Gift City instead of going to Singapore or other overseas markets, he added.

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Axis Bank lists $600 million Sustainable $AT1 notes on India INX and NSE IFSC at GIFT City

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Axis Bank on Thursday announced the listing of its $600 million Sustainable Additional Tier 1(AT1) notes on India INX and NSE IFSC exchanges.

“The AT1 notes are now being listed on Singapore, London and India INX and NSE IFSC exchanges,” it said in a statement.

Also read: Axis Bank completes pricing of overseas AT-1 bonds

The bank had last week announced issuance of these Sustainable AT1 notes in the overseas markets through its IBU branch at GIFT City.

Amitabh Chaudhry, Managing Director and CEO, Axis Bank said, “This is a landmark issuance, and it shows Axis Bank’s commitment to the government’s vision of developing GIFT City as an Internal Financial Centre of repute. We hope that it will encourage other market players to also look at GIFT City as a venue of choice for issuance and listing of their debt and equity products”.

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Axis Bank joins green finance rush with first ESG bonds in India, BFSI News, ET BFSI

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Axis Bank has raised $600 million from offshore investors by selling sustainable additional tier-1 (AT1) bonds at a coupon of 4.1 per cent said.

The bank will be using the proceeds towards eligible green and social project categories, as per the term sheet. The bonds will be listed on bourses, including NSE IFSC and India INX IFSC.

The lender launched the issue of the perpetual bonds earlier in the day with the initial pricing guidance at 4.4 per cent, looking to raise up to USD 1 billion.

Axis Bank raised USD 600 million from its GIFT City branch. The issue saw the order book peaking at USD 2.3 billion, as per the sources.

The major investors in the issue included Bluebay, Blackrock, Fidelity and HSBC Asset Management Company, they said.

This was only the third environment, social and governanc-themed bond issue by any lender globally and the first one in India.

The Axis Bank bonds were rated Baa3 (negative) by Moody’s Investors Service, BB+ (stable) by Standard & Poor’s and BB+ (negative) by Fitch Ratings.

HSBC deposits

Last month UK-based Hong Kong and Shanghai Banking Corp (HSBC) has raised $400 million of green deposits in India and identified financing opportunities to use those funds. Under its strategy, the bank first finds avenues to finance before raising the resources. The loans are extended for renewable projects, biodiversity linked initiatives, clean transportation and pollution control. Once the loans are sanctioned they are matched with deposits.

HDFC issue

HDFC, India’s largest private-sector mortgage financier, too announced last month the launch of a new green deposit plan to attract environmentally conscious depositors.

The company plans to raise these deposits from individuals to lend to projects by retail borrowers.

It plans to use these funds to lend to standalone homes which use environment-friendly practices, like putting up solar panels and water recycling, or even to women borrowers or self-help groups.

AT1 bonds

The bank is the third lender in quick succession to raise money from the AT1 route after HDFC Bank raised USD 1 billion from overseas investors last month, and SBI raised Rs 4,000 crore earlier in the day from domestic investors.
The AT1 capital instrument had received a setback after Yes Bank’s investors lost over Rs 8,400 crore of bets after a write-off in the RBI-led bailout.



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Barclays pumps Rs 3,000cr in India to expand biz, BFSI News, ET BFSI

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Mumbai: Barclays Bank has infused Rs 3,000-crore capital to expand its India operations. This is the single largest infusion made since inception — the last large investment was Rs 540 crore in 2009-10.

With this investment, the bank’s total capital deployed in the country increases to Rs 8,300 crore. “We have ambitious growth aspirations, and the investment will help accelerate that as we look to leverage the attractive opportunities that the present situation offers,” said Jaideep Khanna, head of Barclays Asia-Pacific and country CEO. “As economic activity gathers momentum, there is increased demand for capital from clients. We are well placed to support their objectives and remain committed to working closely with them,” added Khanna.

According to a spokesperson, the money is for the growth of the corporate investment bank and wealth management business. The British bank has four branches and a presence across six cities. As part of its expansion plans in the country, Barclays Bank Plc also inaugurated its international banking unit (IBU) branch at GIFT City in Gujarat in February this year.

The spokesperson added that the 55% jump in capital base will enable the lender to significantly expand its exposure to Indian clients.

RBI rules cap a bank’s exposure to a single borrower, a business group and capital markets at 20%, 25% and 40% of their capital respectively. In 2019, the RBI came out with a large exposure framework, which made it difficult for foreign banks to have back-to-back arrangements with their head office for exposures in India as these too came under the ceiling.



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Deutsche Bank gets nod to set up IFSC banking unit at GIFT City, BFSI News, ET BFSI

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Deutsche Bank will set up its IFSC banking unit at India’s first global financial centre in Gujarat. The bank has received approval from the GIFT SEZ Authority to set up an IFSC banking unit at India’s first International Financial Services Centre (IFSC) at GIFT City, Gujarat, a release said on Thursday.

The leading German bank with strong European roots has a global network across 59 countries.

This will serve as a primer for renowned banks from other geographies to consider GIFT City a viable destination for international financial services, said Tapan Ray, MD & Group CEO, GIFT City.

“Progressive banking regulations in GIFT IFSC provide new business opportunities in several areas for foreign banks such as FPI Business, Non-Deliverable Forwards (NDF), Aircraft leasing- financing, and upcoming framework to enable international bullion exchange operations from GIFT IFSC,” he said.

Deutsche Bank is among the largest international banks in India.

It had set up its first branch in the country in Mumbai more than 40 years ago.

“With borders between global financial centres increasingly blurring, establishing a presence at the IFSC in GIFT City was the next logical step for us as we seek to support the growth aspirations of our clients.

“The banking unit will allow us to expand the services available to our clients to smoothly carry out international business transactions, particularly in the areas of financing, trade and currencies,” said Kaushik Shaparia, CEO, Deutsche Bank India.

Deutsche Bank has deployed capital over Rs 19,000 crore in its India branch operations.

The foreign lender currently employs more than 18,000 people across its various entities in the country, the release said.

Set up in 2015, International Financial Services Centre in GIFT City has attracted international and domestic players across the financial services spectrum, such as banks, asset management companies, alternate investment funds and professional services firms.

Banking transactions at the GIFT IFSC crossed USD 100 billion value by the end of July 2021, the release added.



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Deutsche Bank to start IFSC Banking Unit at GIFT City

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German banking major Deutsche Bank will set up an IFSC-Banking Unit (IBU) at India’s first International Financial Services Centre at GIFT City (GIFT IFSC).

The GIFT SEZ Authority on Thursday accorded approval to the European lender to set up an IBU making it the 17th IBU to come at the country’s first IFSC.

The bank currently has over ₹19,000 crore of capital deployed in its India branch operations, would now look to carry out international business transactions from the IBU at GIFT-IFSC.

“The banking unit will allow us to expand the services available to our clients to smoothly carry out international business transactions, particularly in the areas of Financing, Trade and Currencies,” said Kaushik Shaparia, CEO, Deutsche Bank India. “With borders between global financial centres increasingly blurring, establishing a presence at the IFSC in GIFT City was the next logical step for us as we seek to support the growth aspirations of our clients,” he added.

Deutsche Bank has global network spread across 59 countries, is among the largest international banks operating in India for over 40 years.

It offers services across Corporate Banking, Investment Banking and its International Private Bank. The Deutsche Bank Group currently employs more than 18,000 people across its various entities in the country.

“We welcome Deutsche Bank, one of the leading European banks to launch its offshore banking operations at GIFT IFSC. This will serve as a primer for renowned banks from other geographies to consider GIFT City a viable destination for international financial services,” said Tapan Ray, MD & Group CEO, GIFT City.

Adding further, he said, “Progressive banking regulations in GIFT IFSC provides new business opportunities in several areas for foreign banks such as FPI Business, Non-Deliverable Forwards (NDF), Aircraft leasing- financing, and upcoming framework to enable international bullion exchange operations from GIFT IFSC.”

With the latest Deutsche Bank IBU, the total number of IBUs at GIFT-IFSC will increase to 17.

Since being established in 2015, the International Financial Services Centre at GIFT City has attracted leading international and domestic players across the financial services spectrum. The Banking transactions at the GIFT IFSC has crossed USD 100 billion in value by the end of July 2021.

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GIFT City, India Insurtech Association ink pact to promote fintech in insurance space

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India Insurtech Association (IIA), a not-for-profit body promoting tech-driven insurance ecosystems in India inked a memorandum of understanding (MoU) with International Financial Services Centre at GIFT City, (GIFT-IFSC) to collaborate on building thought leadership in the field of insurance and promoting GIFT City for Indian and foreign insurance companies.

To raise awareness about GIFT IFSC, the collaboration will organise events, information series, seminars, and conferences. The two institutions will also research regulatory sandbox projects for GIFT IFSC, which will benefit insurtech start-ups, re-insurance businesses, politicians, service providers, and individuals.

Tapan Ray, MD and Group CEO, GIFT City, said, “We have presence of some of the major insurance players in GIFT City and now, with this collaboration, we can aspire to be a vibrant hub for world-class insurance products and services and encourage innovation in the segment.”

Through the integrated platform of GIFT City, the endeavour is to highlight India’s international financial services potential by offering international firms a world-class infrastructure and facilities to conduct their business in India.

Elaborating on the collaboration, Prerak Sethi, Director and Co-founder of IIA, said, “Through this collaboration, our goal is to assist worldwide financial organisations in developing top-notch financial services. IIA will provide support towards bringing various Indian and global insurance, re-insurance and insurtech participants to benefit from the regulatory sandbox initiatives at GIFT City.”

Under the terms of the MoU, the IIA has promised to work closely with the GIFT SEZ in various areas, including bringing global insurance businesses, Indian insurtech companies, and insurance players to the GIFT City.

The association will promote new digital business models, build collaboration between start-ups and all the other participants of the insurance industry.

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