HSBC and ICICI Bank Lead NRI Foreign-Currency Lending in GIFT City: What It Means for India’s Diaspora
Gujarat International Finance Tec-City, better known as GIFT City, is increasingly becoming an important destination for international banking and financial services connected with India. A recent development involving HSBC and ICICI Bank highlights how quickly the financial hub is expanding its role in handling foreign-currency business from India's large overseas community.
According to data compiled by the International Financial Services Centres Authority (IFSCA), HSBC and ICICI Bank together disbursed $19.3 billion under a special Reserve Bank of India foreign-exchange swap facility designed to encourage foreign-currency non-resident deposits. HSBC accounted for $10.9 billion of the lending, while ICICI Bank provided $8.4 billion. Across 20 lenders operating in the financial centre, loans under the programme reached a combined $52.8 billion.
The figures are significant not only for the two banks but also for GIFT City's ambition to develop into an international financial centre. They also demonstrate the growing importance of India's diaspora as a source of foreign-currency funding.
What Is Happening in GIFT City?
GIFT City is India's designated international financial services hub in Gujarat. It hosts banking units and other financial businesses that can conduct transactions involving international currencies and overseas customers.
The recent growth has been supported by a special RBI programme aimed at attracting foreign-currency deposits from non-resident Indians.
The programme operated from June through the end of August, with the RBI providing a concessional foreign-exchange swap facility to participating banks. The arrangement helped banks manage the cost associated with bringing foreign-currency deposits into India.
For banks, the facility created an incentive to seek more deposits from NRIs. For GIFT City, it generated additional banking activity and increased the amount of money flowing through its financial ecosystem.
HSBC and ICICI Bank Dominate the Lending Activity
HSBC and ICICI Bank accounted for a substantial share of the lending conducted through the programme.
HSBC's lending reached $10.9 billion
HSBC's GIFT City banking operation disbursed approximately $10.9 billion under the facility.
The bank has already established a significant international banking presence in GIFT City, making it well positioned to serve customers with cross-border financial requirements.
ICICI Bank provided $8.4 billion
ICICI Bank's GIFT City unit followed with approximately $8.4 billion in lending.
Together, HSBC and ICICI Bank therefore accounted for $19.3 billion, representing a sizeable portion of the $52.8 billion provided by the 20 participating lenders.
Other banks involved included Bank of Baroda, State Bank of India and Canara Bank.
Why Are Foreign-Currency Deposits Important?
Foreign-currency deposits are particularly relevant for NRIs because they allow overseas Indians to keep funds in currencies such as the US dollar rather than immediately converting all their money into Indian rupees.
For India, attracting these deposits can provide an additional source of foreign exchange.
This matters because foreign-currency inflows can strengthen the country's external financing position and provide banks with additional resources for international and domestic financial activities.
The RBI's special programme was therefore designed to make it more attractive for banks to mobilise foreign-currency deposits.
The programme also came at a time when overseas Indians were contributing substantial amounts of foreign capital to India. The Economic Times report noted that India received a record $127 billion from its overseas nationals through special programmes, highlighting the scale of the diaspora's financial contribution.
GIFT City's Growing Role in India's Financial System
The latest banking figures are part of a broader expansion of GIFT City.
According to IFSCA data cited in the report, banking assets in the centre stood at around $120 billion at the end of August. The regulator's chairperson said assets could exceed $150 billion by the end of September.
The number of bank depositors has also increased substantially.
There were approximately 32,000 depositors at the end of August, nearly 50% higher than at the end of March. Three years earlier, the number was only around 4,000.
That increase indicates that GIFT City's banking ecosystem is expanding beyond its earlier base of institutional and corporate customers.
Why NRIs Matter to GIFT City's Future
India has one of the world's largest overseas populations, and NRIs regularly interact with Indian banks for investments, property purchases, remittances, deposits and other financial requirements.
GIFT City provides an opportunity to bring more of those international financial activities into a specialised Indian financial centre.
The IFSCA has indicated that NRIs are expected to remain important to the future growth of GIFT City's banking sector.
Banks could increasingly use their international networks to introduce wealth-management services and other financial products to Indians living abroad.
A larger wealth-management opportunity
The growth of foreign-currency deposits could be an entry point for banks to offer broader financial services.
These could include wealth management, investment products, international banking services and financing solutions.
As more NRI customers become familiar with GIFT City, banks may have an opportunity to build longer-term relationships rather than simply attracting deposits.
Faster Customer Onboarding Could Help
Another factor supporting GIFT City's growth is the development of its digital banking infrastructure.
According to the IFSCA information cited by the report, existing retail customers can be onboarded in roughly two to three days in certain circumstances, while due diligence for new customers generally takes around 10 to 12 days.
Video-based KYC assistance is already available for NRIs.
The regulator also expects biometric-based authentication without assisted video support to become available by the end of 2026.
Such changes could make it easier for overseas customers to establish banking relationships without having to travel to India.
How GIFT City Is Trying to Compete Internationally
GIFT City's long-term objective extends beyond attracting NRI deposits.
The financial centre is being developed as a platform for international banking, investment, capital raising and financial services.
It is also being positioned as an Indian alternative for financial activities that might otherwise take place in established centres such as Singapore or Hong Kong.
Several international financial institutions have already established significant operations in GIFT City.
The centre's regulatory framework, tax-related advantages and international financial infrastructure are among the factors being used to attract global businesses.
Faster Money Transfers Could Improve Efficiency
Financial infrastructure is another important component of GIFT City's development.
The IFSCA has said that interbank transfers within the centre can now be completed within seconds.
Faster transfers can potentially improve operational efficiency for banks and customers involved in international financial transactions.
When combined with digital KYC and specialised international banking regulations, such infrastructure could make the centre more convenient for overseas customers.
What This Could Mean for Indian Banks
The HSBC and ICICI Bank figures could encourage other lenders operating in GIFT City to expand their foreign-currency and wealth-management businesses.
Banks that already have large NRI customer bases may have an opportunity to use their existing relationships to introduce GIFT City-based products and services.
Competition could also increase as lenders attempt to attract overseas deposits.
For customers, greater competition can mean a wider range of financial products. However, customers would still need to examine interest rates, fees, currency exposure, lock-in conditions and other terms before choosing any financial product.
What This Could Mean for NRIs
For overseas Indians, the development could provide more options for managing money connected with India.
GIFT City-based banking may become particularly relevant for NRIs looking for international banking services while maintaining financial connections with India.
However, the availability and suitability of individual products can differ considerably.
NRIs should consider factors such as:
- Currency risk
- Deposit tenure
- Interest rates
- Tax treatment
- Liquidity requirements
- Early-withdrawal conditions
- Borrowing costs
- Regulatory requirements
The headline growth in GIFT City's banking sector does not automatically mean every product offered there will suit every customer.
The Bigger Picture for India's Foreign-Exchange Position
The RBI's foreign-currency mobilisation programme has significance beyond GIFT City.
Foreign-exchange inflows can help India manage external financing requirements and provide banks with additional foreign-currency resources.
Recent data cited by the Economic Times also showed that overseas deposits from India's diaspora contributed significantly to the country's capital-account position in July.
This illustrates why policymakers and financial institutions pay close attention to NRI deposits.
For GIFT City, the programme has provided a strong opportunity to demonstrate that an Indian financial centre can handle substantial international banking flows.
Challenges GIFT City Will Need to Address
Rapid growth also brings challenges.
GIFT City will need to maintain strong regulatory standards while making financial services convenient for international customers.
KYC and customer due diligence are particularly important because financial institutions must balance speed with compliance.
The centre will also need to build a broader ecosystem of financial institutions, investment managers, professional services firms and international customers.
Attracting deposits through temporary incentives is one part of building a financial centre. Maintaining long-term customer relationships and developing diverse financial services will be equally important.
What Happens Next?
The recent lending figures provide an indication of the scale that GIFT City's banking operations can achieve when regulatory incentives and international demand come together.
The next stage could involve banks expanding beyond deposit mobilisation into wealth management and other services for the Indian diaspora.
IFSCA has indicated that banks are expected to increase their efforts to reach global Indian customers.
The development of digital KYC, faster transfers and a growing banking ecosystem could further support this expansion.
For GIFT City, the challenge will be converting the recent surge in activity into sustainable long-term growth.
FAQs
1. What is GIFT City?
GIFT City, or Gujarat International Finance Tec-City, is an international financial services hub in Gujarat designed to facilitate international banking and financial activities.
2. How much did HSBC and ICICI Bank lend through the RBI facility?
HSBC disbursed approximately $10.9 billion, while ICICI Bank disbursed about $8.4 billion, giving them a combined total of $19.3 billion.
3. How much did all participating banks lend?
Twenty lenders in GIFT City collectively provided approximately $52.8 billion under the RBI programme.
4. Why are NRIs important to GIFT City?
NRIs represent a large international customer base with significant financial links to India. Their deposits and investments can provide foreign-currency funding and support the development of international financial services.
5. Are GIFT City banks only focused on deposits?
No. The broader objective includes international banking, wealth management, capital raising and other financial services.
6. Can NRIs complete banking procedures remotely?
Digital processes are increasingly available. The IFSCA has said assisted video KYC is available for NRIs, while additional biometric authentication capabilities are expected to be introduced by the end of 2026.
Conclusion
The emergence of HSBC and ICICI Bank as the largest lenders under the recent foreign-currency programme marks an important phase in GIFT City's development. Their combined $19.3 billion in lending represents a significant portion of the $52.8 billion provided by 20 participating lenders.
More importantly, the development shows how policy support, foreign-currency funding and India's large overseas population can combine to increase activity at an emerging financial centre.
For GIFT City, the next challenge will be turning this momentum into a broader and sustainable international financial ecosystem. For banks, the growing NRI customer base could create opportunities in wealth management and cross-border services.
For NRIs, the expansion means that GIFT City is becoming an increasingly relevant part of India's international banking landscape. As its infrastructure, digital onboarding systems and financial services continue to develop, its role in connecting India's diaspora with the country's financial system could become increasingly significant.